On March 23, 2021, the CFPB submitted its report to Congress covering its administration of the Fair Debt Collection Practices Act (“FDCPA”) during 2020. Because the CFPB shares responsibility for enforcing the FDCPA with the FTC, the report also describes the FTC’s activities relating to debt collection. Notable developments include the effect of the COVID-19 pandemic on the debt collection industry and a description of the CFPB’s recently issued final debt collection rules.
The CFPB is required by statute to prepare and submit this annual report. See 15 U.S.C. § 1692(m). The CFPB and the FTC share responsibility for enforcing the FDCPA and their relationship is governed by a memorandum of understanding. As is customary, the FTC sent a letter to the CFPB setting forth its 2020 debt collection work.
Following an overview of the FDCPA and the debt collection industry (including developments during the COVID-19 pandemic), the report provides a summary of consumer complaints regarding debt collection, the Bureau’s supervisory work and amicus practice related to FDCPA issues, and the Bureau’s and the FTC’s enforcement work. The report also discusses the Bureau’s education and outreach initiatives, and, most significantly, the Bureau’s recently issued regulations implementing the FDCPA.
One difference from previous reports is a new section discussing “Collections During the COVID-19 Pandemic.” According to the report, “some participants in the debt collection industry reported an increase in consumer contacts and payments,” potentially as a result of “more consumers being at home, reduced spending, and increased liquidity provided by pandemic assistance programs.” The Bureau also reported that “debt collectors frequently altered their work practices in response to the pandemic to comply with state orders and reduce their employees’ risk of infection” by “transition[ing] partially or entirely to remote work.” The Bureau also suggests that pandemic measures such as “prohibitions on new wage garnishments or bank attachments” and “a requirement that consumers be offered the option to defer scheduled payments” impacted the debt collection industry.
The report also describes the recently-promulgated regulations implementing the FDCPA. As described in previous FDCPA reports, the Bureau has been working on these regulations for years. Those efforts finally came to fruition in 2020 with the issuance of final rules that are scheduled to take effect on November 30, 2021. The report summarizes the key provisions of the rules, which, among other things, are designed to:
- Provide clarity on the FDCPA’s many provisions governing debt collector communications with consumers, addressing such issues as voicemail, social media, and electronic disclosures;
- Create a safe-harbor for email and text message communications with consumers, previously an area of legal uncertainty for collectors;
- Generally prevent transfer of debts that are paid, settled, or discharged in bankruptcy;
- Impose record retention requirements;
- Prohibit actual or threatened legal action to collect time-barred debts; and
- Require certain actions be taken prior to furnishing information about a debt to credit reporting agencies.
In sum, as the report demonstrates, 2020 was an extraordinary year for debt collection regulation. The COVID-19 pandemic drove many changes in the industry and posed unprecedented challenges to consumers, debt collectors, and regulators. In addition, the CFPB issued its long-awaited FDCPA rules—the first attempt to implement the 1977 statute through regulations. 2021 promises further collection-related developments as the COVID-19 pandemic continues and new CFPB leadership considers revisiting aspects of the debt collection rules.