On July 2, the Consumer Financial Protection Bureau (CFPB) released its latest Supervisory Highlights report. This report presents findings from examinations of debt collection practices, loan servicing, and medical payment products, covering the period from April 1, 2023, to December 31, 2023.Ā
Key Findings in Debt Collection PracticesĀ
The CFPB’s report identified several violations of Regulation F, which enforces the Fair Debt Collection Practices Act, among larger participant debt collectors.Ā
Debt ValidationĀ
Examiners found instances where debt collectors failed to provide the required validation information to consumers. Specifically:Ā
- Debt collectors did not supply validation information either orally or in writing within five days of the initial oral communication, particularly when the initial contact was made via telephone, even after being notified that prior written disclosures were undelivered.Ā
- Student loan debt collectors failed to provide necessary validation notices when the initial communication was in writing.Ā
False, Deceptive, or Misleading RepresentationsĀ
In their communications, both written and oral, debt collectors were found to use different names and did not disclose their true company names. In response, these collectors will now cease using incorrect names and update all scripts and correspondence to reflect their true identities.Ā
Examiners also found that debt collectors:Ā
- Used false, deceptive, or misleading representations by not providing key initial disclosures required by Regulation F. These disclosures inform consumers that the communication is an attempt to collect a debt and that any information obtained will be used for that purpose.Ā
- Failed to make the necessary disclosures in both initial oral and subsequent written communications, as well as in all further communications with consumers.Ā
Ā Harassing, Oppressive, or Abusive ConductĀ
The report highlighted instances of aggressive and abusive behavior by debt collectors:Ā
- Debt collectors took a harsh tone with consumers who explained their inability to make payments due to medical issues.
- Debt collectors ignored requests to stop contacting consumers, placing over 100 calls to some individuals. Although the call frequency was within legal limits, this conduct was deemed harassing given the consumers’ specific requests to cease communication.Ā
Cease Communication RequestsĀ
Debt collectors continued to contact consumers through mediums or specific telephone numbers that consumers had explicitly requested not to be used.Ā
Disclosures in Subsequent CommunicationsĀ
Examiners noted failures in disclosing that communications were from a debt collector, especially by service providers communicating on behalf of the collectors via telephone or text message. Additionally, electronic payment confirmations lacked the required disclosure.Ā
Documentation Related to the Statute of LimitationsĀ
Some entities were found to misrepresent the statute of limitations on credit card debt, falsely stating it as ten years instead of five. This included accounts where the statute of limitations had already expired.Ā
Corrective ActionsĀ
Based on these findings, the companies involved are taking corrective actions. These include updating their written communications and enhancing training programs to ensure compliance with CFPB regulations.Ā
The CFPB’s report underscores the importance of adhering to debt collection regulations to protect consumers from deceptive and abusive practices. As these corrective actions are implemented, consumers should see improved transparency and fairness in debt collection practices.Ā
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Author:Ā Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clientsā criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jenniferās guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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