FTC Sends Annual FDCPA Enforcement Letter to CFPB Filled with Detail

The Federal Trade Commission (FTC) said Monday that it has sent its annual letter to the Consumer Financial Protection Bureau (CFPB) detailing the Commission’s efforts to regulate the debt collection industry through its implementation of the Fair Debt Collection Practices Act (FDCPA).

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is required to submit annual reports to Congress on the FDCPA, a task previously assigned to the FTC.  To assist the CFPB in preparing its report, the FTC issues a letter summarizing its own recent work on debt collection issues.

The FTC said that 2014 was its busiest year ever for enforcement actions under the FDCPA. The agency filed 10 new lawsuits last year, the most for a single year. It continues a trend from 2013 when the FTC filed nine enforcement actions, a record at the time.

The letter noted that nine FDCPA enforcement cases were resolved in 2014 resulting in $140 million in judgments. One long-running case alone against Asset & Capital Management Group that was finally resolved last year saw a $90.5 million final judgment.

The FTC noted that it banned 47 companies and individuals from the debt collection industry in 2014, a fact that it touted in a blog post last week which also covered the year’s enforcement actions.

Also in the enforcement section of the letter were lengthy legal discussions of two amicus briefs written in support of Circuit Court FDCPA cases in 2014, both jointly filed with the CFPB.

The first brief, in the Buchanan case, concerned settlement offers made on time-barred accounts. The FTC and CFPB took the position that under certain circumstances, a settlement offer — and other collection activity — on an out-of-statute account can mislead the consumer and could be a violation of the FDCPA. The Sixth Circuit, in a split decision, sided with the FTC-CFPB position last month and overturned the lower court ruling that favored the collection agency defendant.

The second amicus brief, in the Hernandez case, involves a case that saw a collection agency successfully argue that because it was not the first collector to work the account, it did not need to follow the FDCPA guidelines for disclosures in an “initial communication,” as the consumer had previously communicated with other debt collectors. The FTC-CFPB position strongly disagrees with this interpretation and urges the Ninth Circuit to overturn the lower ruling. The case is still ongoing.

But the letter did not focus exclusively on enforcement. The FTC revealed its role in helping the CFPB with rulemaking efforts for the debt collection industry.

“Building on efforts initiated in 2013, when the CFPB published the Advance Notice of Proposed Rulemaking (ANPR), FTC staff continued to consult with CFPB staff on their rulemaking efforts,” the letter stated. “FTC staff provided suggestions and insights based upon our decades of experience in the debt collection arena.”

It is anticipated that the CFPB will publish its rules proposal for the debt collection industry early this year.

The FTC’s letter also detailed its efforts at community outreach. The agency noted its participation in an October roundtable, “Debt Collection & the Latino Community.” In an interesting footnote, the FTC lists web traffic statistics for many of its consumer resource pages and blog posts aimed at both consumers and companies.

Read the full letter.