March 2018
Fair Debt Collection
Practices Act
CFPB Annual Report 2018
1 CONSUMER FINANCIAL PROTECTION BUREAU
Message from Mick
Mulvaney
Acting Director of the Bureau of
Consumer Financial Protection
The Bureau of Consumer Financial Protection and the
Federal Trade Commission are pleased to present the 2018
Fair Debt Collection Practices Act (FDCPA) Annual Report.
The Bureau is statutorily required under 15 U.S.C. §
1692m(a) to produce this annual report to Congress with
regard to its administration of its debt collection
responsibilities. Under 15 U.S.C. § 1692m(b), the Bureau is allowed to obtain the views of other
agencies with enforcement functions under section 1692(l) of Dodd-Frank, and so discussion of
the Federal Trade Commission’s debt collection activities are integrated throughout this report.
In January 2012, the Bureau and the FTC entered into a memorandum of understanding that
provides for coordination in enforcement, sharing supervisory information and consumer
complaints, preserving the confidentiality of shared information, and consumer education. This
report provides an overview of the Bureau’s and FTC’s activities in the debt collection space in
2017.
In 2017, the Bureau handled approximately 84,500 debt collection complaints, making it one of
the most prevalent topics of complaints about consumer financial products or services received
by the Bureau. The Bureau resolved one FDCPA enforcement case in 2017, and five others
remain pending. The Bureau also filed briefs as amicus curiae in two cases in the federal courts
of appeals arising under the FDCPA.
Debt collection has consistently remained among the top two most-viewed categories in “Ask
CFPB,” an interactive online consumer education tool. In 2017, the Bureau also launched a 21-
day debt management email course for consumers. The Bureau continued research projects to
improve its understanding of the debt collection market and its impact on consumers, including
its nationally representative Survey of Consumer Views on Debt and its study of online debt
sales. In fulfillment of the Bureau’s mandate to monitor the debt collection industry, the Bureau
also conducted a survey of major credit card issuers’ collection practices for the 2017 Credit Card
2 CONSUMER FINANCIAL PROTECTION BUREAU
Market Report. These research and market monitoring activities have aided in the ongoing
development of a potential debt collection rule.
At the Bureau, our priority is to ensure free markets, innovation, and consumer choice by
enforcing the law with consistency, prudence, and humility. We remain committed to the
execution of our responsibilities under all consumer financial laws within our statutory
authority, including the FDCPA, and to educating and empowering consumers to make better
informed financial decisions. Going forward, we want to enforce the FDCPA as written while
protecting the legal rights of all in a manner that is efficient, effective, and accountable.
Sincerely,
Mick Mulvaney
3 CONSUMER FINANCIAL PROTECTION BUREAU
Message from Maureen K.
Ohlhausen
Acting Chairman of the FTC
For more than four decades, the Federal Trade
Commission (FTC) has been protecting consumers from
unlawful debt collection practices. Debt collection has
important benefits for the availability and cost of credit in
the marketplace, but certain debt collection practices, like
attempts to collect phony debts or false threats of arrest or
imprisonment, harm consumers. For years, debt
collection has been one of the largest sources of consumer
complaints received by the FTC. Not only do illegal debt collection practices harm consumers,
they also harm other debt collectors who have complied with the law, sometimes at significant
cost.
The FTC has employed a multipronged effort to protect and educate consumers and collectors.
In 2017 alone, the FTC filed or resolved 10 cases against 42 defendants, obtained more than $64
million in judgments, and banned 13 companies and individuals who engaged in serious and
repeated violations of law from ever working in debt collection again. Our recent cases have
focused on stopping the most harmful practices relating to collections, like “phantom debt
collection” and false and misleading claims, threats, or harassment. Additionally, the FTC has
worked to stop other forms of fraud that target consumers in debt. For example, we recently led
“Operation Game of Loans,” a federal-state law enforcement sweep against student loan debt
relief scams that included 36 law enforcement actions by the FTC and state partners.
In addition to vigorous law enforcement, the FTC also engages in education and public outreach
to inform consumers about their rights under the FDCPA and businesses about their obligations
under the law. For example, the FTC reaches tens of millions of consumers each year through
print and online materials, blog posts, speeches and presentations. The FTC also educates
industry members through our business education pieces (logging more than 11 million page
views in 2017 to our online Business Center), as well as significant outreach to industry
representatives.
4 CONSUMER FINANCIAL PROTECTION BUREAU
The FTC has also undertaken other important initiatives that highlight our debt collection
priorities, such as protecting military consumers. This last year, the FTC hosted two public
workshops (in which CFPB staff participated) focused on consumer protection issues faced by
servicemembers, including collection calls to commanding officers and the potential impact of
debt on security clearances. Additionally, the FTC has undertaken an initiative to examine the
use of existing and emerging technologies in debt collection, including the costs and benefits to
consumers and businesses of such technologies.
Finally, the FTC continues to work closely with our partners at the CFPB to coordinate our
valuable respective efforts to protect consumers. Our staffs regularly meet to discuss ongoing
and upcoming law enforcement against collectors. We also share consumer complaints,
cooperate on consumer education efforts, and consult on debt collection rulemaking and
guidance initiatives.
As this Report details, the FTC is committed to protecting consumers and promoting lawful
practices in the debt collection market and to working with our law enforcement partners on this
important issue. We will remain vigilant in our efforts to monitor this industry and stop
unlawful conduct that harms both consumers and businesses.
Sincerely,
Maureen K. Ohlhausen
5 CONSUMER FINANCIAL PROTECTION BUREAU
Table of contents
Message from Mick Mulvaney ........................................................................... 1!
Message from Maureen K. Ohlhausen .............................................................. 3!
Table of contents ......................................................................................................... 5!
1.! Introduction ........................................................................................................... 7!
2.! Background ........................................................................................................... 8!
2.1! Industry breakdown .................................................................................. 9!
3.! Consumer complaints ........................................................................................ 14!
3.1! Number and types of complaints handled .............................................. 14!
3.2! How companies respond to consumer complaints ................................. 17!
4.! Bureau supervision of debt collection activities ............................................. 19!
4.1! Impermissible communications with third parties ............................... 20!
4.2! Deceptively implying that authorized users are responsible for a debt 20!
4.3! False representations .............................................................................. 21!
4.4! Communicating with consumers at a time known to be inconvenient .. 21!
5.! Debt collection amicus briefs ............................................................................ 22!
6.! Enforcement ........................................................................................................ 25!
6 CONSUMER FINANCIAL PROTECTION BUREAU
6.1! CFPB law enforcement actions ............................................................... 27!
6.2! Continuation of pre-2017 matters .......................................................... 29!
6.3! FTC law enforcement actions ................................................................. 30!
7.! Education and outreach initiatives ................................................................... 40!
7.1! Bureau education and outreach ............................................................. 40!
7.2! FTC education and public outreach ....................................................... 43!
8.! Rulemaking, research, and policy initiatives ................................................... 46!
8.1! Bureau rulemaking and research ........................................................... 46!
8.2! FTC’s research and policy development activities ................................. 49!
Appendix A: ............................................................................................................... 51!
CFPB Debt Collection Information 2017 ......................................................... 51!
Appendix B: ............................................................................................................... 54!
FTC Debt Collection Information 2017 ........................................................... 54!
7 CONSUMER FINANCIAL PROTECTION BUREAU
1. Introduction
The Consumer Financial Protection Bureau is pleased to submit to Congress its annual report
summarizing activities to administer the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq. The Consumer Financial Protection Bureau (“CFPB” or “Bureau”) and the Federal
Trade Commission (“FTC” or “Commission”) share government enforcement responsibility for
the FDCPA. The Commission’s activities during the past year are included in this report. The
Bureau and the Commission work closely to coordinate debt collection enforcement actions and
other matters related to debt collection.
1
This report provides a background on the debt collection market; contains an overview of
consumer complaints submitted to the CFPB and the FTC in 2017; summarizes the Bureau’s
supervisory activities in the debt collection market; describes the Bureau’s and the
Commission’s enforcement actions; describes amicus curiae briefs filed in cases related to the
FDCPA; presents the CFPB’s and the FTC’s consumer education and outreach initiatives; and
discusses developments in the Bureau’s research, market monitoring, and rulemaking activities
and the FTC’s policy and research initiatives.
1
See Memorandum of Understanding between the Consumer Financial Protection Bureau and the Federal Trade
Commission (Mar. 2015), available at
https://www.ftc.gov/system/files/documents/cooperation_agreements/150312ftc-cfpb-mou.pdf. As part of this
coordination, the CFPB and FTC staff regularly meet to discuss ongoing and upcoming law enforcement,
rulemaking, and other activities, share debt collection complaints, cooperate on consumer education efforts in the
debt collection arena, and consult on debt collection rulemaking and guidance initiatives.
8 CONSUMER FINANCIAL PROTECTION BUREAU
2. Background
Debt collection is a $10.9 billion dollar industry that employs nearly 120,000 people across
approximately 8,000 collection agencies in the United States.
2
The debt collection industry
affects millions of Americans. According to the Bureau’s Consumer Credit Panel
3
, about 26
percent of consumers with a credit file have a third-party collection tradeline listed. On average,
these consumers have about 3.4 collection tradelines listed on their credit reports. Debt
collection efforts include calls, letters, filing lawsuits, and other methods to collect alleged debts
from consumers.
In the course of attempting to collect debts, debt collectors must adhere to a variety of laws and
regulations, which govern topics as diverse as telephone communications (e.g., the Telephone
Consumer Protection Act, or “TCPA”) and furnishing information to credit reporting agencies
(e.g., the Fair Credit Reporting Act, or “FCRA”) as well as various state statutes. The primary
federal law that governs the conduct of debt collectors is the FDCPA,
4
which establishes
consumer protections in the debt collection process including the rights to dispute a debt and
instruct a collector to stop communication about an alleged debt. The FDCPA prohibits debt
collectors from engaging in certain types of conduct in connection with the collection of a debt
and imposes certain affirmative obligations on collectors.
2
Edward Rivera, Debt Collection Agencies in the US, IBIS World, (Dec. 2017).
3
The Bureau’s Consumer Credit Panel is a longitudinal, nationally-representative sample of approximately five
million de-identified credit records maintained by one of the three nationwide credit reporting companies.
4
15 U.S.C. § 1692 et seq.
9 CONSUMER FINANCIAL PROTECTION BUREAU
The law empowers the CFPB and the FTC to enforce its provisions and establishes a private
right of action against any debt collector who fails to comply with any provision of the FDCPA
with respect to any person. The FDCPA also requires the Bureau to submit this report on “the
administration of its functions” under the FDCPA and enables it to “obtain … the views” of other
agencies that enforce the FDCPA, such as the FTC.
5
2.1 Industry breakdown
Most consumers with collection tradelines on their credit files had medical,
telecommunications, or retail debt.
6
However, industry revenue shows a somewhat different
distribution across types of debt. Financial services debt is the largest source of revenue for the
industry, accounting for more than one-third of all debt collection revenue. Telecommunications
debt also accounts for a large share of industry revenue – more than one-fifth.
7
Government,
retail, and medical debt are also significant drivers of industry revenue.
