CFPB 2024 Annual Report on Activities to Administer the Fair Debt Collection Practices Act
I. Introduction and Spotlight on Medical and Rental Debt
1.1 Medical Debt
- 1.1.1 Introduction: This section highlights the CFPB’s work on medical debt issues, including a proposed rule to restrict medical debt reporting on credit reports.
- 1.1.2 Debt Not Owed: Examines consumer complaints about medical debt collection for debts not actually owed, often stemming from billing errors or insufficient information provided to consumers.
- 1.1.3 Debt Verification: Focuses on complaints regarding difficulties in verifying medical debts, with consumers struggling to obtain documentation or responses from debt collectors.
- 1.1.4 Medical Payment Products: This section discusses the CFPB’s investigation into medical payment products offered by financial institutions in partnership with hospitals, raising concerns about potential collection practices.
1.2 Rental Debt
- 1.2.1 Introduction: This section focuses on the CFPB’s efforts in addressing rental debt collection issues, analyzing complaints received since August 2023.
- 1.2.2 Rental Debt Not Owed: This section delves into complaints about rental debt collection for amounts not actually owed, highlighting disputes over security deposit deductions, ambiguous lease terms, and junk fees.
- 1.2.3 Financialization: Examines the increasing presence of financial products and services in the rental housing market, and the potential risks they pose to consumers, including debt collection issues.
- 1.2.4 Price-fixing: This section investigates allegations of price-fixing by landlords and property management companies using revenue management software, potentially leading to inflated rental bills.
- 1.2.5 Debt Verification: Discusses challenges faced by consumers in verifying rental debts, with many alleging a lack of response from debt collectors despite seeking verification.
1.3 Conclusion: Summarizes the key findings and trends in medical and rental debt collection.
II. Consumer Debt and Collections
2.1 Consumer Debt
- 2.1.1 Introduction: Provides an overview of the consumer debt landscape and its influence on the debt collection industry.
- 2.1.2 Trends: Discusses trends in consumer debt levels, highlighting the steady increase in non-housing debt driven by rising credit card and auto loan balances.
- 2.1.3 Factors: Examines factors contributing to the rise in consumer debt, including higher inflation and interest rates.
- 2.1.4 Delinquencies: Analyzes delinquency rates across different debt categories, noting an overall increase but remaining below pre-pandemic levels.
- 2.1.5 Charge-Offs: Provides data on credit card charge-off rates, suggesting an increase in accounts likely to be placed for collection in 2024.
2.2 Debt Collection Industry
- 2.2.1 Overview: Provides a snapshot of the debt collection industry, including its size, employment figures, and major sources of revenue.
- 2.2.2 Trends: Discusses trends in the industry, highlighting the ongoing consolidation and the increasing use of data furnishing to credit reporting agencies.
- 2.2.3 Debt Buyers: Explains the role of debt buyers in the collection market, their revenue model, and the types of debts they typically purchase.
2.3 The FDCPA
- 2.3.1 Introduction: Provides an overview of the Fair Debt Collection Practices Act (FDCPA) as the primary federal law regulating debt collection activities.
- 2.3.2 Consumer Protections: Discusses key provisions of the FDCPA, including prohibitions on harassment, deceptive practices, and unfair means of collection.
- 2.3.3 Enforcement: Highlights the enforcement mechanisms of the FDCPA, empowering the CFPB and other agencies to take action and providing consumers with a private right of action.
III. Consumer Complaints
3.1 Number and Type of Complaints Handled
- 3.1.1 CFPB Complaints: Presents data on the number and types of debt collection complaints received by the CFPB in 2023.
- 3.1.2 Company Responses: Analyzes the responses of companies to debt collection complaints, including the types of relief provided.
- 3.1.3 Debt Categories: Breaks down complaints by category of debt, revealing credit card debt as a leading source of consumer concerns.
3.2 Consumer Issues in Debt Collection Complaints
- 3.2.1 Introduction: This section examines the most prevalent consumer issues reported in debt collection complaints.
- 3.2.2 Attempts to Collect Debt Not Owed: Analyzes complaints related to efforts to collect debts that consumers dispute, including those arising from identity theft or billing errors.
