On Wednesday, July 8, the Consumer Financial Protection Bureau announced its latest — and largest — settlement of claims of unfair and deceptive debt collection practices. The Office of the Comptroller of the Currency and 47 state attorneys general all were part of the overall settlement. The numbers are significant: $50 million in restitution and $166 million in penalties. The injunctive relief is extensive, with pages and pages of requirements that extend for several years even though the credit card issuer stopped the practices at issue nearly two years ago. Although the alleged unfair, deceptive, or abusive acts and practices (UDAAP) violations do not plow new ground, the injunctive relief provisions provide a road map to debt sellers and debt collectors on what the regulators view as best practices. They also put regulated entities on notice that debt collection remains high on the enforcement agenda.

The Claims -

The consent order details allegations regarding two primary areas: debt sales and collection litigation. On debt sales, the CFPB alleged that the sale of debts the credit card issuer knew or should have known were unenforceable, and the selling of debts with inaccurate or inadequate evidence that the stated amount of the debts were owed, constitute unfair practices. The CFPB also alleged that the credit card issuer knowingly or recklessly provided substantial assistance to the deceptive acts of debt collectors that purchased and then attempted to collect the unsubstantiated, inaccurate and/or unenforceable debts.

Originally published in Law360 on July 15, 2015.