ciskey debra jThe FDCPA is becoming middle-aged; it saw its 38th birthday on September 20, 2015. On the day that President Jimmy Carter signed the FDCPA into law on September 20, 1977, the number one hit song was “Best of My Love” by The Emotions, and Kenny Stabler was on the cover of “Sports Illustrated.” Many of us take a few minutes on our birthday to review the last 12 months of our life, maybe to say a prayer of thanksgiving for that year, and to set a few goals for the year ahead. With a nod to Edmund Burke’s sage advice: “Those who don’t know history are doomed to repeat it”, let’s take a look back at developments under the FDCPA and debt collection enforcement actions that occurred in the last year.

Enforcement: Lessons Learned

CFPB and the FTC have finalized more enforcement actions this year than we have seen in the recent past. I put them in two categories—those related to the practices of legitimate industry participants, and those conducting scams under the guise of debt collection. The scammers create havoc for legitimate debt collectors because they cause consumers to be suspicious of anyone claiming to be a debt collector; and the fact that regulators treat them like debt collectors and not like criminals doesn’t help. Bringing actions under the FDCPA and levying civil penalties that are likely to go unpaid will not stop fraudsters. Bringing criminal actions resulting in prison time just might.

These actions are representative of the enforcement actions taken and are not all inclusive. In the scammer, or fictitious debt collector category, we saw the following enforcement actions related to the practices described here:

• Pretending to be a state or district attorney when collecting bad checks, making false threats of criminal prosecution, deceiving consumers into paying extra for a financial education class. CFPB, 3/30/15: National Corrective Group, Victim Services, Inc., and American Justice Solutions, Inc.

• Making false claims of authority to collect fake debts, repeatedly calling consumers who have requested calls to cease, making calls at inconvenient times or at a consumer’s place of employment with knowledge that such calls are prohibited by the employer, calling multiple times in a day with such frequency as to constitute harassment. Threatening wage garnishment, threatening to have consumers’ drivers’ licenses revoked, threatening legal proceedings, or threatening arrest or imprisonment. FTC, 4/6/2015: K.I.P., LLC et al.

• Attempting to collect debts that don’t exist, frightening people into paying them with false threats of arrest, wage garnishment and “financial restraining orders.” This order implicated dialing and payment processing vendors who were accused of turning a blind eye even when circumstances may have indicated that there were problems related to the practices of the scammers. CFPB, 4/8/2015: Universal Debt and Payment Solutions, et al.

Actual debt collectors or entities collecting their own debt were sanctioned for stepping over the compliance line as well:

• Misrepresenting their identity by altering caller ID information, making it appear that calls are coming from the repo man, pizza delivery companies, flower shops, vehicle storage facilities or family and friends. Equally deceptive, making it appear that calls were coming from a law enforcement agency and stating or implying that criminal charges are about to be filed. Further, discussing defaulted loans with consumer’s references, employers, friends, and family members, and hiring a repo company to make calls when there is no intent to repossess or when repossession is not imminent. CFPB, 10/1/2015: Westlake Services and Wilshire Consumer Credit

• Sending threatening or deceptive text messages and emails to consumers which threatened to arrest or sue consumers. Contacting consumers’ friends, family members and employers about debts. Withholding information a consumer may need to dispute his debt. Withholding the fact that your communications are from a debt collector. FTC, 5/21/2015, Unified Global Group, et. al.

• Collectors claiming or implying that they are attorneys, or that they work for an attorney, in an effort to convince a consumer that a lawsuit is imminent. Misrepresenting that a lawsuit has been filed or that wages, bank accounts, or 401k accounts will be garnished or seized. FTC, 1/20/2015: Commercial Recovery Systems, Inc.

• Falsely claiming to be a law firm, process server, or government-affiliated entity, or an attorney or investigator. Using phone numbers with different area codes to deceive consumers about their identity. Falsely representing that a consumer is subject to imminent arrest that day, or within hours or even minutes, and would be subject to spending months in jail. Contacting third parties about the purported debts, warrants, and charges. Withholding information related to the fact that they were a debt collector and failing to provide the required notices and disclosures required by law. Adding unauthorized processing fees to payments made by credit card. FTC, 1/5/2015: Vantage Point Services, LLC et al.

More enforcement actions are detailed on the FTC and CFPB websites. The value in reading and understanding these consent orders is that we can surmise where the CFPB might be considering related to its rulemaking for debt collection; and they identify practices that are sure to trip red flags with enforcement teams. For example, several actions included the use of manipulated caller ID information. It might be worthwhile to examine your policies and practices related to that practice now. Other actions related to the addition of convenience fees. Other common themes relate to the failure to send required notices, such as validation notices, and failing to disclose that communications were from a debt collector. Do you have policies and procedures in place to ensure that these key compliance requirements are in place?

Debra Ciskey is the Compliance Officer at Wakefield & Associates. Inc. She is a member of the board of directors and a certified instructor for ACA International.