Last week, we discussed various aspects of the Consumer Financial Protection Bureau’s annual report to Congress on the Fair Debt Collection Practices Act. Included in the report was information about three cases in which the CFPB filed amicus (“friend of the court”) briefs.

The first was in Birster v. American Home Mortgage Servicing, which was heard in the 11th Circuit. The plaintiffs alleged that the mortgage servicer was a debt collector, and thus subject to the Fair Debt Collection Practices Act in foreclosure proceedings. According to the report, “The appeal presents the questions (1) whether an entity that satisfies the Act’s general definition of ‘debt collector’ is subject to the entire Act even though its principal purpose is the enforcement of security interests and (2) whether conduct related to enforcement of a security interest can also qualify as debt collection activity covered by the Act.” The CFPB’s amicus brief argued that the mortgage service qualifies as a debt collector.

The second case was Marx v. General Revenue Corp., in which GRC sent a fax to the plaintiff’s employer in an attempt to determine whether her wages were able to be garnished to repay a student loan. A district court ruled that the FDCPA was not violated, and awarded the debt collector $4,543 in costs, even though Marx hadn’t brought the suit in bad faith. In its amicus brief, the CFPB argued that an appellate court’s decision “unduly limits the Act’s general ban on contacting third parties in connection with debt collection,” and that the court misinterpreted the FDCPA and another law governing monetary awards. It said that the court erred because the FDCPA says that debt collectors can only recover costs if the lawsuit “was brought in bad faith and for the purpose of harassment.”

The third case was Fein, Such, Kahn & Shephard v. Allen, in which a debt collector said that sending a letter to a consumer’s attorney asking for payment of unlawful fees doesn’t fall under the FDCPA. The U.S. Supreme Court asked the Solictor General for an opinion on whether or not to take the case, and the CFPB, FTC, and Solicitor General recommended not taking the case because the appellate decision was sound.

As we’ve discussed this week, the Consumer Financial Protection Bureau issued its first annual report to Congress regarding complaints filed about possible violations of the Fair Debt Collection Practices Act. Included in the report was a summary of Federal Trade Commission enforcement actions against debt collection agencies for alleged violations of the FDCPA.

The report notes seven cases that the FTC filed or resolved during 2011. It boasts that two civil cases resulted in “the two largest civil penalty amounts the agency has ever obtained in cases alleging violations of the FDCPA.” These cases were United States v. West Asset Management, which resulted in a $2.8 million settlement, and United States v. Asset Acceptance, which resulting in a $2.5 million settlement.

The CFPB’s report says that the enforcement actions are a result of an increased focus on debt collection practices that pose a threat to consumers. It says, “These practices include conduct related to the quantity and quality of information used in collecting debts, disclosure of information in the collection of time-barred debts, egregious tactics used to collect on actual or purported payday loans, and other egregious debt collection practices.”

The Asset Acceptance case included allegations that the debt collector continued to try and collect disputed debts, and didn’t provide debt validation to consumers who requested it within the 30-day window provided by the FDCPA. The FTC also alleged that Asset Acceptance deceptively attempted to collect time-barred debts because it misled consumers into thinking they could be sued if they didn’t pay.

The CFPB report also highlighted the FTC’s work in shutting down payday loan companies – or those that said they were from payday loan companies. FTC v. American Credit Crunchers alleged that “consumers either had not taken out a payday loan at all or had taken out a payday loan that the defendants were not authorized to collect. Two other payday loan cases, FTC v. LoanPointe and FTC v. Payday Financial fought allegedly illegal wage garnishment practices, such as attempting to garnish wages without first obtaining a court order.

The CFPB also states in its report that it is in the process of investigating various debt collection practices to see if they violate the FDCPA or the Dodd-Frank Act. In addition, it notes that the CFPB filed amicus briefs in three cases related to the FDCPA. We’ll discuss these cases next week.

As we mentioned yesterday, the Consumer Financial Protection Bureau has issued its first annual report to Congress regarding the complaints filed about possible violations of the Fair Debt Collection Practices Act. Thanks to the Dodd-Frank Act, the CFPB has taken this responsibility from the Federal Trade Commission. However, the CFPB hasn’t yet begun tracking debt collection complaints, so the data is from the complaints received by the FTC.

To recap, the number of complaints received about the debt collection industry exceeds that of any other industry, and the FTC received 142,743 complaints in 2011, 117,374 of which were regarding third-party debt collectors (as opposed to in-house debt collectors).

