Bank Regulators Warn Against Unfair Collection Practices

January 2, 2014

The Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) have fired across the bow of financial institutions warning that they will soon face increased scrutiny regarding collection practices related to consumer debts. In July, the CFPB released two bulletins stating that financial institutions collecting their own debts are expected to adhere to many of the standards set forth in the Fair Debt Collections Practice Act, or FDCPA. This is because failure to do so may constitute an unfair, deceptive or abusive act or practice violation under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The FDCPA is a federal law which applies only to third parties (such as debt collectors and attorneys) during the collection process. The FDCPA makes it illegal for third parties to harass abuse, lie to, deceive, or mislead debtors when collecting a debt.

CFPB Bulletin 2013-07 cites examples of debt collection practices that may constitute violations under Dodd-Frank, such as collecting fees not expressly authorized by the debt agreement, seizing property without legal authority, misrepresenting the effect of a debt on a credit report, and threatening an action that is not intended or authorized (such as a lawsuit or criminal complaint). CFPB Bulletin 2013-08 gives specific examples of Dodd-Frank violations for misrepresentations regarding the effect of debt payments on credit reports, credit scores and creditworthiness. For example, it is a violation to tell a person that making a payment will result in a credit report correction when the debt is too old to be included on a credit report. The CFPB is developing proposed rules for debt collection, and is currently seeking comments from the public about debt collection practices.

The Office of the Comptroller of the Currency (OCC) also released a Statement in July entitled “Shining a Light on the Consumer Debt Industry” in which it encouraged national banks and federal savings banks to collect debts in a safe, responsible and fair manner. In this Statement, the OCC wrote, “The OCC expects all national banks and federal savings associations to have policies and procedures in place to manage their debt collection activities effectively.” Clearly the OCC and the CFPB are taking a closer look at how financial institutions treat consumers when collecting past due debts.

If you have any questions about bankruptcy or you are considering to file bankruptcy, contact the experienced bankruptcy attorneys at Fears | Nachawati Law Firm for more information and a free consultation. Call us at 1.866.705.7584 or send an email to fears@fnlawfirm.com

More Blog Posts

CONTACT US

Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with all your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears Nachawati.

Inquiry Type

  • General
  • Personal Injury
  • Immigration
  • Bankruptcy
  • Drug Litigation
  • Family Law

Locations

With offices in Texas, Florida and Colorado and attorneys licensed in Texas, Florida, Colorado, Arkansas and Oklahoma, Fears Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consulation

Live Chat (Online Now)