5
15 U.S.C. § 1692m
6
This data was retrieved from the Bureau’s Consumer Credit Panel, a longitudinal, nationally-representative sample
of approximately five million de-identified credit records maintained by one of the three nationwide credit reporting
companies.
7
Edward Rivera, Debt Collection Agencies in the US, IBIS World, (Dec. 2017).
10 CONSUMER FINANCIAL PROTECTION BUREAU
FIGURE 1: DEBT COLLECTION MARKET SEGMENTS BY SHARE OF REVENUE, 2017 (IBIS WORLD)
More than one-half of the industry’s revenue, about $5.9 billion, is generated by firms
contracting with creditors to collect their debts on a contingency fee basis. In contingency fee
collections, the creditor and the collector each receive a share of the amount collected.
About one-third of debt collection revenue, $3.5 billion, comes from debt buyers, who purchase
accounts from the original creditor or other debt buyers and then generally seek to collect on
that debt, either themselves or through third-party debt collectors.
8
Although they represent
about one-third of industry revenue, this overstates debt buyers’ share of dollars collected, since
debt buyer revenue includes all amounts recovered whereas the revenue of contingency
collectors includes only the share of recoveries retained by the collector.
8
Id.
11 CONSUMER FINANCIAL PROTECTION BUREAU
FIGURE 2: DEBT COLLECTION AGENCY TYPES BY SHARE OF REVENUE, 2017 (IBIS WORLD)
The debt collection industry is subject to considerable influence by the credit cycle, which
determines how much charged-off debt is available to collect. As a result of increased consumer
debt, especially in non-housing categories where debt collectors are most frequently employed,
it appears likely that the availability of debt to collect will increase. This would be especially
likely if an unfavorable change in economic circumstances made it more difficult for consumers
to pay their obligations.
After several years of growth, consumer debt surpassed its 2008 peak in 2017, and much of that
growth has been fueled by non-housing debt, including credit cards, student loans, and auto
Contingent
Fee
55%
Debt Buying
32%
Fixed-fee
5.9%
Other
7.6%
12 CONSUMER FINANCIAL PROTECTION BUREAU
loans. In 2017 alone, credit card debt rose by $55 billion, student loan debt grew by $68 billion,
and auto loan debt increased by $64 billion.
9
FIGURE 3: NON-HOUSING CONSUMER DEBT BALANCES (IN TRILLIONS), 2003–2017 (FRBNY CONSUMER
CREDIT PANEL/EQUIFAX)
While student loans and auto loans have exhibited the most notable increases in debt balances
over time, the flow into 90+ days delinquency for auto loans has been increasing slowly and
steadily since 2012 after years of increased lending to subprime borrowers.
9
Center for Microeconomic Data, Quarterly Report on Household Debt and Credit Report 2017: Q4, Federal Reserve
Bank of New York (Feb. 2018), available at https://www.newyorkfed.org/microeconomics/hhdc.html.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
03:Q1
03:Q3
04:Q1
04:Q3
05:Q1
05:Q3
06:Q1
06:Q3
07:Q1
07:Q3
08:Q1
08:Q3
09:Q1
09:Q3
10:Q1
10:Q3
11:Q1
11:Q3
12:Q1
12:Q3
13:Q1
13:Q3
14:Q1
14:Q3
15:Q1
15:Q3
16:Q1
16:Q3
17:Q1
17:Q3
Other
Student loan
Credit card
Auto loan
13 CONSUMER FINANCIAL PROTECTION BUREAU
FIGURE 4: PERCENT OF NON-HOUSING BALANCES 90+ DAYS DELINQUENT, 2003-2017 (FRBNY
CONSUMER CREDIT PANEL/EQUIFAX)
Similarly, outstanding credit card debt continues to increase, surpassing $800 billion for the
first time ever in 2016. Credit card debt per-consumer has been steadily and clearly trending
toward pre-recession levels. At the end of 2016, average consumer balances were over $4,800,
which was the highest figure observed in the Bureau’s Consumer Credit Panel as of the fourth
quarter of 2017.
10
As with auto lending, the flow into 90+ days delinquency for credit card
balances has been growing considerably in the past year, which can be seen in Figure 4 above.
10
Consumer Financial Protection Bureau, Consumer Credit Card Market Report, (Dec. 2017), available at
https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-state-credit-card-market/.
0%
2%
4%
6%
8%
10%
12%
14%
16%
03:Q1
03:Q3
04:Q1
04:Q3
05:Q1
05:Q3
06:Q1
06:Q3
07:Q1
07:Q3
08:Q1
08:Q3
09:Q1
09:Q3
10:Q1
10:Q3
11:Q1
11:Q3
12:Q1
12:Q3
13:Q1
13:Q3
14:Q1
14:Q3
15:Q1
15:Q3
16:Q1
16:Q3
17:Q1
17:Q3
Auto loans Credit cards Student loans Other
14 CONSUMER FINANCIAL PROTECTION BUREAU
3. Consumer complaints
The CFPB is required to maintain a consumer complaint system to facilitate the centralized
collection of, monitoring of, and response to consumer complaints regarding consumer
financial products or services. The CFPB began taking consumer complaints about debt
collection in July 2013.
The FTC also accepts complaints from consumers about problems they experience in the
marketplace. These complaints are stored in the Consumer Sentinel Network (Sentinel), a
secure online database available only to law enforcement. The CFPB shares complaint
information with the FTC’s Consumer Sentinel system.
3.1 Number and types of complaints
handled
As in years past, debt collection remains one of the most complained about consumer financial
products or services in the Bureau’s complaint system. From January 1, 2017 through December
31, 2017, the CFPB handled approximately 84,500 debt collection complaints. These complaints
relate to first-party (creditors collecting on their own debts) and third-party collections. Table 1
shows the types of debt collection complaints the CFPB has handled. For each of the six issues
listed in Table 1, consumers also select additional, more-detailed sub-issues when submitting a
complaint.
15 CONSUMER FINANCIAL PROTECTION BUREAU
TABLE 1: TYPES OF DEBT COLLECTION COMPLAINTS REPORTED BY CONSUMERS
11
As indicated in Table 1, the most common debt collection complaint is about attempts to collect
a debt that the consumer reports is not owed. The vast majority of these consumers report that
the debt is not their debt (57 percent) or that the debt was paid (27 percent), while the
remaining consumers report that the debt resulted from identity theft (11 percent) or was
discharged in bankruptcy and is no longer owed (5 percent). In response to many of these
complaints, third-party collectors close and return the account to their clients or provide the
consumer with additional information about the account.
Complaints involving written notifications about debt are the second-most common issue
selected by consumers (see line 2 in Table 1). The FDCPA requires collectors within five days
after the initial communication with a consumer to provide the consumer with a written notice
informing them, among other things, of their right to dispute, unless this information is
contained in the initial communication or the consumer has paid the debt. Most consumers who
complain about written notifications report they have not received enough information to verify
11
Percentages may not sum to 100% due to rounding.
Types of debt collection complaints
%
Attempts to collect debt not owed
39%
Written notification about debt
22%
Communication tactics
13%
Took or threatened to take negative or legal action
11%
False statements or representation
10%
Threatened to contact someone or share information improperly
4%
Total debt collection complaints
100%
16 CONSUMER FINANCIAL PROTECTION BUREAU
the debt (72 percent). Some consumers complain that they did not receive a notice of their right
to dispute (24 percent), while others report that the notification did not disclose that it was an
attempt to collect a debt (5 percent).
Complaints about communication tactics used when collecting debts were the third-most
common issue complained about in 2017 (see line 3 of Table 1) with many of these types of
complaints concerning communications by phone. The majority of complaints about
communication tactics are about frequent or repeated calls (52 percent). Some of these
consumers report receiving successive calls in a short period of time (e.g., several calls a day),
whereas others report receiving calls over a long period of time (e.g., calls consistently over
several months). Complaints of continued contact attempts despite requests to stop contact
were also common (24 percent). Other communication tactics complaints relate to reports of
companies using obscene, profane, or abusive language (11 percent), calling outside of the
FDCPA’s assumed convenient calling hours from 8:00 a.m. to 9:00 p.m. at the consumer’s
location (4 percent), or other (10 percent).
Consumers submitted complaints describing companies taking or threatening to take legal or
other negative action (see line 4 of Table 1). Most of these complaints are about threats to sue on
a debt that is old (26 percent), threats or suggestions that consumers’ credit histories would be
damaged (25 percent), or threats to arrest or jail consumers if they do not pay (23 percent).
Other complaints relate to seizures or attempts to seize property (9 percent), being sued without
proper notification of the lawsuit (9 percent), collection of or attempts to collect exempt funds
such as child support or unemployment benefits (5 percent), being sued in a different state from
where the consumer resides or where the consumer signed the contract (2 percent), or threats of
deportation or turning the consumer into immigration (0.1 percent).
The majority of complaints about false statements or representations (see line 5 of Table 1) are
about attempts to collect the wrong amount from the consumer (73 percent). In addition,
consumers report that companies impersonated an attorney or a law enforcement or
government official (16 percent), indicated the consumer committed a crime by not paying debt
(8 percent), or indicated that the consumer should not respond to a lawsuit (3 percent).
Complaints about threatening to contact someone or sharing information improperly were the
least complained about debt collection issue in 2017 (see line 6 of Table 1). In these complaints,
consumers most often reported that the collector talked to a third party about the debt (55
17 CONSUMER FINANCIAL PROTECTION BUREAU
percent), contacted an employer (25 percent), contacted the consumer after being asked not to
do so (19 percent), or contacted the consumers directly, instead of contacting their attorneys (2
percent).
3.2 How companies respond to consumer
complaints
From January 1, 2017 through December 31, 2017, the CFPB has sent approximately 48,800 (58
percent) of approximately 84,500 debt collection complaints it has handled to companies for
their review and response. The CFPB has referred some of the remaining debt collection
complaints to other regulatory agencies (30 percent), while other complaints were found to be
incomplete (10 percent), or are pending
12
with the consumer or the CFPB (1 percent and 1
percent, respectively).
13
Companies have already responded to approximately 45,100 complaints or 92 percent of the
approximately 48,800 complaints sent to them for response. Company responses include
descriptions of steps taken or that will be taken, communications received from the consumer,
any follow-up actions or planned follow-up actions, and categorization of the response.
Response category options include “closed with monetary relief,” “closed with non-monetary
relief,” “closed with explanation,” “closed,”
14
and other administrative options.
15
Monetary relief
is defined as objective, measurable, and verifiable monetary relief to the consumer as a direct
12
This category contains complaints that do not include the necessary information for the CFPB to send the
complaints to companies for responses or refer the complaints to other regulatory agencies.
13
All complaints handled by the Bureau, including those sent to other regulators, serve to inform the Bureau in its
work to supervise companies, to enforce consumer financial laws, to write better rules and regulations, and to
educate and engage consumers.
14
In April 2017, based on feedback from stakeholders, “Closed” was discontinued as a response category.
15
Companies provide administrative responses when they identify complaints submitted by or including
unauthorized third parties or complaints that are the result of fraud, scams, or business identity theft.