The FTC tracks debt collection complaints by category; as one would imagine, some complaints fall into more than one category. Here is a snapshot of the categories and subcategories of complaints, along with the tally of complaints and the percentage of FDCPA complaints that number represents:

Harassment: Calling repeatedly or continuously (47,362 complaints, 40.4%); obscene, profane, or abusive language (16,576 complaints; 14.1%); calling at inconvenient times (10,488 complaints, 8.9%); threats or use of violence (3,977 complaints, 3.4%).

Demanding an Incorrect Amount: Misrepresenting the character, amount, or legal status of a debt (46,482 complaints, 39.6%); collecting amounts in excess of what’s permitted (9,314 complaints, 7.9%).

Failing to Send Required Notice: 30,742 complaints, 26.2%.

Threats: Falsely threatening a lawsuit or another unlawful action (35,473, 30.2%); falsely threatening arrest or seizure of property (27,624, 23%).

Failing to Self-Identify as a Debt Collector: 20,781 complaints, 17.7%.

Improper Third-Party Contacts: Calling to obtain location information (20,519 complaints, 17.5%); disclosing debt to a third party (12,636 complaints, 10.8%).

Workplace Calls: 16,895 complaints, 14.4%.

Not Verifying Disputed Debts: 10,000 complaints, 8.5%.

Not Honoring “Cease and Desist” Notice: 5,922 complaints, 5%.

The CFPB report also included information about the FTC’s law enforcement actions, which we will review tomorrow.

The Fair Debt Collection Practices Act mandated that the Federal Trade Commission submit an annual report to Congress regarding its activities in implementing the FDCPA. Under the Dodd-Frank Act, the responsibility of issuing the report moved to the newly created Consumer Financial Protection Bureau. On March 20, the CFPB issued its first FDCPA report to Congress.

Because it’s been less than a year since the CFPB’s creation, and because the agency was largely hamstrung until early January, when via a recess appointment President Obama named Richard Cordray as CFPB director, much of the information in the report was provided by the FTC.

The CFPB report, which can be downloaded from http://www.consumerfinance.gov/reports/fair-debt-collection-practices-act/, notes, “In 2011, approximately 30 million individuals, or 14 percent of American adults, had debt that was subject to the collections process (averaging approximately $1,400). It goes on to say that the FDCPA was put into place to both protect consumers and to prevent those debt collectors who abide by the law from suffering a competitive disadvantage. It also points to the changes in the debt collection industry since the FDCPA was enacted 35 years ago, noting the rise of the debt buying industry and debt collection law firms. Further, it acknowledges the myriad technological advances (such as predictive dialers, computer analytics, and massive databases) that have changed the debt collection landscape.

The report states that the FTC receives more complaints about the debt collection industry than any other industry; in 2011, the agency received 142,743 debt collector complaints, an increase of about 500 complaints when compared with 2010. Of those complaints, the vast majority (117,374) were about third-party debt collectors (as opposed to in-house collectors); the number of complaints about third-party collectors in 2011 increased by 8,120 over 2010.

As for the types of behaviors that consumers complained about, two rose dramatically during 2011: demanding larger payments than permitted, and threatening dire consequences if the consumer did not pay. The most significant drop in complaints was about harassing the consumer or others. Still, that represented the greatest number of overall complaints, followed by threatening dire consequences and demanding larger payments than permitted.

In addition, in terms of 2011 complaints vs. 2010 complaints, there was a slight decrease in complaints about debt collectors failing to send a written notice of the debt, failing to identify himself or herself as a debt collector, and revealing the existence of a debt to third parties. The numbers of complaints stayed about the same for three other categories of complaints: impermissible calls to the consumer’s workplace, failing to verify disputed debts, and failing to abide by a “cease and desist” request.

We’ll delve into the actual numbers in more depth tomorrow. However, there is a caveat to all of these numbers. In its report, the FTC – and by extension, the CFPB – acknowledges that complaints about abusive debt collectors are underreported. After all, many consumers aren’t aware of their rights under the FDCPA, and put up with debt collector abuse. Others may complain directly to the debt collection agency, to their attorney general, or to a fair debt attorney, and don’t necessarily file a complaint with the FTC. In addition, the report notes that the FTC can’t always determine whether or not a debt collector’s behavior is in violation of the FDCPA, so recorded complaints may not accurately reflect violations.