Stopping Unfair, Deceptive, or Abusive Acts or Practices in the Collection of Consumer Debts

The Consumer Financial Protection Bureau (CFPB) has issued a very useful and timely bulletin around the rights of consumers and agencies when it comes to debt collection practices in context of laws enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act. For the millions of Americans dealing with debt collectors or those who may have to in the future, the guidelines provided by the CFPB are quite useful. Unfair, deceptive or Abusive acts include:

  • Collecting or assessing a debt and/or any additional amounts in connection with a debt (including interest, fees, and charges) not expressly authorized by the agreement creating the debt or permitted by law
  • Failing to post payments timely or properly or to credit a consumer’s account with payments that the consumer submitted on time and then charging late fees to that consumer
  • Taking possession of property without the legal right to do so. This applies to small and large institutions, particularly those looking to leverage rising property prices by buying distressed housing at below market prices
  • Revealing the consumer’s debt, without the consumer’s consent, to the consumer’s employer and/or co-workers. This form of harassment is used by some unscrupulous debt collectors to shame consumers into paying their debts
  • Falsely representing the character, amount, or legal status of the debt. This particularly applies in fraudulent cases where identity theft may be an issue
  • Misrepresenting that a debt collection communication is from an attorney
  • Misrepresenting that a communication is from a government source or that the source of the communication is affiliated with the government
  • Misrepresenting whether information about a payment or nonpayment would be furnished to a credit reporting agency
  • Misrepresenting to consumers that their debts would be waived or forgiven if they accepted a settlement offer, when the company does not, in fact, forgive or waive the debt
  • Threatening any action that is not intended or the covered person or service provider does not have the authorization to pursue, including false threats of lawsuits, arrest, prosecution, or imprisonment for non-payment of a debt

I am sure you have been or seen others deal with one or more of the situations above. The good thing is that the CFPB has also provided some easy to read guidelines and action letter templates to help consumers deal with some of the above situations in a more effective manner. This includes the following action letters that allow consumers to request more information about a debt the collector has told them that they owe, dispute the debt and for the debt collector to prove responsibility or stop communication, restrict how and when a debt collector can contact them or stop all contact and finally what to do if a debt collectors has initiated formal legal proceedings.,

Remember all communication with debt collectors should be done in writing, so use these templates and included guidelines as a starting point.

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1 thought on “Stopping Unfair, Deceptive, or Abusive Acts or Practices in the Collection of Consumer Debts”

  1. Unfortunately the list of prohibited “abusive acts” pretty much summarizes the business model of many collection agencies. That’s why the world’s largest debt collector just received a record $3.2 million penalty from the FTC.

    Having debts one cannot pay does not give others license to beat you up. Know your rights, and defend yourself. Many consumer rights attorneys can turn the tables on abusive debt collectors, winning you a financial judgment.


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