In his remarks last week to the National Consumer Law Center Conference, Director Cordray identified several issues on which the CFPB will be focusing when it begins examining members of the debt collection industry. Those exams are expected to begin on or after January 2, 2013, the effective date of the CFPB’s debt collection larger participant rule issued last week.  

Among the issues identified by Director Cordray was the accuracy of information used in the debt collection process. According to Director Cordray, “[d]ebt collectors-and the creditors on whose behalf they are collecting or who sold the debt to them-bear responsibility for the quality of the information they are using to pursue consumers.”  His comments confirm our expectation that review of collection documentation and affidavit execution processes will be a priority in CFPB exams. 

Director Cordray indicated that the CFPB will also be looking at how debt collectors handle consumer disputes and requests for additional information. He also discussed the CFPB’s efforts to coordinate enforcement of the Fair Debt Collection Practices Act with “the FTC, and the prudential regulators, along with private parties,” and noted the ability of “State attorneys general [to] pursue these matters” under state law.  He stated that the CFPB’s “main concern is how to coordinate these efforts strategically and effectively in a marketplace that includes not only the larger firms…but also thousands of smaller companies and law firms.” 

With regard to the CFPB’s mortgage servicing proposal, Director Cordray acknowledged the criticism the CFPB has received from consumer advocates concerning the proposal’s allowance of “dual tracking” by servicers (meaning the ability of servicers to proceed with foreclosure while evaluating a home owner for loss mitigation).  According to Director Cordray, the CFPB is “currently digesting and analyzing the comments we have received fromNCLC and others” as to what restrictions can be placed on dual tracking.  

Director Cordray also made clear that the CFPB intends to aggressively use its enforcement authority.  He indicated that although “the timing was such” that the CFPB’s initial enforcement actions involved credit card practices, the CFPB is “currently active on many fronts” and “[m]ore activity on [the credit card] front, and on other fronts, will follow in due course.”