18 CONSUMER FINANCIAL PROTECTION BUREAU
result of the steps taken or that will be taken in response to the complaint. Non-monetary relief
is defined as other objective and verifiable relief to the consumer as a direct result of the steps
taken or that will be taken in response to the consumer’s complaint. “Closed with explanation”
indicates that the steps taken by the company in response to the complaint included an
explanation that was tailored to the individual consumer’s complaint. For example, this category
would be used if the explanation substantively meets the consumer’s desired resolution or
explains why no further action will be taken. “Closed” indicates that the company closed the
complaint without relief – monetary or non-monetary – or explanation. Consumers are given
the option to review and provide feedback on all company closure responses.
The following table shows how companies have responded to consumer complaints.
TABLE 2: HOW COMPANIES HAVE RESPONDED TO CONSUMER COMPLAINTS TO THE CFPB
16
16
Percentages may not sum to 100% due to rounding.
Company Response
#!
%
Closed with explanation
37,800
77%
Closed with non-monetary relief
4,700
10%
Company did not provide a timely response
2,600
5%
Company reviewing
1,700
4%
Closed (without relief or explanation)
800
2%
Closed with monetary relief
800
2%
Administrative response
400
1%
Total Complaints Sent to Companies for Response
48,800
100%
19 CONSUMER FINANCIAL PROTECTION BUREAU
4. Bureau supervision of debt
collection activities
Under the Dodd-Frank Act, the CFPB has authority to supervise certain nonbank entities that
offer or provide consumer financial products or services.
17
In addition, for other nonbank
markets for consumer financial products or services, the Bureau has the authority to supervise
“larger participants” as the Bureau defines by rule.
18
Under the Bureau’s larger participant rule
for the debt collection market, the Bureau has the authority to supervise any firm with more
than $10 million in annual receipts from consumer debt collection activities.
In 2017, the Bureau’s supervision of debt collectors uncovered a number of actions that
examiners deemed to be violations of the FDCPA.
19
17
Specifically, the Bureau has authority to supervise nonbank entities in the residential mortgage, payday lending,
and private education lending markets. The Bureau also has the authority to supervise persons who offer or provide
consumer financial products or services where it has “reasonable cause to determine, by order, after notice to the
person and a reasonable opportunity for such person to respond . . . that such person is engaging, or has engaged, in
conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or
service.” 12 U.S.C. § 5514(a)(1)(C).
18
See Defining Larger Participants of the Consumer Debt Collection Market, 77 FR 65775 (Oct. 31, 2012).
19
In deference to the importance of confidentiality and consistent with the policies of the prudential regulators, the
Bureau treats information obtained from companies through the supervisory process as confidential and privileged.
See 12 U.S.C. §§ 1821(t), 1828(x); 12 C.F.R. pt. 1070; see also Memorandum to the Chief Executive Officers of
Depository Institutions, Credit Unions, and their Affiliates to the Bureau’s Supervision Authority from the
Consumer Financial Protection Bureau (Jan. 4, 2012) (regarding the Bureau’s Supervision Authority and Treatment
20 CONSUMER FINANCIAL PROTECTION BUREAU
4.1 Impermissible communications with
third parties
Under section 805(b) of the FDCPA, a debt collector generally may not communicate with a
person other than the consumer in connection with the collection of a debt without permission
from the consumer. Examiners determined that one or more entities did not adequately confirm
that they had contacted the correct party before beginning to discuss the debt. As a result, one or
more entities communicated with a third party in connection with the collection of a debt by
discussing the debt with an authorized user of the credit card who was not financially
responsible for the debt (and who was not otherwise a “consumer” under section 805(b)).
In response to these findings, one or more entities enhanced consumer verification processes to
include the verification of first and last names as well as confirmation of date of birth or the last
four digits of the Social Security number before disclosing the debt or the nature of the call to
the consumer. Additionally, one or more entities revised its processes to discuss the debt with an
authorized user only after explicit authorization from the cardholder. Lastly, the entities trained
their collection agents on the enhanced policies and procedures.
4.2 Deceptively implying that authorized
users are responsible for a debt
Under section 807(10) of the FDCPA, a debt collector may not use false representations or
deceptive means to collect or attempt to collect any debt. Examiners determined that one or
more entities violated the FDCPA by attempting to collect a debt directly from the authorized
user of a credit card even though the authorized user was not financially responsible for the
debt. Examiners concluded that the practice of soliciting payment from a non-obligated user in a
manner that implies that the authorized user is personally responsible for the debt constitutes a
of Confidential Supervisory Information, CFPB Bulletin 12-01), available at
https://files.consumerfinance.gov/f/2012/01/GC_bulletin_12-01.pdf.
21 CONSUMER FINANCIAL PROTECTION BUREAU
deceptive means to collect a debt in violation of the FDCPA. One or more entities have
undertaken remedial and corrective actions regarding these violations.
4.3 False representations
As noted above, a debt collector may not use false representations or deceptive means to collect
or attempt to collect any debt under section 807(10) of the FDCPA. Examiners found that one or
more entities made false representations to consumers about the effect on their credit score of
paying a debt in full rather than settling the debt for less than the full amount. In response to
these findings, one or more entities amended training materials to remove references to how a
consumer’s credit score may be affected by either settling the debt in full or paying the debt in
full.
4.4 Communicating with consumers at a
time known to be inconvenient
Under section 805(a)(1) of the FDCPA, a debt collector may not communicate with a consumer
in connection with the collection of any debt at any unusual time or place or a time or place
known or which should be known to be inconvenient to the consumer. Examiners discovered
that consumers were contacted by one or more entities outside of the hours of 8:00 a.m. to 9:00
p.m. (the times which, in the absence of knowledge to the contrary, may be assumed to be
convenient) or at times consumers had previously informed the entities were inconvenient.
These inconvenient contacts were caused by the failure to accurately update account notes and
the use of auto dialers that based call parameters solely on the consumer’s area code, rather than
also considering the consumer’s last known address. Supervision directed one or more entities
to enhance compliance monitoring for dialer systems to ensure that they correctly set up system
parameters and properly monitor collectors for inputting and adhering to account notations.
22 CONSUMER FINANCIAL PROTECTION BUREAU
5. Debt collection amicus briefs
In 2017, the Bureau has filed amicus curiae (friend of the court) briefs in two cases in the federal
courts of appeals arising under the FDCPA. In addition, two cases in which the Bureau filed
amicus briefs in 2016 were decided in 2017.
Deficiency Judgment in Judicial Foreclosure: Cohen amicus
brief
On June 1, 2017, the Bureau filed an amicus brief in the Second Circuit case of Cohen v. Ditech
Financial, LLC.
20
The brief addressed whether the FDCPA applies to judicial foreclosure
proceedings in state court where, under state law, the debt collector is entitled to seek a
deficiency judgment against the consumer for the amount of any mortgage debt remaining
after the foreclosure sale.
The Bureau’s amicus brief argued that the FDCPA applied to judicial foreclosure proceedings
that could lead to a deficiency judgment against a consumer. The court has not yet issued a
decision in this case.
20
Brief as Amicus Curiae Supporting Plaintiff-Appellant, Cohen v. Ditech Financial LLC, No. 17-950 (2d Cir. June 1,
2017), available at https://www.consumerfinance.gov/policy-compliance/amicus/briefs/cohen-v-ditech-financial-
llc/.
23 CONSUMER FINANCIAL PROTECTION BUREAU
Misrepresentation of Amount Owed: Johnson amicus brief
On April 10, 2017, the Bureau filed an amicus brief in the Eighth Circuit case of Johnson v.
Admiral Investments, LLC.
21
The Bureau’s brief addressed whether a misrepresentation made to
a consumer’s attorney about the amount of the debt owed was actionable under the FDCPA.
The Bureau argued that a facially false statement by a debt collector is actionable even when it is
made to a consumer’s attorney. The brief further contended that the possibility that the attorney
could uncover the falsity through an investigation did not excuse a debt collector’s conduct,
particularly where Congress had specifically legislated that debt collectors must be honest about
the amount of the debt that they seek to collect.
The brief also addressed Johnson’s standing under Article III of the U.S. Constitution to bring
her FDCPA claim. The brief argued that Johnson had standing because, under Supreme Court
precedent, a plaintiff suffers a concrete and particularized injury when she does not receive
truthful information to which she is entitled by law.
In October 2017, the parties stipulated for a voluntary dismissal of the appeal. The Eighth
Circuit therefore did not issue a decision in this case.
Collection of Protected Social Security Funds: Arias case
On October 26, 2016, the Bureau filed an amicus brief in the Second Circuit case of Arias v.
Gutman, Mintz, Baker & Sonnenfeldt, PC to address when a debt collector violates the FDCPA
in the course of garnishing money from an account containing the consumer’s Social Security or
21
Brief as Amicus Curiae Supporting Plaintiff-Appellant, Johnson v. Admiral Investments, LLC, No. 17-1298 (8th Cir.
Apr. 10, 2017), available at https://www.consumerfinance.gov/policy-compliance/amicus/briefs/johnson-v-
admiral-investments-llc/.
24 CONSUMER FINANCIAL PROTECTION BUREAU
other protected funds.
22
In a decision last year, the Second Circuit agreed with the Bureau’s
position that the plaintiff in that case had stated a viable FDCPA claim in his complaint.
23
Bankruptcy Proofs of Claim: Midland Funding case
On December 23, 2016, the Acting Solicitor General, with the assistance of the Bureau, filed an
amicus brief in the Supreme Court in Midland Funding, LLC v. Johnson to address whether a
debt collector violates the FDCPA by filing an accurate proof of claim in a bankruptcy
proceeding for an unextinguished time-barred debt that the creditor knows is judicially
unenforceable.
24
In May 2017, the Supreme Court, in a 5 to 3 decision, concluded, contrary to
the position taken in the government’s brief, that such a filing does not violate the FDCPA.
25
22
Brief as Amicus Curiae Supporting Plaintiff-Appellant, Arias v. Gutman, Mintz, Baker & Sonnenfeldt, PC, No. 16-
2165 (2d Cir. Oct. 28, 2016), available at https://www.consumerfinance.gov/policy-
compliance/amicus/briefs/arias-v-gutman-mintz-baker-sonnenfeldt-pc/.
23
Arias v. Gutman, Mintz, Baker & Sonnenfeldt, LLP, 875 F.3d 128 (2d Cir. Nov. 14, 2017).
24
Brief as Amicus Curiae Supporting Defendant, Midland Funding, LLC v. Johnson, No. 16-348 (U.S. Dec. 21, 2016),
available at https://www.consumerfinance.gov/policy-compliance/amicus/briefs/midland-funding-llc-v-johnson/.
25
Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (May 15, 2017).
25 CONSUMER FINANCIAL PROTECTION BUREAU
6. Enforcement
The Bureau announced four new law enforcement actions in 2017 related to unlawful collection
conduct in violation of the FDCPA. The Bureau’s contributions to this section provide a synopsis
of FDCPA matters only. In 2017, both agencies brought or continued enforcement actions
addressing harmful debt collection activity in violation of laws other than the FDCPA. Unlike the
Bureau, the FTC has opted to include such matters in this section. Some of these actions are still
pending. The Bureau continues to be in active litigation in one FDCPA matter filed in 2015 and
one filed in 2016. In addition to the Bureau’s public enforcement actions involving FDCPA-
covered debt collection practices, the Bureau is conducting a number of non-public
investigations of companies to determine whether they engaged in collection practices that
violate the FDCPA or the CFPA.