- 3.2.3 Taking or Threatening Negative Action: Focuses on complaints about threats to sue, damage credit scores, seize assets, or engage in other harmful actions.
- 3.2.4 False Statements or Representations: Examines complaints alleging misrepresentations about the debt amount, legal status, or collector’s identity.
- 3.2.5 Communication Tactics: Analyzes complaints about harassment, excessive calls, and improper communication methods used by debt collectors.
- 3.2.6 Dealing with Deceased Consumers: Explains consumer rights and limitations on debt collection practices when dealing with deceased individuals’ estates.
- 3.2.7 Disclosure of Consumer’s Rights: This section explores complaints alleging inadequate disclosure of consumer rights, particularly regarding debt validation and dispute procedures.
IV. CFPB Supervision of Debt Collection Activities
4.1 Supervisory Highlights from Examinations
- 4.1.1 Introduction: Discusses the CFPB’s supervisory authority over larger participants in the debt collection market.
- 4.1.2 Violations Identified: Highlights key FDCPA violations found during examinations of debt collectors, including those related to communication tactics, debt validation, and collecting amounts not permitted.
- 4.1.3 Remedial Actions: Outlines the corrective measures directed by the CFPB to address the identified violations and improve compliance.
V. Enforcement
5.1 CFPB Law Enforcement Actions
- 5.1.1 Introduction: Provides an overview of the CFPB’s enforcement actions addressing illegal debt collection practices in 2023.
- 5.1.2 Case Summaries: Summarizes four specific enforcement actions taken by the CFPB against debt collection companies, highlighting the violations found and the remedies imposed.
5.2 Law Enforcement Activities by Other Federal Agencies
- 5.2.1 Debt Collection Issues Affecting Small Businesses: Highlights the FTC’s actions to protect small businesses from unfair and deceptive debt collection practices.
- 5.2.2 Halting Collection of Millions in Student Debt: Focuses on the FTC’s efforts to address deceptive practices by schools that lead to students accruing unmanageable debt.
- 5.2.3 Combating Unauthorized and Illegal Charges: Discusses the FTC’s initiatives to combat unauthorized charges and recurring subscription fees that contribute to consumer debt.
VI. Consumer Education
- 6.1 CFPB’s Consumer Education Activities6.1.1 Ask CFPB: Highlights the “Ask CFPB” resource, offering consumer-friendly answers to common debt collection questions and providing downloadable sample letters.
- 6.1.2 In-Language Resources: Discusses the CFPB’s in-language resources available in multiple languages, including information on consumer rights and key debt collection terminology.
- 6.1.3 Debt Collection Rule Implementation: Explains the CFPB’s efforts to educate consumers about the new debt collection rule and its impact on their rights and interactions with collectors.
VII. CFPB Rulemaking, Research, and Policy Initiatives
7.1 CFPB Research Projects
- 7.1.1 Introduction: Discusses the CFPB’s research initiatives aimed at understanding the debt collection market and identifying potential consumer harms.
- 7.1.2 Research Areas: Highlights specific areas of research, including consumer experiences with debt collection, the impact of data furnishing to credit reporting agencies, and trends in industry practices.
7.2 Research and Outreach to Special Populations
- 7.2.1 Introduction: Explains the CFPB’s focus on understanding the unique challenges faced by specific populations in the context of debt collection.
- 7.2.2 Older Americans: Examines issues faced by older adults, including debt collection related to medical expenses and the potential for financial exploitation.
- 7.2.3 Servicemembers and Veterans: Highlights the unique challenges faced by military consumers, including the impact of debt on security clearances and the prevalence of debt collection complaints within this group.
- 7.2.4 Students: Focuses on the financial implications of student loans and the impact of tuition payment plans on repayment risk.
- 7.2.5 Workers: Examines the issue of employer debt, particularly training repayment agreement provisions (TRAPs) and the potential for exploitative collection practices.
7.3 FDCPA Regulatory Actions
- 7.3.1 Advisory Opinions: Discusses the CFPB’s issuance of an advisory opinion clarifying the prohibition on collecting time-barred debt under the FDCPA.
- 7.3.2 Informal Guidance: Highlights the CFPB’s ongoing efforts to provide informal guidance to facilitate implementation of the debt collection final rule.
