A Comment on the CFPB’s Debt Collection Bulletin

by Jeff Sovern

As Deepak pointed out last week, a lot has been going on in debt collection, and one item is that the CFPB has issued a bulletin stating that people subject to its jurisdiction may not commit unfair, deceptive, or abusive practices in collecting debts.  The Fair Debt Collection Practices Act generally does not apply to creditors collecting their own debts, but the Bureau is clearly willing to use its UDAAP power to, in effect, apply some of the FDCPA's provisions to creditors.  This is terrific news for consumers who are being hounded by creditors as opposed to independent debt collectors, but it still provides more limited protection than the FDCPA itself for two main reasons.

First, there is no private claim under the Dodd-Frank Act to enforce the Bureau's UDAAP powers.  By contrast, the FDCPA provides for a private claim with statutory damages of up to $1,000 and attorney's fees to prevaliing plaintiffs.  Because the Bureau's resources are finite, it will surely not have the funding to pursue every possible UDAAP claim.  Consumers who can persuade the Bureau to pursue their complaints will undoubtedly find the Bureau's intervention helpful, but only so many will be able to take advantage of that opportunity. 

It may be that some consumers will be able to convince courts to find conduct that the Bureau has labeled unfair, abusive, or deceptive a violation of state UDAP statutes.  States often follow FTC interpretations in construing their UDAP statutes; perhaps they will find CFPB interpretations equally persuasive.  State UDAP statutes are sometimes called "little FTC Acts;" one of my co-authors has observed that they may come to be known as little FTC/CFPB Acts as well.  But such a strategy may not work in every state.  Many state statutes explicitly provide that FTC interpretations are relevant in construing their statutes; I'm not aware of any state that has bestowed a similar status on CFPB interpretations.  And many state statutes do not mention unfair conduct, much less abusive. On the other hand, other statutes refer to illegal conduct, and since the Bureau has labeled the conduct in question illegal, that should go a long way to supporting a UDAP claim in such states.

Now I turn to the second reason.  The Bureau Bulletin listed specific behaviors that could be unfair, abusive or deceptive (though it says "could" rather than "are," I would not be so brave as to suggest that the Bureau will not view the listed conduct as unlawful).  The Bulletin carefully noted that the list was not exhaustive and consisted just of examples.  Still, the list consisted largely of examples of misrepresentations (e.g., claiming that something is from an attorney or the government when it wasn't) or unfair conduct (e.g., telling co-workers of the debt). But the FDCPA goes beyond these protections. For instance, in section 1692g, it requires collectors to tell consumers that they have the right to seek validation of the debt and in 1692e(11), that the collector is attempting to collect a debt. Section 1692c(c) largely bars collectors from further communications with the consumer once the consumer has made a written request that the collector stop such communications.  If creditors fail to live up to these other FDCPA provisions, are they committing a UDAAP violation? My guess is not as to the disclosure requirements, but I'm not sure.  I believe the Bureau has the power to define UDAAP as including these protections, just as the FTC has–and has used–its UDAP power to require door-to-door sellers to give certain notices to consumers.  But I think the Bureau would be clearer if it intended creditors to provide these protections, and perhaps some day it will be. On the other hand, if I represented creditors, I would recommend that they cease communicating with a consumer if the consumer so demanded. That's because the Bulletin mentions that telling employers or co-workers about the debt would be a UDAAP violation.  If the Bureau thinks one privacy invasion barred by the FDCPA is a UDAAP violation, why not another? 

Don't get me wrong: the Bureau has provided consumer-debtors significant protections in its Bulletin.  It is a major step forward.  But it's not quite the same as the FDCPA protections.


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