CFPB Bulletin – Prohibition of UDAAP in the Collection of Consumer Debts
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, credit unions are legally required to refrain from committing unfair, deceptive or abusive acts or practices in violation of the Act (UDAAP). The CFPB published a bulletin on July 10 to provide clarity on the impact of UDAAP related to the collection of consumer debts. The bulletin describes certain acts or practices related to the collection of consumer debt that could constitute as prohibited UDAAPs, depending on facts and circumstances. Below are some examples included in the bulletin:
- 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.
- 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.
- Taking possession of property without the legal right to do so.
- Revealing the consumer’s debt, without the consumer’s consent, to the consumer’s employer and/or co-workers.
- Falsely representing the character, amount, or legal status of the debt.
- Misrepresenting that a debt collection communication is from an attorney.
- Misrepresenting that a communication is from a government source or that the source of the communication is affiliated with the government.
- Misrepresenting whether information about a payment or nonpayment would be furnished to a credit reporting agency.
- 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.
- 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 CFPB has also published debt collection examination procedures, which is a useful resource for credit unions.
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. Bryan Laviolette is the editor of Monitor. Contact him by email
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