04.13.15 by Andrew Shafer

Consumer Financial Protection Bureau UDAAP Bulletin

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On July 10, 2013, the Consumer Financial Protection Bureau issued a bulletin that addressed the Bureau’s interpretation of the provisions of Dodd-Frank that prohibited debt collectors from engaging in unfair, deceptive, abusive acts or practices (commonly referred to as UDAAP).  While the Bureau’s attempt to define these prohibited practices falls far short of the mark of giving the industry any real guidance, its examples illustrate the type of conduct that will fall within UDAAP.

For the most part, the examples are taken directly from portions of the Fair Debt Collection Practices Act, 15 U.S.C. 1692e and 15 U.S.C. 1692f.  The CFPB provided a non-exclusive list of examples of prohibited unfair, deceptive or abusive acts or practices as follows:

1)  Collecting or assessing a debt and/or any additional amounts in connection with a debt (including interest, fees, and charges) not expressly authorized by the agreement creating the debt or permitted by law;

2)  Failing to post payments timely or properly or to credit a consumer’s account with payments that the consumer submitted on time and then charging late fees to that consumer;

3)  Taking possession of property without the legal right to do so;

4) Revealing the consumer’s debt, without the consumer’s consent, to the consumer’s employer and/or co-workers;

5)  Falsely representing the character, amount, or legal status of the debt;

6)  Misrepresenting that a debt collection communication is from an attorney;

7)  Misrepresenting that a communication is from a government source or that the source of the communication is affiliated with the government;

8)  Misrepresenting whether information about a payment or nonpayment would be furnished to a credit reporting agency;

9)  Misrepresenting to consumers that their debts would be waived or forgiven if they accepted a settlement offer, when the company does not, in fact, forgive or waive the debt;

10)  Threatening any action that is not intended or the covered person or service provider does not have the authorization to pursue, including false threats of lawsuits, arrest, prosecution, or imprisonment for non-payment of a debt.

The statute that created the CFPB does not give consumers a private right of action against collection agencies.  Those claims are available through the FDCPA.  However, it does give the CFPB enforcement powers, including the ability to levy significant financial penalties and obtain injunctive relief. The UDAPP bulletin is relevant because it purports to create a laundry list of conduct subject to CFPB enforcement action. However, the bulletin is no better at articulating prohibited conduct than the unfair practices sections of the FDCPA.