The Federal Trade Commission (FTC) on Wednesday announced that it would launch its first-ever coordinated, nationwide law enforcement effort targeting abusive and deceptive debt-collection practices. The initiative is known as Operation Collection Protection, and will combine federal, state and local resources across the country to crack down on debt-collection practices the FTC deems unlawful. The illegal tactics targeted by the operation include harassing phone calls by debt collectors, threats of litigation, and attempts to collect debts that are not actually owed, or “phantom” debts.
According to the FTC, the operation will involve coordinated actions by the Department of Justice, the Consumer Financial Protection Bureau (CFPB), 47 state attorneys general, 17 state regulators, other state and local law enforcement authorities, and even one Canadian agency. The targets of the operation range from “rogue individuals” to “some of the biggest names in the [debt collection] business.” Proposed remedies include asset freezes, injunctions, and “millions” in redress and civil penalties.
Among the highlights of the FTC’s announcement were the following:
- The operation marks a renewed focus for the FTC on abusive debt-collection practices. To mark the occasion, the FTC announced that three new cases had been filed against debt collectors - Delaware Solutions, BAM Financial, and a third debt collector named in a lawsuit that is still under seal. The agency also announced settlements in pending actions against National Check Registry, LLC, and K.I.P., LLC.
- Initial collaboration before Wednesday’s formal announcement has already led to 115 lawsuits and enforcement actions this year, including 30 recently filed actions against debt collectors. And since 2010, the FTC has sued more than 250 debt collectors and secured judgments of almost $350 million. Eighty-six companies and individuals have been banned from collecting debts altogether.
- The FTC warned that violations can even result in incarceration - as part of the operation so far, 19 individuals face indictment, have pleaded guilty or have been convicted of criminal charges relating to illegal collection practices.
- Debt collection has been the No. 1 source of complaints received by the FTC every year - the agency received 280,000 such complaints just last year.
- The FTC’s efforts will include not just enforcement actions, but also cooperative efforts with the debt-collection industry “to stop questionable practices before they start.” These topics will be the focus of its ongoing “Debt Collection Dialogue” events hosted in cities around the country.
Relatedly, the CFPB continues to work on its own regulations for the debt-collection industry. Those rulemaking efforts have moved slower than anticipated, however. The CFPB predicted in its fall 2014 regulatory agenda that “pre-rule” activities, which likely include convening a SBREFA panel, would last through April 2015; its spring 2015 agenda pushed that date to December 2015. Further details will likely emerge in the coming weeks, when the CFPB is expected to release its fall 2015 regulatory agenda.