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CFPB Coming After Debt Collectors

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The CFPB, the consumer protection watchdog created by the Dodd-Frank Act, is coming after debt collectors.

Early this month the agency issued a notice of proposed rule making on the topic of debt collection practices.

The CFPB views debt collection as a significant part of the economy with substantial effects on consumers, noting that, "The use of debt collection litigation to recover on debts has grown to become a critical part of the debt collection industry, with collection law firms having an estimated $2.4 billion in revenues from collections in 2011."

Debt collection, however, is already the subject of extensive federal regulation through the Fair Debt Collection Practices Act, or "FDCPA". The CFPB, however, views consumers complaints and lawsuits against debt collectors under this law as indicating the need for additional regulation:

"Despite the enactment and enforcement of the FDCPA and other measures, protection problems related to debt collection have persisted. For many years, consumers have submitted more complaints to the FTC about debt collectors than any other single industry."

According to the CFPB, "Consumers most commonly complain to the FTC that collectors harass them, demand amounts that consumers do not owe, threaten dire consequences for non-payment, or fail to send required notices."

The CFPB writes that, "Not only do consumers complain about debt collectors, but they also file thousands of private actions each year against debt collectors that allegedly have violated the FDCPA. The number of these actions filed in Federal district court increased from 3,215 in 2005 to 11,811 in 2011, with increases observed each year."

With an administration that is struggling to change the topic away from healthcare and towards topics that can be managed without further Congressional action, look for the administration to shine a light on the CFPB's rulemaking activity and its emphasis on additional consumer protection regulations.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.