In 2017, public actions involving FDCPA cases resulted in over $577,000 in consumer relief and
$78,800 paid into the civil penalty fund, which is used to provide relief to eligible consumers
who would not otherwise get full compensation.
The FTC is primarily a law enforcement agency, and law enforcement investigations and
litigation are at the heart of the FTC’s recent debt collection work. Both the FDCPA and the FTC
Act
26
authorize the Commission to investigate and take law enforcement action against debt
collectors that violate those statutes.
27
The Commission may file a federal court action seeking
26
15 U.S.C. § 1692-1692p; 15 U.S.C. §§ 41-58.
27
The FDCPA authorizes the Commission to investigate and take law enforcement action against debt collectors that
engage in unfair, deceptive, abusive, or other practices that violate the statute. 15 U.S.C. § 1692l. Under the FTC Act,
26 CONSUMER FINANCIAL PROTECTION BUREAU
injunctive and equitable monetary relief under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), or
refer the matter to the Department of Justice for civil penalties and injunctive relief under
Section 5(m) of the FTC Act, 15 U.S.C. § 45(m). Where a collector’s violations are so egregious
that a court order is necessary to halt the conduct immediately, or where consumer redress and
disgorgement are more appropriate forms of monetary relief than civil penalties, the FTC
generally files the action itself under Section 13(b) of the FTC Act. In other circumstances, the
FTC may refer the case to the Department of Justice.
28
From January 1 through December 31, 2017, the FTC filed or resolved 10 cases against 42
defendants, obtained more than $64 million in judgments,
29
and banned 13 companies and
individuals who engaged in serious and repeated violations of law from ever working in debt
collection again.
30
In several of its Section 13(b) cases, the Commission obtained preliminary
relief that included ex parte temporary restraining orders with asset freezes, immediate access
to business premises, and appointment of receivers to take over the debt collection businesses.
the FTC may investigate and take law enforcement action against entities that, in connection with collecting on
debts, engage in unfair or deceptive acts and practices. 15 U.S.C. § 45.
28
In addition to filing and referring law enforcement actions, the FTC files amicus briefs and undertakes other law
enforcement-related activities.
29
These figures include cases filed and resolved in 2017, as well as cases filed in previous years but resolved in 2017.
30
In 2015, the FTC began publishing a list of every individual and company that the agency has sued that has been
banned from the debt collection industry. This list, located at https://www.ftc.gov/enforcement/cases-
proceedings/banned-debt-collectors, is a valuable resource to help law-abiding collection industry professionals
avoid doing business with these defendants, as well as to help state debt collection licensing officials and law
enforcers better protect consumers. Currently, the list includes 152 banned individuals and companies.
27 CONSUMER FINANCIAL PROTECTION BUREAU
6.1 CFPB law enforcement actions
In the Matter of Works & Lentz, Inc.; Works & Lentz of Tulsa,
Inc., and Harry A. Lentz, Jr.
31
(File No. 2017-CFPB-0003) (consent order entered January 9, 2017)
The CFPB took action against two medical debt collection law firms and their president who the
Bureau’s investigation found had falsely represented that their letters and calls were from
attorneys attempting to collect on a debt when no attorney had yet reviewed the account. The
investigation also found that the law firms did not ensure the accuracy of the consumer
information they furnished to credit reporting companies and used improperly notarized
affidavits in lawsuits filed against consumers. The practices affected thousands of individuals.
The CFPB ordered Works and Lentz, Inc., Works and Lentz of Tulsa, Inc., and their president,
Harry A. Lentz, Jr., to provide $577,135 in relief to harmed consumers, correct their business
practices, and pay a $78,800 penalty.
Consumer Financial Protection Bureau v. Navient
Corporation, Navient Solutions, Inc. and Pioneer Credit
Recovery, Inc.
32
(M.D. PA 3:17-cv-00101) (complaint filed January 18, 2017)
31
Press Release, Consumer Financial Protection Bureau, CFPB Takes Action Against Two Law Firms for
Misrepresenting Attorney Involvement to Collect on Medical Debts (Jan. 9, 2017), available at
https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-two-law-firms-misrepresenting-
attorney-involvement-collect-medical-debts/.
32
Press Release, Consumer Financial Protection Bureau, CFPB Sues Nation’s Largest Student Loan Company Navient
for Failing Borrowers at Every Stage of Repayment (Jan. 18, 2017), available at
https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-nations-largest-student-loan-company-navient-
failing-borrowers-every-stage-repayment/.
28 CONSUMER FINANCIAL PROTECTION BUREAU
The CFPB filed a lawsuit in federal district court against Navient Corporation and its
subsidiaries, Navient Solutions, Inc. and Pioneer Credit Recovery, Inc. The complaint alleged
that Pioneer and Navient Corporation misled consumers about the effect of rehabilitation on
their credit reports and overpromised the amount of collection fees that would be forgiven in the
federal loan rehabilitation program. The Bureau made allegations relating to Navient’s servicing
practices as well. Through its action, the Bureau seeks redress for consumers harmed by these
illegal practices and seeks to keep Navient Corporation, Navient Solutions, and Pioneer from
committing such illegal practices in the future. The case remains pending.
Consumer Financial Protection Bureau v. Weltman, Weinberg
& Reis Co., L.P.A.
33
(N.D. Ohio No. 1:17-cv-00817) (complaint filed April 17, 2017)
The CFPB filed a lawsuit in federal district court against the debt collection law firm Weltman,
Weinberg & Reis Co., L.P.A., alleging that the law firm had made statements on collection calls
and sent collection letters, which created the false impression that attorneys had meaningfully
reviewed the consumers’ files, when no such review had occurred. The CFPB is seeking to stop
the alleged unlawful practices, recoup relief for harmed consumers, and impose a penalty. The
case remains pending.
33
Press Release, Consumer Financial Protection Bureau, CFPB Files Suit Against Law Firm for Misrepresenting
Attorney Involvement in Collection of Millions of Debts (Apr. 17, 2017), available at
https://www.consumerfinance.gov/about-us/newsroom/cfpb-files-suit-against-law-firm-misrepresenting-
attorney-involvement-collection-millions-debts/.
29 CONSUMER FINANCIAL PROTECTION BUREAU
Consumer Financial Protection Bureau v. Ocwen Financial
Corporation, Ocwen Mortgage Servicing, Inc., and Ocwen
Loan Servicing, LLC
34
(S.D. Fla. 17-cv-90495) (complaint filed April 20, 2017)
The CFPB filed a lawsuit against one of the country’s largest nonbank mortgage loan servicers,
Ocwen Financial Corporation, and its subsidiaries alleging that Ocwen violated the law by
mishandling basic functions, such as sending accurate monthly statements, properly crediting
payments, and properly handling insurance. The CFPB also alleged that Ocwen illegally
foreclosed on struggling borrowers, failed to adequately correct errors raised by customer
complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it
made in borrowers’ records. The Florida Attorney General and Massachusetts Attorney General
took similar actions against Ocwen in separate lawsuits. The case remains pending.
6.2 Continuation of pre-2017 matters
CFPB v. Universal Debt & Payment Solutions, LLC, et al.
35
(N.D.GA No. 1:15-CV-0859) (complaint filed March 26, 2015).
The CFPB filed a complaint against a group of seven debt collection agencies, six individual debt
collectors, four payment processors, and a telephone marketing service provider alleging
violations of the FDCPA and the Consumer Financial Protection Act (“CFPA”)’s prohibition on
unfair and deceptive acts and practices, and providing substantial assistance to unfair or
34
Press Release, Consumer Financial Protection Bureau, CFPB Sues Ocwen for Failing Borrowers Throughout
Mortgage Servicing Process (Apr. 20, 2017), available at https://www.consumerfinance.gov/about-
us/newsroom/cfpb-sues-ocwen-failing-borrowers-throughout-mortgage-servicing-process/.
35
Press Release, Consumer Financial Protection Bureau, “CFPB Sues Participants in Robo-Call Phantom Debt
Collection Operation” (Apr. 8, 2015), available at http://www.consumerfinance.gov/about-us/newsroom/cfpb-
sues-participants-in-robo-call-phantom-debt-collection-operation/.
30 CONSUMER FINANCIAL PROTECTION BUREAU
deceptive conduct. The complaint alleged that the individuals, acting through a network of
corporate entities, used threats and harassment to collect “phantom” debt from consumers. The
Bureau alleged their misconduct was facilitated by the substantial assistance of the payment
processors and the telephone service provider. The Bureau is seeking a permanent injunction,
redress for consumers, and a monetary penalty. The case remains pending.
CFPB, et al. v. MacKinnon, et al.
36
(W.D.N.Y. Case 1:16-cv-00880) (complaint filed November 2, 2016)
In partnership with the New York Attorney General, the Bureau filed a lawsuit in a federal
district court alleging that Douglas MacKinnon and Mark Gray operate a network of companies
– Northern Resolution Group LLC, Enhanced Acquisitions LLC, and Delray Capital LLC – that
harass, threaten, and deceive millions of consumers across the nation into paying inflated debts
or amounts they may not owe. The Bureau is seeking to shut down this operation and to obtain
compensation for victims and a civil penalty against the companies and partners. The case
remains pending.
6.3 FTC law enforcement actions
Phantom Debt Collection Actions
The Commission has stepped up its aggressive efforts to fight “phantom debt collection” this
year. Phantom debt collectors engage in unfair, deceptive, or otherwise unlawful conduct by
attempting to collect on debts that either do not exist or are not owed to the phantom debt
collector. In 2017, the Commission initiated or resolved six actions involving phantom debt
collection: (1) SQ Capital LLC; (2) Stark Law LLC; (3) ACDI Group; (4) Alliance Law Group;
36
Press Release, Consumer Financial Protection Bureau, CFPB and New York Attorney General File Lawsuit Against
Illegal Nationwide Debt Collection Scheme (Nov. 2, 2016), available at http://www.consumerfinance.gov/about-
us/newsroom/cfpb-and-new-york-attorney-general-file-lawsuit-against-illegal-nationwide-debt-collection-scheme/.
31 CONSUMER FINANCIAL PROTECTION BUREAU
(5) Lombardo, Daniels; and (6) Advanced Mediation Group. SQ Capital and Stark Law are the
first two cases brought by the FTC against operations for allegedly selling fake debt portfolios.
This past year, the Commission also returned money to thousands of consumers who were
targeted by the phantom debt scheme in Centro Natural.
In September, the Commission secured a court order in the SQ Capital matter, which involved
fake payday loan debt portfolios.
37
The complaint, filed in late 2016,
38
alleged that the
defendants distributed debt portfolios that listed Social Security numbers and bank account
numbers of real consumers. The defendants, however, falsely claimed that the purported
borrowers had failed to repay debts they never owed, or to repay loans that never existed.
39
The
defendants also allegedly lacked the authority to sell the debts of the lenders they named. In
early 2017, at the FTC’s request, a federal court entered a preliminary injunction halting this
operation. This last fall, the court issued a default judgment against the defendants, requiring
them to pay more than $4.1 million that they received selling the fake debts. The order also bans
them from handling sensitive debt information, including bank account numbers, credit or debit
card numbers, or Social Security numbers.
