The federal agency claims it has issued bulletins to the approximately 4,500 debt collection firms under its jurisdiction, warning them not to engage in illegal practices when trying to extract payments from delinquent borrowers.
In addition, the CFPB has launched a new resource on its website where consumers can submit complaints about questionable debt collection practices. It has also published sample action letters that consumers can use when corresponding with debt collectors.
"Consumers need options to help them secure fair and respectful treatment from those debt collectors that fail to abide by the law,’ said Richard Cordray, director of the CFPB, in a statement. ‘They can protect themselves by using our action letters to communicate with debt collectors and by submitting a complaint to us if they believe they are harmed by illegal conduct."
About 30 million Americans, or about 15% of all citizens with established credit, were in debt collection at some point during the first quarter, according to the CFPB, citing data from the Federal Reserve Bank of New York.
Regardless of whether they are a bank or third-party debt buyer, all firms that are engaged in debt collection are subject to the Consumer Financial Protection Act of 2010, which holds them accountable for any unfair, deceptive or abusive practices in collecting debt.
Specifically, the CFPB has warned companies to avoid deceptive statements about the impact on consumers' credit reports when they either make or miss a payment.
In addition, it has warned companies to avoid threatening actions that they do not have the authority to pursue. For example, debt collectors are prohibited from making false threats of lawsuits, arrest, prosecution or imprisonment for non-payment of debt.
The CFPB's announcement on Wednesday did not, however, outline the punitive measures debt collectors would face if they violated the rules.
To download a copy of the bulletin on unfair, deceptive and abusive practices, click here.
To download a copy of the bulletin on debt collectors discussing consumers' credit, click here.