October 01, 2020

CFPB partners with federal, state agencies to target 'phantom,' abusive debt collection

CFPBThe CFPB is partnering with the Federal Trade Commission (FTC) and more than 50 federal and state law enforcement agencies to launch a nationwide law enforcement and outreach initiative to target phantom debt collection and abusive and threatening debt collection practices. NAFCU is supportive of the bureau's efforts to prevent bad actors in this space.

According to a release on the initiative, "Operation Corrupt Collector," the purpose is to prevent debt collectors from engaging in illegal practices related to collecting non-existent debts and using scare tactics.

"The CFPB is actively working to protect consumers from illegal actions of debt collectors," said CFPB Director Kathy Kraninger. "We will continue to monitor the financial marketplace, as well as consumer complaints received, in order to ensure that we identify and take action against debt collectors who are violating the law. Lastly, consumers should know that the Bureau’s consumer complaint system is a resource for them to submit any complaints they may have on their experiences with financial services providers."

The initiative includes enforcement actions from the FTC, three federal partners and 16 different states. The CFPB has filed two cases as part of the operation. In addition to the enforcement actions, state and local consumer protection agencies are working with the FTC to release consumer resources on debt collection practices and what to do if they do not recognize a debt.

The CFPB has tools for consumers available here, as well as a video on how to protect themselves from fraudulent collectors.

The bureau is set to finalize its rule on debt collection generally in October, according to its rulemaking agenda released in July. NAFCU has flagged for the bureau additional burdens credit unions will face as a result of its third-party debt collection rule and recommended ways to address these concerns.