A recent federal report about consumer complaints shows why debt collectors need to comply with the law.
The federal Consumer Financial Protection Bureau (CFPB) recently released its report on the most common types of consumer complaints the agency receives each month. According to Reuters, debt collection practices were the leading cause of complaints, outstripping complaints related to mortgages and credit reporting. The story is a good reminder of why it is so important for businesses to ensure that their debt collection practices are being handled in a way that complies with federal legislation, especially given recent cases involving deceptive practices by some debt collectors. In those cases, the debt collection companies were slapped with steep fines and penalties.
Federal consumer protection legislation
The CFPB was launched in 2011 as a federal agency designed to uphold consumer financial protection. Much of its mandate is concerned with ensuring that consumers are treated in accordance with the Fair Debt Collection Practices Act (FDCPA), which regulates fair practices for collecting consumer debt. In addition to protecting consumers from abusive tactics by debt collection companies, the legislation also helps protect law-abiding debt collectors from the unfair competition that would result if abusive and deceitful debt collection practices were allowed to continue unabated. Since its creation in 2011, the CFPB has tracked consumer complaints to help ensure that the FDCPA is being enforced.
Consumer complaints report
In its most recent report, the CFPB found that there were an average of 6,785 complaints related to debt collection each month, higher than the second-leading cause of complaints, mortgages, which stood at 4,210 per month, and credit reporting, which had 3,287 monthly complaints on average. Many of the complaints were related to debt collectors attempting to collect on a debt that did not exist, contacting alleged debtors multiple times per week or at their workplace, or calling a particular residence despite being told previously that the alleged debtor did not reside at that address.
Fines and penalties
Abusive behavior by debt collection companies is something that federal regulators are taking seriously. As the Credit Union Times reports, the two most complained about companies in the CFPB report have already been hit with high fines for deceptive collection tactics. One company was ordered to refund customers $42 million, pay a $10 million penalty and cease collections on $125 million worth of debts. The other company refunded consumers $19 million, paid an $8 million penalty and had to stop collecting on over $3 million in debts.
Because of increased regulation of the debt collection industry and the steep penalties that can ensue for failing to comply with those regulations, businesses should ensure that they are always on the right side of the law. A law firm that is experienced in consumer debt collection and seeks to abide by all federal and state rules concerning collections can be an invaluable partner for businesses seeking to collect on outstanding consumer debts.