37
Order, FTC v. Joel Jerome Tucker, No. 16-082816 (D. Kan. Sept. 20, 2017); see also Press Release, Federal Trade
Commission, FTC Obtains Court Order Against Scheme that Sold Fake Payday Loan Debt Portfolios (Oct. 17, 2017),
available at https://www.ftc.gov/news-events/press-releases/2017/10/ftc-obtains-court-order-against-scheme-
sold-fake-payday-loan-debt.
38
Complaint, FTC v. Joel Jerome Tucker, No. 16-082816 (D. Kan. Dec. 16, 2016); see also Press Release, Federal
Trade Commission, FTC Charges Defendants with Selling Fake Payday Loan Debt Portfolios (Jan. 9, 2017),
available at https://www.ftc.gov/news-events/press-releases/2017/01/ftc-charges-defendants-selling-fake-payday-
loan-debt-portfolios.
39
To add credibility to some of the fake loans in their portfolios, the defendants used the name of a purported lender
associated with another Commission law enforcement action. See Order, FTC v. AMG Services, No.12-00536 (D.
Nev. Sept. 30, 2016). In 2016, a court ordered the defendants in the AMG payday lending scheme to pay a record
$1.3 billion for deceiving and illegally charging consumers undisclosed and inflated fees. id.; see also Press Release,
Federal Trade Commission, U.S. Court Finds in FTC’s Favor and Imposes Record $1.3 Billion Judgment Against
Defendants Behind AMG Payday Lending Scheme (Oct. 4, 2016), available at https://www.ftc.gov/news-
events/press-releases/2016/10/us-court-finds-ftcs-favor-imposes-record-13-billion-judgment.
32 CONSUMER FINANCIAL PROTECTION BUREAU
Similarly, in October 2017, the FTC and Illinois Attorney General secured orders halting the
alleged unlawful conduct in the Stark Law matter.
40
In 2016, the FTC partnered with Illinois to
file this action against an operation for allegedly demanding immediate payments from
consumers for supposedly delinquent loans, often armed with consumers’ sensitive personal and
financial information.
41
The defendants also allegedly threatened consumers with lawsuits or
arrest; deceptively held themselves out as a law firm with authority to sue and obtain substantial
judgments against consumers; and disclosed debts to consumers’ relatives, friends, and co-
workers. As in SQ Capital, the complaint also charged these defendants with unlawfully selling
portfolios of fake debt to other debt collectors in violation of the FTC Act. The court entered an
ex parte temporary restraining order (and later a preliminary injunction) with an asset freeze
and the appointment of a receiver. The permanent orders most recently secured by the
Commission ban the defendants from the debt collection business and from selling debt
40
This case was part of the Commission’s Operation Collection Protection, the first coordinated federal-state-local
enforcement initiative targeting illegal debt collection. The nationwide crackdown included more than 165 actions
by more than 70 federal, state, and local law enforcement and regulatory authorities against collectors who used
illegal tactics such as harassing phone calls and false threats of litigation or arrest. See, e.g., Press Release, Federal
Trade Commission, FTC and Federal, State and Local Law Enforcement Partners Announce Nationwide Crackdown
Against Abusive Debt Collectors (Nov. 4, 2015), available at https://www.ftc.gov/news-events/press-
releases/2015/11/ftc-federal-state-local-law-enforcement-partners-announce; Press Release, Federal Trade
Commission, FTC and State Law Enforcement Partners Announce More Actions and Results in Continuing
Crackdown Against Abusive Debt Collectors (Jan. 7, 2016), available at https://www.ftc.gov/news-events/press-
releases/2016/01/ftc-state-law-enforcement-partners-announce-more-actions-results; Press Release, Federal Trade
Commission, FTC and Illinois Attorney General Halt Chicago-Area Operation Charged with Collecting and Selling
Phantom Payday Loan Debts (Mar. 30, 2016), available at https://www.ftc.gov/news-events/press-
releases/2016/03/ftc-illinois-attorney-general-halt-chicago-area-operation-charged; Press Release, Federal Trade
Commission, FTC Actions: Debt Collectors Banned from Debt Collection Business (Sept. 7, 2016), available at
https://www.ftc.gov/news-events/press-releases/2016/09/ftc-actions-debt-collectors-banned-debt-collection-
business; Tom Carter, A Debt Collection Round-up, FTC Blog (Dec. 27, 2016), available at
https://www.consumer.ftc.gov/blog/debt-collection-round; Lesley Fair, Collection Protection Reflection, FTC Blog
(Dec. 30, 2016), available at https://www.ftc.gov/news-events/blogs/business-blog/2016/12/collection-
protection-reflection?utm_source=govdelivery. Participants in the Commission’s Operation Collection Protection
initiative continue to work closely together to share information and coordinate actions.
41
Complaint, FTC v. Stark Law, LLC, No. 16-3463 (N.D. Ill. Mar. 21, 2016); see also Press Release, Federal Trade
Commission, FTC and Illinois Attorney General Halt Chicago-Area Operation Charged with Collecting and Selling
Phantom Payday Loan Debts (Mar. 30, 2016), available at https://www.ftc.gov/news-events/press-
releases/2016/03/ftc-illinois-attorney-general-halt-chicago-area-operation-charged.
33 CONSUMER FINANCIAL PROTECTION BUREAU
portfolios. Additionally, each order imposes a judgment of more than $47 million, which will be
partially suspended once the defendants surrender assets valued at more than $9 million.
42
In June 2017, the FTC also filed an action against the ACDI Group operation for allegedly
collecting on phantom debts.
43
The complaint alleges that the defendants obtained counterfeit
payday loan debts from the SQ Capital operation (described above) through a debt broker.
When the defendants reported receiving consumer complaints regarding these debts to the
broker, the broker returned the defendants’ money and told them to stop collecting on these
phony debts. However, the defendants allegedly continued to collect from consumers for at least
seven more months. Litigation continues in this matter.
Additionally, this past year, the Commission obtained a permanent order shutting down the
phantom debt operation in Alliance Law Group, which the FTC alleged attempted to collect fake
debts by posing as lawyers and falsely threatening to sue or have consumers arrested.
44
The
complaint, filed in July, alleges that the defendants called consumers without identifying
themselves as debt collectors, claiming they would file lawsuits or criminal actions against
consumers.
45
To coerce some consumers into paying the phantom debts, the defendants
42
Orders, FTC v. Stark Law, LLC, No. 16-3463 (N.D. Ill. Oct. 27, 2017); see also Press Release, Federal Trade
Commission, FTC Settlements Ban Chicago-area Phantom Debt Collector from the Debt Collection Business and
from Selling Debt Portfolios (Nov. 1, 2017), available at https://www.ftc.gov/news-events/press-
releases/2017/11/ftc-settlements-ban-chicago-area-phantom-debt-collector-debt.
43
Complaint, FTC v. ACDI Group LLC, No. 17-340 (W.D. N.C. June 22, 2017); see also Press Release, FTC Charges
Debt Collection Scheme Took Consumers’ Money for Phantom Debts They Did Not Owe (June 23, 2017), available
at https://www.ftc.gov/news-events/press-releases/2017/06/ftc-charges-debt-collection-scheme-took-consumers-
money-phantom.
44
Order, FTC v. Hardco Holding Group LLC (Alliance Law Group), No. 17-1257 (M.D. Fla. Dec. 5, 2017); see also
Press Release, Federal Trade Commission, FTC Obtains Court Order Banning Debt Collectors from Debt Collection
Business (Dec. 6, 2017), available at https://www.ftc.gov/news-events/press-releases/2017/12/ftc-obtains-court-
order-banning-debt-collectors-debt-collection.
45
Complaint, FTC v. Hardco Holding Group LLC (Alliance Law Group), No. 17-1257 (M.D. Fla. July 10, 2017); see
also Press Release, Federal Trade Commission, FTC Charges Debt Collection Scheme with Posing as Attorneys to
Take Consumers’ Money for Phantom Debts (July 17, 2017), available at https://www.ftc.gov/news-events/press-
releases/2017/07/ftc-charges-debt-collection-scheme-posing-attorneys-take.
34 CONSUMER FINANCIAL PROTECTION BUREAU
allegedly threatened them with prison or claimed police would arrest them at their homes. The
defendants also allegedly pretended to be unrelated, legitimate small businesses, which may
have caused angry consumers to call the businesses to complain. The Commission initially
secured a temporary restraining order halting this operation, along with an asset freeze and a
receiver. In December, all but one of the defendants agreed to a final order banning them from
the debt collection business, and imposing a judgment of $702,059 – partially suspended upon
the surrender of certain assets. Subsequently, the court entered a default judgment against the
remaining individual defendant, resolving this litigation.
In August 2017, the FTC also shut down the phantom debt collection scheme in Lombardo,
Daniels. The Commission alleged that the North Carolina-based scheme used intimidation and
deception to collect more than $2.1 million from consumers.
46
The Commission’s action charges
the defendants with falsely claiming that consumers were delinquent on payday loans or other
debts they did not owe, and threatening them with arrest or other formal legal action. Their
collectors also allegedly called consumers repeatedly and regularly used profanity; illegally
disclosed purported debts to third parties; and failed to provide other disclosures and notices
required by the FDCPA. At the Commission’s request, the court issued a temporary restraining
order halting this operation, along with an asset freeze and a receiver. Litigation continues
against the defendants in this matter.
Additionally, last fall, the FTC halted a Georgia-based operation, Advanced Mediation Group,
which the Commission charged with tricking people into paying for debts defendants did not
have the authority to collect.
47
The defendants allegedly claimed, falsely, that consumers had
committed a crime and faced dire consequences – including lawsuits, garnishment, and even
46
Complaint, FTC v. v. Lombardo, Daniels & Moss, No. 17-00503 (W.D. N.C. Aug. 21, 2017); see also Press Release,
Federal Trade Commission, FTC Charges Debt Collection Operation Took Consumers’ Money for Phantom Debts
(Aug. 29, 2017), available at https://www.ftc.gov/news-events/press-releases/2017/08/ftc-charges-debt-
collection-operation-took-consumers-money.
47
Complaint, FTC v. Global Processing Solutions, No. 17-4192 (N.D. Ga. Oct. 23, 2017); see also Press Release,
Federal Trade Commission, FTC Charges Debt Collection Business Defrauded Consumers into Paying Debts They
Did Not Owe (Nov. 8, 2017), available at https://www.ftc.gov/news-events/press-releases/2017/11/ftc-charges-
debt-collection-business-defrauded-consumers-paying.
35 CONSUMER FINANCIAL PROTECTION BUREAU
imprisonment – if a purported debt was not paid. Using these tactics, the operation collected
more than $3.4 million from consumers. The defendants also illegally contacted consumers’
friends, non-spouse relatives, and employers, and failed to provide statutorily-required written
notices and disclaimers. The Commission secured a temporary restraining order, with an asset
freeze and receiver, from the court in this case. Litigation continues in this matter.
In addition to the law enforcement actions above, this past year the Commission also returned
funds to consumers who lost money to a phantom debt collection operation previously stopped
by the FTC. This past September, the agency mailed 2,158 checks totaling $279,134 to
consumers in the Centro Natural matter — following the issuance of a previous, first round of
checks in 2016.
