How the CFPB Protects Consumers in the Debt Collection Process
Written by: Kristy Welsh
Last Updated: August 29, 2017
Regardless of any unpaid debt you may owe, there are limits to what creditors and debt collectors are legally allowed to do in collection of the debt. However, these rules are routinely violated by agencies that should (and likely do) know better.
Fortunately, the CFPB is on your side, protecting consumers in the often stressful, confusing, and costly debt collection process. Here’s how.
Oversees Debt Collection Industry
In October 2012, the CFPB announced its oversight of the nation’s largest debt collectors, which includes those that log annual receipts of more than $10 million through debt collection action. Though this limits the CFPB’s jurisdiction to around 175 agencies, their activity represents more than 60 percent of debt collection activity in the U.S.
In July 2013, the CFPB put debt collectors on the alert, producing two separate bulletins stressing the importance of avoiding 1) unfair, deceptive, and abusive collection practices; and 2) misleading consumers about how paying (or not paying) a debt may affect credit reports, credit scores, and creditworthiness.
Publishes Annual Fair Debt Collection Practices Report
Every year, the CFPB publishes a report on the landscape of the state of debt collection practices, including an overview of:
- Number and type of debt collection complaints received by both the CFPB and the FTC
- CFPB responses to debt collection complaints
- How the CFPB supervises and enforces debt collection best practices
- Community education and outreach on debt collection rights of consumers
- How the CFPB conducts research, sets new policies, and writes new rules
Provides Consumers with Sample Action Letters
Even when consumers know their rights relative to debt collection, that doesn’t mean they always know what to do about it, particularly when it comes to communication with creditors and debt collectors.
Thus, the CFPB’s provision of 5 sample action letters consumers can customize to fit some of the most common issues, including:
- Requesting more information about a debt (e.g., how much you owe, who the original creditor was, when the account was opened, date when the account became delinquent, etc.)
- Requesting proof that you owe the debt (without which they must cease collection)
- Instructing a creditor or debt collector how you want to be contacted about the debt
- Instructing a creditor or debt collector to stop contacting you about the debt (with the understanding that you are still legally responsible for it)
- Notifying a creditor or debt collector that you have hired a lawyer (through whom all further communication should be directed)
Writes New Debt Collection Rules
In November 2013, the CFPB appealed to the public for feedback before writing new debt collection rules. There were a number of questions asked of participants, covering topics ranging from debt collection litigation to the use of email, texting, and social media for debt collection purposes.
Takes Legal Action Against Shady Debt Collection Practices
In July 2014, the CFPB took action against Georgia-based Frederick J. Hanna & Associates, an agency that files debt collection lawsuits. The CFPB says the agency is guilty of submitting deceptive court filings and/or providing evidence that was faulty or unsubstantiated, violating the rights of consumers.
If you have a question about your rights relative to debt collection, the CFPB website is a great place to turn. The Ask CFPB section includes a debt collection category, with answers to some of the most commonly asked questions, like:
- What is harassment by a debt collector?
- What information does a debt collector have to give me about a debt?
- What is the best way to negotiate a settlement with a debt collector?
- Can a debt collector try and collect on a debt that was discharged in bankruptcy?
- What should I do if a creditor or debt collector sues me?
To search for debt collection information on the CFPB website, go to ConsumerFinance.gov. Click on "Get Assistance" and then select "Ask CFPB".
Accepts Debt Collection Complaints
Is a debt collector ignoring your requests for proof you owe the debt? Are they using abusive intimidation tactics in trying to collect? Are they continuing to contact you about the debt despite your formal letter requesting them to stop?
Note, the CFPB also shares complaints with state and federal law enforcement agencies, and sends a complaint report to Congress twice a year. Your complaint may also be posted to the Consumer Complaint Database (minus any personally-identifying information).
When you submit a complaint to the CFPB:
- Your complaint and supporting documentation is forwarded to the company for their review.
- The company has 15 days to respond to the CFPB and to you.
- The CFPB provides you with email updates on your complaint status.
Whatever the issue relative to debt collection, the CFPB wants to hear about it.