Federal, state, and local regulators and enforcement agencies announced a national initiative targeting debt collectors branded Operation Collection Protection on November 4, 2015. The enforcement effort has so far resulted in 115 law enforcement actions against debt collectors engaged in allegedly illegal practices, brought by over 70 law enforcement agencies, including the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), Department of Justice, and state attorneys general. All companies that seek payment from consumers for accounts receivable should take note, because of the heightened scrutiny of debt collection and debt buying activities.
The FTC's press conference included statements by FTC Chairwoman Edith Ramirez, with Illinois Attorney General Lisa Madigan and Minnesota Commerce Commissioner Mike Rothman. During the press conference, the regulators emphasized why debt collection is such a high priority: (1) the sheer amount of debt U.S. consumers hold—$2.5 trillion as of 2010—means a significant portion of the population is impacted on a daily basis; (2) debt collection plays a critical role in a functioning credit economy; and (3) debt collection perennially garners the most consumer complaints among all business practices.
While the press conference, and the four new actions announced, focused on practices the officials described as particularly problematic—harassment and abuse of consumers and the collection of so-called phantom and zombie debt—the message was clearly broader: illegal debt collection practices are a top priority for consumer protection watchdogs around the country, which will continue to pool and leverage their considerable resources to stamp out improprieties.
The message sent by Operation Collection Protection complements recent CFPB enforcement, supervisory, and rulemaking efforts focused on the debt collection industry, including first-party creditors and billing services, and on the intersection of data furnishing and debt collection. In addition, the CFPB continues to work on developing proposed rules for debt collection following publication of its advanced notice of proposed rulemaking in November 2013.