7.4 Other Related Regulatory Actions
- 7.4.1 Fair Credit Reporting Act (FCRA) Rulemaking: Details the CFPB’s proposed rulemaking under FCRA to restrict the reporting of medical debt and collection information on consumer credit reports.
7.5 Stakeholder Outreach
- 7.5.1 Field Hearing on “Zombie” Second Mortgages: Discusses the CFPB’s field hearing in Brooklyn, NY, focused on the issue of debt collection related to “zombie” second mortgages and its impact on homeowners.
- 7.5.2 Debt Collection Policies and Practices: Highlights the CFPB’s report on trends in debt collection policies and practices deployed by large credit card issuing banks.
7.6 Market Monitoring and Outreach
- 7.6.1 Introduction: Discusses the CFPB’s efforts to monitor the debt collection market and engage with stakeholders to address emerging trends and concerns.
- 7.6.2 Increased Financialization: Examines the trend of increased financialization in consumer financial markets and its potential impact on debt collection practices.
VIII. Conclusion
- 8.1 Summary of Key Findings: Summarizes the main findings of the report, including trends in consumer debt, debt collection practices, and enforcement actions.
- 8.2 CFPB’s Continued Focus: Emphasizes the CFPB’s ongoing commitment to protecting consumers from harmful debt collection practices and promoting fair and transparent debt collection markets.
IX. Appendices
- Appendix A: CFPB Debt Collection Information, 2023: Provides data on consumer usage of CFPB resources related to debt collection, including website page views, downloads, and print distribution of educational materials.
- Appendix B: CFPB Medical Debt Information, 2023: Lists various consumer resources and educational materials published by the CFPB addressing medical debt and collection issues.
- Appendix C: FTC Debt Collection Information, 2023: Presents data on consumer usage of FTC resources related to debt collection, including website page views, downloads, and print distribution of educational materials.
Welcome back everybody to the deep dive
um today
we’re gonna try to get to the bottom of something that
I think
affects most people at some point in their lives
and that’s debt collection yeah
but we’re gonna go a little bit deeper than just
you know dealing with those pesky bills
and we’re gonna look at the system itself right
um and to do that
we’re gonna be looking at the Consumer
Financial Protection Bureau’s latest report
the CFPB yeah
the CFPB you know them
absolutely yeah
this report really dies into the Fair
Debt Collection Practices Act okay
the ftcpa for short I’ve heard of that
and really
this sets the rules of the road for debt collectors
and we’re hoping to uncover some potential pitfalls
that you as a consumer
might encounter when dealing with debt collectors
especially when it comes to medical and rental debt
right and it’s not just about like
do you owe this money or don’t you
it’s also about whether the process itself is even fair
exactly um
and this is important now more than ever
because consumer debt has reached a record
$17.5 trillion yeah
that’s a big number it’s a huge number right
and that includes everything from
those credit cards that are
you know burning a hole in your pocket
to student loans that just never seem to go away
they never go away
and the problem is as that debt rises
so do attempts to collect it okay
so let’s start with something that
I think will resonate with a lot of people listening
which is medical debt uh huh
the CFPB found that over half of the
complaints they received about medical debt
yeah were from people who said
I don’t even owe this money
yeah it’s crazy right
how is that even possible
well it’s complicated
yeah the CFPB found that there’s this
big communication breakdown between hospitals
and insurance companies and debt collectors
okay so you can imagine
you know maybe
you get a dentist bill that you thought was canceled
but then a few months later
it ends up in collections and you’re like
wait a minute I thought we took care of this
I’ve been there it’s a mess
so it’s not even about the bill itself
it’s the whole system that’s kind of messed up
yeah the system is really the problem here
and get this
when consumers do actually dispute these debts
the report shows that debt collectors often just close
the accounts without even investigating
well wouldn’t that be a good thing though
if they’re closing the account even if it’s disputed
isn’t that good for the consumer
well not necessarily
closing the account doesn’t mean
the issue just disappears
uh okay
or the debt might already be on their credit report
right which could make it harder to get a loan
or even rent an apartment
and plus it really raises the question
are some debt collectors pursuing debts
that they know aren’t even legit
yeah that’s a problem
that’s shady yeah
okay well
speaking of unfair
the report also talks about these financial assistance
programs that a lot of non profit
hospitals are required to offer right
um so
these programs are supposed to help people
who can’t afford to pay their medical bills
yeah it’s federal law
they have to offer this assistance
but the CFPB is finding this troubling trend
that people are being pursued for debts
