United States

CFPB pushes to protect consumers from debt collection practices

COMPLIANCE NEWS  | 

In June, the Consumer Financial Protection Bureau (CFPB) announced that it plans to seek Office of Management and Budget (OMB) approval to conduct a survey of approximately 8,000 individuals as a part of its research on debt collection disclosures. This survey will test a number of questions related to new disclosures being developed, especially in regard to time-barred and obsolete debts. The survey will be used to test consumers’ comprehension and decision-making.

These new disclosures and rulemaking proposals come as a California federal district court refused to dismiss a lawsuit filed by the CFPB in January 2017 against several law firms and attorneys alleging defendants violated the Federal Trade Commission’s (FTC) Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA). The suit alleged that these law firms and attorneys were illegally charging upfront fees for debt relief services which were disguised as fees for bankruptcy services. The court found that the CFPA authorized the CFPB to enforce the TSR and that the TSR contained no applicable exception for the practice of law or attorneys. CFPB lawsuit against debt collectors

The CFPB’s win in California in maintaining the lawsuit against law firms and attorneys for unlawful debt collection practices, and the push for new debt collection disclosures shows a clear picture that the CFPB is really cracking down on debt collection and working to prevent any harm to consumers.