48
In addition to this monetary relief, the Commission had secured stipulated
orders banning the defendants from debt collection or telemarketing, after alleging they targeted
thousands of Spanish-speaking consumers with unlawful tactics to collect on fake debts and to
coerce consumers into purchasing goods they did not want.
49
Other Actions to Halt FDCPA & FTC Act Violations
In addition to the phantom debt cases described above, the FTC successfully resolved four other
actions in 2017 to protect consumers from unlawful debt collection practices: (1) GC Services,
(2) American Municipal Services; (3) Unified Global Group, and (4) Commercial Recovery
Systems. The Commission also returned money to thousands of consumers harmed by the
unlawful conduct in the Rincon Debt Management and Goldman Schwartz matters.
In February 2017, the Commission secured an order for $700,000 in civil penalties and
important conduct relief regarding the use of voicemail messages against GC Services, a large
48
Press Release, Federal Trade Commission, FTC Returns Money to Victims of a Bogus Debt Collection Scheme (Sept.
2017), available at https://www.ftc.gov/enforcement/cases-proceedings/refunds/centro-natural-refunds.
49
Order, FTC v. Centro Natural Corp., No. 14 -23879 (S.D. Fla. June 30, 2015); see also Press Release, Federal Trade
Commission, FTC Action Puts an End to Fraudulent Debt Collection Scheme that Targeted Spanish-Speaking
Consumers (July 8, 2015), available at https://www.ftc.gov/news-events/press-releases/2015/07/ftc-action-puts-
end-fraudulent-debt-collection-scheme-targeted.
36 CONSUMER FINANCIAL PROTECTION BUREAU
collector of federal student loan debts.
50
The complaint alleged that the defendant’s collectors
left phone messages that illegally disclosed purported debts to third parties without consumers’
permission. The complaint also alleged that the company falsely claimed it would stop calling
specific phone numbers after being informed that it had the wrong number, and that it made
improper repeated location communication calls to third parties. The order secured in this case
prohibits this conduct. And it specifically prohibits the defendant from leaving voicemail
messages stating the consumer’s name and identifying itself as a collector, unless: the recorded
message on the machine names only the debtor; the debtor previously confirmed that only the
debtor could access the messages left at the number; or the debtor has consented to receiving
messages at that number.
In March, the Commission obtained an order against American Municipal Services, which the
FTC charged with using deceptive tactics to collect court fines, parking tickets, and other debts
owed to more than 500 municipalities.
51
The defendants allegedly used letterhead with titles like
“Warrant Enforcement Division” and “Municipal Enforcement Division” that falsely suggested
they were a government agency. According to the Commission’s complaint, after sending
consumers an initial warning letter, the defendants then sent a purported “FINAL NOTICE”
falsely claiming that consumers were subject to imminent arrest for nonpayment, that their
driver’s licenses may be suspended for nonpayment, and that the debts would be reported to
consumer reporting agencies. The Commission obtained a stipulated final order that prohibits
the defendants from making the false claims that they are the government and the false claims
as to the consequences of nonpayment. The order also required the defendants to pay $350,000.
50
Complaint and Order, FTC v. GC Services Ltd., No. 17-00461 (S.D. Tex. Mar. 2, 2017) (Complaint and Order, filed
by the Department of Justice); see also Press Release, Federal Trade Commission, Student Loan Debt Collector Will
Pay $700,000 for Unlawful Collection Calls in Settlement with FTC (Feb. 14, 2017), available at
https://www.ftc.gov/news-events/press-releases/2017/02/student-loan-debt-collector-will-pay-700000-unlawful-
collection.
51
Complaint and Order, FTC v. American Municipal Servs., No. 17-00168 (E.D. Tex. Mar. 21, 2017); see also Press
Release, Federal Trade Commission, FTC Settlement Halts Allegedly Abusive Practices by Company Collecting
Debts for More Than 500 Municipalities (Mar. 24, 2017), available at https://www.ftc.gov/news-events/press-
releases/2017/03/ftc-settlement-halts-allegedly-abusive-practices-company.
37 CONSUMER FINANCIAL PROTECTION BUREAU
Last summer, the FTC also resolved its litigation against the Unified Global Group operation by
securing an order against the final defendant – banning him from debt collection and imposing
a suspended $9.39 million judgment.
52
In 2016, the Commission secured settlements with the
other four defendants, banning them from the industry as well. The FTC’s complaint against
Unified Global Group
53
alleged that the defendants sent texts to trick consumers into calling
them back. The texts included false statements such as, “YOUR PAYMENT DECLINED WITH
CARD ****-****-****-5463 . . . CALL 866.256.2117 IMMEDIATELY,” even though consumers
had never arranged to make payments to the defendants. The defendants also allegedly used
deceptive emails and calls that threatened arrest and civil lawsuits, and unlawfully contacted
consumers’ friends, non-spousal family members, and co-workers about the supposed debts.
54
In United States v. Commercial Recovery Systems, a case that the FTC referred to the
Department of Justice for prosecution, the court ordered the one remaining defendant to pay a
$2 million penalty to resolve this litigation.
55
In 2016, the court entered summary judgment
52
Order, FTC v. Unified Global Group, LLC, No. 15-422 (W.D.N.Y. Aug. 24, 2017); see also Press Release, Federal
Trade Commission, FTC Obtains Court Order: Debt Collector Banned from Debt Collection Business (Aug. 30,
2017), available at https://www.ftc.gov/news-events/press-releases/2017/08/ftc-obtains-court-order-debt-
collector-banned-debt-collection. This case was part of a 2015 law enforcement sweep, called “Messaging for
Money,” targeting operations that used deceptive, threatening, or otherwise unlawful text messages or emails to
harm consumers. See Press Release, Federal Trade Commission, FTC Halts Three Debt Collection Operations That
Allegedly Threatened and Deceived Consumers via Illegal Text Messages (May 21, 2015), available at
https://www.ftc.gov/news-events/press-releases/2015/05/ftc-halts-three-debt-collection-operations-allegedly-
threatened.
53
Complaint, FTC v. Unified Global Group, LLC, No. 15-422 (W.D.N.Y. May 11, 2015); see also Press Release, Federal
Trade Commission, FTC Halts Three Debt Collection Operations That Allegedly Threatened and Deceived
Consumers via Illegal Text Messages (May 21, 2015), available at https://www.ftc.gov/news-events/press-
releases/2015/05/ftc-halts-three-debt-collection-operations-allegedly-threatened.
54
Order, FTC v. Unified Global Group, LLC, No. 15-422 (W.D.N.Y. Aug. 26, 2016); see also Press Release, Federal
Trade Commission, FTC Actions: Debt Collectors Banned from Debt Collection Business (Sept. 7, 2016), available
at https://www.ftc.gov/news-events/press-releases/2016/09/ftc-actions-debt-collectors-banned-debt-collection-
business.
55
Memorandum Opinion and Order, United States v. Commercial Recovery Sys., Inc., No. 15-36 (E.D. Tex. Mar. 21,
2017); see also Press Release, Federal Trade Commission, Debt Collector Ordered to Pay $2 Million in Civil
38 CONSUMER FINANCIAL PROTECTION BUREAU
against this defendant and one other – banning them from the debt collection business. The
court found that these debt collectors had “repeatedly and routinely violated the FDCPA . . . in
multiple ways, by making blatantly false representations for the purpose of intimidating
consumers into paying debts.”
56
Among other things, the court found that their routine threats
to sue consumers were “patently false,” and further that they falsely impersonated attorneys and
threatened to seize or garnish consumers’ property or wages. The court banned these two
defendants from debt collection,
57
and a third defendant agreed to a final order also subjecting
him to a debt collection ban.
58
The Commission has also returned money to thousands of additional consumers targeted by
other debt collection operations alleged to have engaged in unlawful conduct. In March, the
agency mailed 5,232 checks totaling more than $2.7 million (an average of $525 per consumer)
to consumers who lost money to the Rincon Debt Management scheme.
59
The FTC had obtained
a judgment of more than $23 million against this operation (partially suspended after $3.3
million in assets was handed over), along with a complete ban on debt collection activity.
60
This
relief resolved allegations that this operation targeted Spanish-speaking consumers and others
with abusive practices to coerce repayment of alleged debts that they often did not owe.
Penalties (Mar. 24, 2017), available at https://www.ftc.gov/news-events/press-releases/2017/04/debt-collector-
will-pay-2-million-settle-ftc-charges.
56
Memorandum Opinion and Order, United States v. Commercial Recovery Sys., Inc., No. 15-36 (E.D. Tex. Apr. 7,
2016).
57
Order, United States v. Commercial Recovery Sys., Inc., No. 15-36 (E.D. Tex. Apr. 18, 2016); see also Press Release,
Federal Trade Commission, FTC Action: Debt Collector Banned from Collection Business (Sept. 22, 2016), available
at https://www.ftc.gov/news-events/press-releases/2016/09/ftc-action-debt-collector-banned-collection-business.
58
Order, United States v. Commercial Recovery Sys., Inc., No. 15-36 (E.D. Tex. Sept. 21, 2016).
59
Press Release, Federal Trade Commission, FTC Returns Money to Victims of Debt Collection Scheme (Mar. 30,
2017), available at https://www.ftc.gov/news-events/press-releases/2017/03/ftc-returns-money-victims-debt-
collection-scheme.
60
Order, FTC v. Rincon Management Services, LLC, No. 11-01623 (C.D. Cal. Mar. 26, 2014); see also Press Release,
Federal Trade Commission, FTC Obtains More Than $3.3 Million for Consumers; Defendants Agree to Be
Permanently Banned from the Debt Collection Business (Apr. 3, 2014), available at http://www.ftc.gov/news-
events/press-releases/2014/04/ftc-obtains-more-33-million-consumers-defendants-agree-be.
39 CONSUMER FINANCIAL PROTECTION BUREAU
Additionally, in June, the FTC mailed 4,380 checks totaling more than $550,000 to consumers
who paid Goldman Schwartz, a debt collection operation that the Commission had sued for
multiple law violations, including making false threats and collecting bogus attorney’s fees and
other charges.
61
The defendants were also banned from the debt collection business under a
settlement with the FTC.
62
61
Press Release, Federal Trade Commission, FTC Returns Money to Victims of Abusive Debt Collection Operation
(June 30, 2017), available at https://www.ftc.gov/news-events/press-releases/2017/06/ftc-returns-money-
victims-abusive-debt-collection-operation.
62
Order, FTC v. Goldman Schwartz, Inc., No. 13-00106 (S.D. Tex. May 28, 2014); see also Press Release, Federal
Trade Commission, FTC Puts Texas-based Operation Permanently Out of the Debt Collection Business After It
Allegedly Used Deception, Insults, and False Threats against Consumers (May 19, 2014), available at
http://www.ftc.gov/news-events/press-releases/2014/05/ftc-puts-texas-based-operation-permanently-out-debt-
collection.
40 CONSUMER FINANCIAL PROTECTION BUREAU
7. Education and outreach
initiatives
The Bureau empowers consumers to make sound financial decisions for themselves and their
families through wide-ranging consumer education efforts. These efforts include outreach to
targeted consumer populations, including students, older Americans, servicemembers, veterans,
and low-income and economically-vulnerable consumers, as well as to the general population
and to financial educators. The CFPB’s financial education work is focused on encouraging
consumers to ask questions, make plans, and take action in their financial lives to reach their
own life goals. The FTC has also worked to educate consumers and businesses about their rights
and responsibilities under the FDCPA and the FTC Act.