that should have been covered
under these programs
it’s like they’re being punished for needing help
wait so even if a hospital forgives a debt
it can still end up in collections
yeah unfortunately
that’s what’s happening
the report actually highlights cases where
forgiven hospital bills
still ended up going to collections
wow
and that’s a potential legal violation under the ftcpa
okay debt
collectors
aren’t supposed to go after debts that aren’t actually
owed so
what are the implications
for someone who’s dealing with medical debt
right now well
the biggest thing is to keep
really good records of every single bill okay
every interaction with your insurance company
any applications you make for financial assistance
that way you have proof if you need to challenge a debt
god don’t be afraid to speak up
speak up for yourself yeah
what about all of these new
medical payment products that we keep hearing about
well yeah
I mean they sound helpful
you know on the surface
but are
there some hidden dangers that we should be aware of
well yeah
this is where things get a little worrisome
when we start talking about
the financialization of healthcare
a lot of these products are offered through
partnerships between hospitals
and financial institutions okay
and they might sound good at first
but they can actually lead to more aggressive
debt collection tactics
here’s where it gets really interesting
yeah so the thing is
non profit
hospitals have to follow these IRS regulations
that are designed to protect patients okay
but by using these financial products
they’re basically passing the debt off to someone else
no so
the hospital gets their money up front
when you enroll in one of these products
but then it’s
the financial institution that’s actually responsible
for collecting the debt okay
and they aren’t bound by the same IRS rules
so it’s like a loophole exactly
it’s a loophole
and it really raises concerns about transparency
and oversight in the whole world of medical debt
so they’re outsourcing the problem
but the patient is the one
who might end up getting squeezed
you got it not good
not good at all okay
well we’ve covered medical debt
we’ve talked about how this system can be confusing
and how there are some potential pitfalls
for consumers but what about rental debt
oh yeah rental debt is a whole other can of worms
let’s open that can of worms after a quick break
sounds good
it’s mind boggling how complicated this all is
it really is and if you thought medical debt was a maze
just wait till we get to rental debt
oh yeah
the CFPB has been
flooded with complaints about rental debt
since they started accepting them last August
yeah it’s become a real battleground out there
and one of the biggest issues is security deposits
oh yeah
you know that money you pay up front
that’s supposed to be returned to you
when you move out right
minus any like
legitimate damages to the property
exactly but the problem is
landlords are often withholding those deposits unfairly
or they’re charging tenants
for damages that they’re not even responsible for
oh the report
actually has a story about someone who went to court
and won over an illegally withheld security deposit
but the debt collectors still refuse to remove
the debt from their credit report
so even a court order didn’t help them
hmm that’s wild
yeah it’s crazy
and you can imagine the impact that has on your credit
you know it could make it harder to rent another place
or even get a car loan oh absolutely
it’s like a vicious cycle
it is and it doesn’t stop there
the CFPB found that landlords and debt collectors
are also tacking on these junk fees
for things that aren’t even allowed under state law
like what kind of things oh
you know basic repairs
routine upkeep
things that should be the landlord’s responsibility
right but
they’re sneaking these fees into the rental agreement
so it’s really important to read the fine print
and understand what you’re signing
oh yeah
always read the fine print
and don’t be afraid to push back
if something seems off knowledge is power absolutely
even when you are informed
you know you’ve done your research
it still feels like
the system is gonna stack against you
yeah it can feel that way
the report even talked about this trend of
financialization in the rental market
with all these new apps and services popping up
it’s really interesting
how technology is changing everything
it is on the surface
these services sound convenient
you know paying your rent online
earning rewards points
even getting loans for security deposits
but I bet there’s a catch
often there is
the CFPB
is finding that a lot of these services have hidden
fees or make it
really difficult to challenge fraudulent charges
some landlords even complained about signing up
for a service that was advertised as free
only to be hit with fees later on
oh no
and imagine trying to fight that
as an individual renter going up against a big company
David and Goliath exactly
and then on top of that
the report mentions these price fixing allegations
against companies
that provide software for setting rental prices
wait what
yeah this is where things get really concerning
because if companies are colluding to inflate rents
that’s a huge problem outrageous
