Debt collection will continue to be a major CFPB focus in 2013. That’s the clear takeaway from the CFPB’s second annual report to Congress on enforcement of the Fair Debt Collection Practices Act. Another takeaway is that the CFPB’s supervisory authority in the debt collection arena continues to expand. Dodd-Frank gave the CFPB supervisory authority over service providers to large insured depository institutions as well as service providers to mortgage originators, payday lenders, and private student lenders. Those service providers can include third-party debt collectors regardless of the collector’s size. Since issuing its first FDCPA report in 2012, the CFPB expanded its supervisory authority to include debt collectors and debt buyers that qualify as “larger participants.”
The CFPB’s authority goes beyond debt collectors and debt buyers. As the report notes, while first-party creditors are generally not subject to the FDCPA, the Dodd-Frank Act prohibits them from engaging in unfair, deceptive or abusive acts or practices (UDAAP) in their own collection activity. The FDCPA also does not apply to servicers when collecting debts that were current when servicing began. The CFPB already supervises mortgage servicers and servicing by large banks, and recently proposed to supervise nonbank servicers of private and federal student loans as “larger participants.” That means the CFPB can evaluate collection activity by creditors and servicers it supervises for UDAAP compliance.
Since the CFPB has not yet expanded its complaint system to include debt collection (although it is expected to do so in the first half of 2013), the complaint data discussed in the report is based on complaints submitted to the FTC through its Consumer Sentinel database in 2012. Drawing on a letter dated February 1, 2013 sent by the FTC to the CFPB (which is included as an appendix), the report also describes the FTC’s debt collection enforcement efforts in 2012. For more information on the CFPB’s report, see our legal alert.
We have speculated that the CFPB might use the field hearing on its complaint system scheduled for this Thursday as an opportunity to announce the expansion of the system to take complaints about debt collection and/or payday and short-term loans. According to Isaac Boltansky of Compass Point, the CFPB may announce at the hearing that it will make various types of complaints public through its system (currently only credit card complaints are public). Isaac also expect the CFPB to release an updated snapshot of the complaints received since their last report on the matter in October 2012.