7.1 Bureau education and outreach
The Bureau provides consumers with information about specific financial matters, including
those relating to debt collection. A major Bureau consumer education product is Ask CFPB, an
interactive online tool that helps consumers find clear and impartial answers to a wide variety of
financial questions.
The Bureau began publishing “Ask CFPB” questions and answers including the topic of debt
collection in October 2012. From its beginning until December 2017, Ask CFPB has been viewed
more than 18.6 million times. Debt collection is consistently one of the two most-viewed
categories in Ask CFPB. It also provides practical tips to consumers regarding steps they can
41 CONSUMER FINANCIAL PROTECTION BUREAU
take when faced with debt collection as well as steps to take to manage debts in a way that may
prevent the debts from ending up in collection.
63
In July 2013, the Bureau added five sample letters to Ask CFPB that consumers may use when
they interact with debt collectors. The five letters are intended for consumers who: (1) need
more information about a debt; (2) want to dispute their debt; (3) want to restrict how and when
a collector can contact them; (4) want to stop all communication from the debt collector; and (5)
want to direct further communications with respect to the debt matter to an attorney.
64
These
letters are available in English and Spanish.
These letters have been downloaded more than 517,000 times from June 2014 to the end of
December 2017. The two most downloaded letters are “I need more information about this debt”
and “I do not owe this debt.”
TABLE 3: DOWNLOADS OF CFPB’S COLLECTION-RELATED LETTERS
Letter
% total downloads
“I need more information about this debt”
40%
“I do not owe this debt”
34%
“I want to specify how the debt collector can
contact me”
10%
“I want the debt collector to stop contacting me”
13%
“I want the debt collector to only contact me
through my lawyer”
3%
63
Ask CFPB, Debt Collection, Consumer Financial Protection Bureau, http://www.consumerfinance.gov/consumer-
tools/debt-collection/ (last visited Feb. 22, 2018).
64
Ask CFPB, What Should I Do When a Debt Collector Contacts Me, Consumer Financial Protection Bureau,
https://www.consumerfinance.gov/ask-cfpb/what-should-i-do-when-a-debt-collector-contacts-me-en-1695/
(last updated Feb. 2, 2017).
42 CONSUMER FINANCIAL PROTECTION BUREAU
In addition to online resources for consumers, the Bureau offers print publications on financial
topics including debt collection, which consumers and organizations can download or order in
bulk free of charge. The Bureau’s brochure “Know Your Rights When a Debt Collector Calls” was
updated in 2017 and is available in both English and Spanish. There is also a version tailored
specifically to servicemembers, covering their unique rights and issued by the Bureau through
its statutorily required Office of Servicemember Affairs.
Debt collection, including debt management to avoid entering collections, is covered in the
Bureau’s Your Money, Your Goals financial empowerment toolkit for social services
organizations. As of the end of 2017, over 24,400 staff and volunteers in social services
organizations had been trained on Your Money, Your Goals, reaching an estimated 956,000
people.
Another resource focused on helping consumers address problems surrounding debt is the
Bureau’s booklet, “Debt getting in your way?” This is a colorful, compact booklet that includes a
selection of simplified paper tools from the Your Money, Your Goals toolkit. The tools in this
booklet can help a consumer get a full picture of existing debt, order a credit report, prioritize
debts and set repayment goals, and plan how to avoid additional debt in the future. Since the
booklet’s release in the fall of 2017, more than 30,000 copies have been distributed throughout
the United States. The Your Money, Your Goals booklet, toolkit, and trainings for using them
can be accessed at www.consumerfinance.gov/your-money-your-goals.
In November 2017, the Bureau, through its Office of Consumer Engagement, developed a 21-day
email course that includes tools and resources from Your Money, Your Goals. The Get a Handle
on Debt Boot Camp
65
is a program that allows consumers to sign up for periodic messages about
steps to manage their debt effectively and meet their financial goals. In its first two months of
operation in 2017, the Debt Boot Camp attracted 4,268 sign-ups.
65
Courtney-Rose Dantus, Sign-up for our Email Course and Get Your Finances in Shape, CFPB Blog (Feb. 5, 2018),
available at https://www.consumerfinance.gov/about-us/blog/sign-our-email-course-and-get-your-finances-
shape/.
43 CONSUMER FINANCIAL PROTECTION BUREAU
Debt collection is also a significant issue facing the servicemember population. In October 2017,
the Bureau issued a 50 State Snapshot of Servicemember Complaints.
66
Servicemember
complaints indicated that debt collection was the top category of complaints in each of the 50
states. In May 2017, the Bureau’s Office of Servicemember Affairs released a report entitled
Charting our course through the military lifecycle.
67
Debt collection continues to be the largest
category of complaints from the military community, and as of April 1, 2017, they comprise 42
percent of total complaints from military consumers.
Student loan debt is also a significant issue for the military population. Repaying student debt
will help servicemembers stay on track as they progress through their military career. The
Bureau’s Office of Servicemember Affairs also offers servicemember-specific materials, such as
“Tackling Student Loan Debt”
68
and “Tips for Servicemembers with Student Loan Debt.”
69
A list of the Bureau’s consumer education materials relating to debt collection and information
on the extent of their distribution is set forth in Appendix A.
7.2 FTC education and public outreach
Education and public outreach are important parts of the Federal Trade Commission’s debt
collection program. The FTC uses multiple formats and channels to inform consumers about
66
Consumer Financial Protection Bureau, 50 State Snapshot of Servicemember Complaints, (Oct. 2017), available at
https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/cfpb_monthly-complaint-report_50-state-
snapshot-servicemembers_102017.pdf.
67
Consumer Financial Protection Bureau, Charting Our Course Through the Military Lifecycle, (May 16, 2017),
available at https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201705_cfpb_OSA_Military-
Lifecycle-Report.pdf.
68
Consumer Financial Protection Bureau, For Servicemembers: Tackling Student Loan Debt, available at
https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201604_cfpb_servicemember-student-loan-
guide.pdf.
69
Seth Frotman & Paul Kantwill, Tips for Servicemembers with Student Loan Debt, CFPB Blog (Nov. 6, 2017),
available at https://www.consumerfinance.gov/about-us/blog/tips-servicemembers-student-debt/.
44 CONSUMER FINANCIAL PROTECTION BUREAU
their rights under the FDCPA, as well as what the statute requires of debt collectors, and to
inform debt collectors about what they must do to comply with the law. The FTC also uses
education and public outreach to enhance legal services providers’ understanding of debt
collection issues.
The Commission reaches tens of millions of consumers through English and Spanish print and
online materials, blog posts, speeches and presentations. To maximize its outreach efforts, FTC
staff works with an informal network of about 16,000 community-based organizations and
national groups that order and distribute FTC information to their members, clients, and
constituents. In 2017, the FTC distributed 13.8 million print publications to libraries, police
departments, schools, non-profit organizations, banks, credit unions, other businesses, and
government agencies. In 2017, the FTC logged more than 60 million views of its business and
consumer education website pages. The FTC’s channel at YouTube.com/FTCvideos houses 212
business and consumer videos in English and Spanish, which were viewed more than 581,000
times in 2017. A new video — Debt Collection: Know Your Rights — summarizes consumer
rights and encourages viewers to report problem calls to the FTC. The Commission’s consumer
blogs, in English
70
and Spanish,
71
reached 199,860 (English) and 50,480 (Spanish) email
subscribers, and regularly serve as source material for local and national news stories.
As part of its work to raise awareness about scams targeting the Latino community, the FTC has
developed a series of fotonovelas in Spanish. The graphic novels tell stories based on complaints
Spanish speakers make to the FTC and offer practical tips to help detect and stop common
scams. Consumers ordered more than 37,000 copies of the Cobradores De Deuda (Debt
Collectors) fotonovela in 2017.
The Commission also educates industry members by developing and distributing business
education materials, delivering speeches, blogging, participating in panel discussions at industry
70
Andrea Arias, Shopping for a VPN App? Read This., FTC Blog (Feb. 22, 2018), available at
http://www.consumer.ftc.gov/blog.
71
Karen Dodge, Advertencia Sobre los Reembolsos de Western Union, FTC Blog (Feb. 21, 2018), available at
http://www.consumidor.ftc.gov/blog.
45 CONSUMER FINANCIAL PROTECTION BUREAU
conferences, and providing interviews to general media and trade publications. The FTC’s
business education resources can be found in its online Business Center.
72
The Business Center
logged more than 11 million page views in 2017, and there are more than 68,000 email
subscribers to the Business Blog.
73
A complete list of the FTC’s consumer and business
education materials relating to debt collection, and information on the extent of their
distribution is set forth in Appendix B.
FTC staff also regularly meets with legal service providers, consumer advocates, and people who
work in immigrant, Native American, Latino, Asian, and African American communities to
discuss consumer protection issues, including the FTC’s work in the debt collection arena. For
example, the FTC hosted six Ethnic Media Roundtables around the country in 2017, bringing
together law enforcement, community organizations, consumer advocates, and members of the
ethnic media to discuss how consumer protection issues — including debt collection — affect
their communities.
72
Federal Trade Commission, Business Center, http://business.ftc.gov/ (last visited Feb. 22, 2018).
73
Federal Trade Commission, Business Blog, http://business.ftc.gov/blog (last visited Feb. 22, 2018).
46 CONSUMER FINANCIAL PROTECTION BUREAU
8. Rulemaking, research, and
policy initiatives
8.1 Bureau rulemaking and research
8.1.1 Bureau research projects
The Bureau is engaged in research to better understand the debt collection market and its
impact on consumers, which will help inform the development of rules. This research relies on
various data sources, including publicly and commercially available data as well as information
obtained through industry outreach and other efforts.
The Bureau released findings from its “Survey of Consumer Views on Debt” in January 2017.
74
The survey results substantially expand the understanding of debt collection in the United States
by providing the first comprehensive and nationally representative data on consumers’
experiences and preferences related to debt collection. The survey asked consumers about their
74
Consumer Financial Protection Bureau, Consumer Experiences With Debt Collection: Findings From the CFPB’s
Survey on Consumer Views on Debt, (Jan. 2017), available at http://www.consumerfinance.gov/data-
research/research-reports/consumer-experiences-debt-collection-findings-cfpbs-survey-consumer-views-debt/.
The Bureau released some preliminary findings from this survey in July 2016. See Appendix B of Consumer
Financial Protection Bureau, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, (July
28, 2016), available at http://files.consumerfinance.gov/f/documents/20160727_cfpb_Outline_of_proposals.pdf.
47 CONSUMER FINANCIAL PROTECTION BUREAU
experiences, if any, with debt collectors over the past year. Some key findings of the survey were
discussed in the 2017 FDCPA Annual Report.
75
A recent research paper presented by Bureau economists uses detailed administrative data on
new credit card accounts to study the effects of four recent state laws and regulations that placed
restrictions on the conduct of debt collectors.
