Reviewing the Consumer Financial Protection Bureau’s Annual Report

A recent annual report by the federal Consumer Financial Protection Bureau (CFPB) shows a growing number of complaints made by consumers about the practices used by debt collectors — including trying to collect debts that had been paid or were never owed by the consumer at all.

The report looks at complaints made to the CFPB and Federal Trade Commission during 2013. The fledgling CFPB, which was created in 2011, just started taking complaints about debt collection practices in July 2013. Through the end of the year, the agency had received more than 30,000 complaints about practices ranging from attempting to collect debts that hadn’t been paid to harassing debtors at their workplaces or calling their friends and families about their debts.

Of the complaints received by the CFPB, 34 percent were for debts that the target of collection activities didn’t owe. Of those, 65 percent involved debts that had never been owed by the person being contacted, and 27 percent were for debts that had been paid off.

Nearly a quarter of complaints to the CFPB were for communication tactics used by collection agencies, including frequent and repeated collections calls, calling people about debts owed by someone with a similar name, continuing to call a debtor after being notified the debtor couldn’t receive calls at that number, and calling a debtor’s workplace or third parties.

Another common practice complained of by debtors is that collection companies failed to provide documentation to verify a debt when the alleged debtor wanted to dispute the debt, which is a debtor’s right. A number of complaints alleged that debt collectors didn’t provide the required validation notice when initially contacting the debtor about the debt, or failed to disclose that the communication was an attempt to collect a debt.

The FTC received 204,464 complaints related to debt collection activity in 2013, which was an increase from 202,616 in 2012 — or about a 1 percent increase. The top five reasons for complaints to the FTC included repeated calls (39%), misrepresentation of the nature, amount, or status of the debt (38.1%), falsely threatening an illegal or unintended act (34.1%), no written notice of the debt (28.9%), and falsely threatening arrest or property seizure (27.9%).

About 1 in 7 American adults has debt that is subject to collection activity, with an average debt amount of about $1,400, according to the report. Home mortgages, car loans, and credit cards remain among the most common types of debt; however, debt for student loans and medical bills was on the rise in 2013. Hospitals and other health providers now number among the biggest customers for collection agencies, and 1 in 8 student loan borrowers now has more than $50,000 in educational debt.

Being in debt doesn’t mean that you lose your rights. Consumers have a number of protections under the Fair Debt Collection Practices Act, Fair Credit Reporting Act, and Telephone Consumer Protection Act when it comes to debt collection activities. If you think a collection company has violated your rights, you can make a complaint to the CFPB or the FTC.

If you’re the subject of debt collection activity, you also may want to consider seeking representation from a debt help lawyer. An experienced debt lawyer may be able to negotiate with creditors to make your debt more manageable, or get collection agencies to cease aggressive and harassing debt collection tactics. If you want to talk to one of the Ohio debt help lawyers at Luftman, Heck & Associates, call us at (888) 726-3181 today to schedule a free consultation.