it is
and if those inflated rents then lead to unpaid bills
it puts renters
at even greater risk of being subjected to
unfair debt collection practices
that’s a domino effect exactly
one shady practice leading to another
and to make matters worse
the report found a lot of issues with debt verification
in the rental market this is a big one
a lot of renters are having trouble
getting debt collectors to actually verify rental debts
really they request documentation
they send letters but often they get no response
they’re just left in limbo
yeah meanwhile
that unverified debt
could be hurting their credit score
that’s terrifying yeah
it’s like you’re being held responsible for something
without even knowing if it’s legitimate
the CFP actually shared a complaint from someone
who repeatedly requested debt validation
but never got a response
and yet that debt remained on their credit report
it’s like a black hole of information
it really is well
this whole situation just highlights
the need for greater transparency
and accountability in the rental market
absolutely
renters need to be able to access information
and they need to be able to challenge debts
that they believe are incorrect
they do it shouldn’t be this
difficult to prove that you don’t owe something right
the way the damages are charged is often so subjective
and confusing it’s like
a breeding ground for inaccurate collection notices
it is the report even gave an example
where someone paid for carpet damage
directly to their property manager
but then they started getting collection letters
for the same amount that’s just adding insult to injury
talk about frustrating it’s incredibly stressful
and it adds to the burden that people are already
facing you know
it’s like they’re constantly fighting an uphill battle
just to clear their name well
this has been a really sobering look
at the world of debt collection
it has but hopefully
it’s also been empowering for our listeners
because knowledge is power
absolutely
the more you know about your rights and the system
the better equipped you’ll be to protect yourself
wow this deep dive has been really eye opening
it has it feels like navigating a minefield out there
with all of these potential pitfalls
yeah in both medical and rental debt
it’s definitely complex
but the good news is knowledge is power
the more you understand your rights
and how the system works
the better equipped you’ll be to protect yourself
so where do we even begin
what’s the first step to feeling
less overwhelmed by all this
well I think
the most important thing is to know that
you have rights under the FDCPA okay
you have the right to dispute a debt
you have the right to request validation
and you even have the right to set limits on
how a debt collector can contact you
it’s almost like they have to play by certain rules
they do
and we as consumers need to know what those rules are
exactly
and the CFPB website is a fantastic resource for that
they have tons of information
sample letters clear explanations of your rights right
don’t be afraid to assert them
and I’m guessing keeping good records is crucial too
oh absolutely
keep copies of every Bill
every piece of correspondence
every agreement anything related to your finances okay
that documentation can really be your saving Grace
if you need to challenge a debt
they like building your own defense file
exactly just in case
just in case and specifically for medical debt
always explore those financial assistance options right
many hospitals
especially non profits have programs to help
if you can’t afford your bills right
don’t hesitate to ask
it’s better to ask and be told you don’t qualify
it is than to just assume you don’t
and then end up struggling unnecessarily
exactly and when it comes to renting
read every single word of your lease agreement
know what you’re agreeing to
including any fees or clauses about damages
and if something seems unfair or unclear
question it so
it’s almost like
you have to become your own financial detective
in a way you do wow
but remember even if you find yourself
facing a debt collection situation
don’t panic okay
take a deep breath know that you have options
the CFPB website is a great starting point
and there are also consumer advocacy groups in
legal aid organizations that can provide guidance
it’s not about living in fear of debt
it’s about being informed and proactive
that’s the key takeaway here
and by being informed
you’re not only protecting yourself
but you’re also contributing to a fairer
more transparent marketplace for everyone
that’s a great point so
as financial products become
even more woven into our lives
like we seen with health care and housing
what can we do as consumers
to push for greater accountability
in the debt collection system
that’s the question isn’t it
how can we
ensure that debt collection practices are fair
and accurate yeah
something we all need to think about and engage with
well thank you so much for diving deep with us today
it’s been a pleasure we hope you feel
empowered to navigate the world of debt
with a little more confidence
and a lot more knowledge absolutely
that’s it for this deep dive we’ll see you next time
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