76
The economists found no effect of the state laws
on credit card interest rates but found that the new restrictions on debt collection in these states
reduced, by a very small magnitude, access to credit cards and credit limits on average. Splitting
the results on credit access by prime and subprime consumers, the paper finds a somewhat
larger effect on credit access for sub-prime borrowers. However, even broken out, the estimated
effects are still small in magnitude; the effect of these debt collection restrictions is equivalent to
an error that lowers consumers' credit scores by eight points or less. This paper represents the
independent views of the researchers and does not necessarily reflect the views of the Bureau.
8.1.2 FDCPA rulemaking
The Bureau issued an Advanced Notice of Proposed Rulemaking in November 2013 to explore
the idea of developing debt collection rules. On July 28, 2016, the Bureau published an Outline
of Proposals Under Consideration (the “Outline”) in preparation for a Small Business
Regulatory Enforcement Fairness Act (SBREFA) panel. The Outline addressed proposals under
consideration for those who are defined as “debt collectors” under the FDCPA.
77
On August 25,
2016, the Bureau convened a panel pursuant to the SBREFA composed of the Bureau, the Small
Business Administration (SBA), and the Office of Management and Budget (OMB) to obtain
input from small businesses in the debt collection industry on the possible effect of debt
collection rulemaking on their businesses. The Bureau is continuing to consider the feedback it
received through the SBREFA panel and from other stakeholders subsequent to publication of
75
Consumer Financial Protection Bureau, Fair Debt Collection Practices Act Annual Report, at 58 (Mar. 2017).
76
Charles Romeo and Ryan Sandler, The Effect of Debt Collection Laws on Access to Credit, Office of Research,
Consumer Financial Protection Bureau (Nov. 20, 2017).
77
The outline can be found at https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-
protection-bureau-considers-proposal-overhaul-debt-collection-market/.
48 CONSUMER FINANCIAL PROTECTION BUREAU
the Outline. Additionally, the Bureau, among other things, is engaged in research and market
outreach, as described below in Section 8.1.3.
8.1.3 Market monitoring and outreach
The Bureau continues to monitor the debt collection industry and engages key debt collection
stakeholders to improve its understanding of the market and to develop informed policies that
will protect consumers without imposing unnecessary costs.
Throughout 2017, Bureau staff spoke at both regional and national debt collection industry
events and conducted industry site visits. The Bureau also held meetings with consumer
advocates, industry groups, vendors, and government officials to better understand consumers’
experiences with debt collection as well as how the market and industry function.
In addition, the Bureau has held a number of meetings with market participants to inform the
Bureau as a part of the rulemaking process. The results of this outreach have provided Bureau
staff with detailed information related to the costs of operating a debt collection business and
potential impacts of the proposals under consideration.
In 2017, the Bureau also gathered information from major credit card issuers regarding their
collection and recovery practices and published key insights in the Bureau’s 2017 Credit Card
Market Report.
78
The survey and resulting report addressed a variety of relevant topics in the
collection industry, including consumer communication methods, use of modern technologies,
debt sales, and litigation practices, among others.
78
Press Release, Consumer Financial Protection Bureau, CFPB Releases Report on the State of the Credit Card
Market (Dec. 27, 2017), available at https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-
state-credit-card-market/.
49 CONSUMER FINANCIAL PROTECTION BUREAU
8.2 FTC’s research and policy development
activities
Throughout the past year, the FTC has used public workshops and other initiatives to continue
its monitoring and evaluation of the debt collection industry. It has also provided input to the
Bureau on its debt collection rulemaking and guidance initiatives.
In July 2017, the FTC hosted the “Military Consumer Financial Workshop” in San Antonio,
Texas, to examine financial issues and scams that can affect military consumers.
79
The workshop
included a panel on debt collection that discussed, among other things, collector contacts (or
threatened contacts) with commanding officers, the potential impact of debt on security
clearances, and how increased financial literacy can assist this community. Additionally, in
September, the FTC hosted a related Common Ground Conference – along with state and local
partners – in Los Angeles, California, to help educate military consumers and train military
attorneys, law enforcement, and consumer protection officials on fraud and other issues that
affect servicemembers and their families, including debt collection.
80
Bureau staff participated
as panelists at both of these events.
Additionally, this past year, as a natural outgrowth of the agency’s work on issues related to
financial technologies (or “FinTech”),
81
the FTC began its Debt Collection Fintech (or
“DebtTech”) Initiative. As part of this initiative, the FTC is engaging in outreach with industry
79
More information about this workshop, including an agenda and video of the event, is available at
https://www.ftc.gov/news-events/events-calendar/military-consumer-workshop.
80
Additional information about this event is available at https://www.ftc.gov/news-events/events-
calendar/2017/09/protecting-military-consumers-common-ground-conference.
81
The FTC is engaged in extensive research and dialogue with stakeholders relating to Fintech to assess how to protect
consumers in connection with Fintech, while avoiding policies and enforcement that would chill or hinder Fintech
or impose unnecessary or undue burdens on Fintech firms. For example, the FTC has held three forums on several
Fintech topics, such as marketplace lending, crowdfunding, peer-to-peer payment systems, artificial intelligence,
and blockchain. See generally Federal Trade Commission, Financial Technology News Events,
https://www.ftc.gov/news-events/media-resources/consumer-finance/financial-technology (last visited Feb. 22,
2018).
50 CONSUMER FINANCIAL PROTECTION BUREAU
and consumer groups, conducting research, and taking other steps to continue building
expertise on the use of existing and emerging technologies in debt collection. The FTC or its staff
also may share this expertise with other federal or state government officials, where appropriate,
through public comments and other means. The Commission will be exploring the costs and
benefits to consumers and businesses of such technologies, including whether they can combat
fraud and other harmful conduct, (e.g., phantom debt collection).
Finally, the FTC continues to work closely with the CFPB to coordinate efforts to protect
consumers from unfair, deceptive, and abusive debt collection practices.
82
As part of this
coordination, FTC and CFPB staff regularly meet to discuss ongoing and upcoming law
enforcement, rulemaking, and other activities; share debt collection complaints; cooperate on
consumer education efforts in the debt collection arena; and consult on debt collection
rulemaking and guidance initiatives.
82
The Dodd-Frank Act directs the FTC and the CFPB to coordinate their law enforcement activities and promote
consistent regulatory treatment of consumer financial products and services, including debt collection. See Dodd-
Frank Act, Pub. L. 111-203, 124 Stat. 1376 § 1024(c)(3) (2010). In January 2012, the FTC and CFPB entered into a
memorandum of understanding (“MOU”) that supplements the requirements of the Dodd-Frank Act and creates a
strong and comprehensive framework for coordination and cooperation. Memorandum of Understanding Between
the Consumer Financial Protection Bureau and the Federal Trade Commission, (Jan. 2012), available at
http://www.ftc.gov/sites/default/files/attachments/press-releases/federal-trade-commission-consumer-financial-
protection-bureau-pledge-work-together-protect-consumers/120123ftc-cfpb-mou.pdf. The agencies reauthorized
the MOU in March of 2015 for a three-year term. See Press Release, Federal Trade Commission, FTC, CFPB
Reauthorize Memorandum of Understanding (Mar. 12, 2015), available at https://www.ftc.gov/news-events/press-
releases/2015/03/ftc-cfpb-reauthorize-memorandum-understanding.
51 CONSUMER FINANCIAL PROTECTION BUREAU
APPENDIX A:
CFPB Debt Collection
Information 2017
Title
Page
views or
downloads
in English
Page
views or
downloads
in Spanish
Print
distribution
in English
Print
distribution
in Spanish
Consumer information
Ask CFPB Debt Collection Topic
Page
83,594
How to negotiate a settlement with a
debt collector
838,255
1,508
What should I do when a debt
collector contacts me?
266,338
1,250
Sample letters to debt collectors
136,866
370
What is a statute of limitations on a
debt?
78,765
6,292
How can I verify whether or not a
debt collector is legitimate?
69,604
190
What is harassment by a debt
collector?
63,826
3,743
Know Your Rights When a Debt
Collector Calls
1,519
269
96,278
66,087
Behind on bills?
5,395
130,609
52 CONSUMER FINANCIAL PROTECTION BUREAU
Title
Page
views or
downloads
in English
Page
views or
downloads
in Spanish
Print
distribution
in English
Print
distribution
in Spanish
Planning to become debt free?83
2,758
331
95,079
64,142
Debt getting in your way? Get a
handle on it.
920
19,700
Servicemembers: Know your rights
when a debt collector calls
934
12,501
Consumer video
Debt collection stories
51,400
CFPB Consumer Content
Consumer blog posts
§ Consumer experiences with debt collection: Findings from our survey
§ Your voice, your story. Consumer views on debt collection
§ The IRS is using private debt collectors. Here’s what you should know (authored by FTC)
§ How to respond when a debt collector contacts you in three easy steps
§ Servicemembers and debt collection: Sharing your stories
§ How to get a handle on debt
§ Sign up for our email course Get a Handle on Debt Boot Camp and get your finances in
shape 84
83
Available only by download or print.
53 CONSUMER FINANCIAL PROTECTION BUREAU
§ 5 financial New Year’s resolutions
Webinars and trainings for financial educators
§ Debt collection resources
85
(February 2017)
§ Community Financial Education Program
86
84
First published October 18, 2017.
85
The participants in this webinar were primarily a mix of financial education practitioners (such as housing
counselors, credit counselors and financial coaches) and representatives from debt collection companies.
86
This included seven in-person training events for librarians on financial topics, including debt collection, in 2017.
54 CONSUMER FINANCIAL PROTECTION BUREAU
APPENDIX B:
FTC Debt Collection
Information 2017
Title
Page
views or
downloads
in English
Page
views or
downloads
in Spanish
Print
distribution
in English
Print
distribution
in Spanish
Consumer information
Coping with Debt
95,987
10,177
72,600
13,400
Debt Collection
328,317
47,001
101,700
Debt Collection Arbitration
12,236
952
1,800
Debt Collectors (fotonovela)
37,425
Debts and Deceased Relatives
71,117
27,466
Fake Debt Collectors
83,421
2,273
Garnishing Federal Benefits
32,277
1,642
Consumer videos
Helping Victims of Identity Theft
420
Fraud Affects Every Community:
Debt Collection
7641
Debt Collection: Know Your Rights
2455
313
Business information
The Fair Debt Collection Practices
12,566
14,770
55 CONSUMER FINANCIAL PROTECTION BUREAU
Title
Page
views or
downloads
in English
Page
views or
downloads
in Spanish
Print
distribution
in English
Print
distribution
in Spanish
Act
Business video
Debt Collection
605
125
FTC Consumer Content
Consumer Blog Posts
§ Defendant pays the price for selling fake consumer debt portfolios
§ FTC schools student loan debt collectors
§ Lies, threats, debt collection: Tale of a few cities
§ Company kept collecting debts it knew were phony
§ Know your debt collection rights
§ Fake debt collectors impersonate real businesses
§ Phantom debt collectors impersonate law firms
§ FTC halts abusive debt collection operation
Video
§ Debt Collection: Know Your Rights
§ Cobranza de deuda: Conozca sus derechos
Business Blog Posts
§ Outfit that orchestrated phantom debt scheme struck a sour note
56 CONSUMER FINANCIAL PROTECTION BUREAU
§ We can’t go for that (no can do)
§ Debt-erring phantom debt collection
§ Debt collector for governments made false threats