The CFPB has issued a bulletin (Compliance Bulletin 2015-07) to provide guidance to creditors, debt buyers and third-party debt collectors about compliance with the CFPA UDAAP prohibition and the FDCPA when conducting in-person debt collection visits, such as visits to a consumer’s workplace or home.
The bulletin highlights the following potential compliance violations that can result from in-person collection visits:
UDAAP. The CFPA deems an act or practice “unfair” if it causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers and is not outweighed by countervailing benefits consumers or competition. Creditors collecting their own debts as well as debt buyers and third-party debt collectors are subject to the CFPA UDAAP prohibition. The bulletin cautions that, depending on the facts and circumstances, certain in-person collection visits may cause or be likely to cause substantial consumer injury. For example, the CFPB states that because such visits can result in third parties learning that a consumer has debts in collection, they can harm a consumer’s reputation and, if a visit is to the consumer’s workplace, it can result in negative employment consequences. In addition, even if there is no risk of third party disclosure, the CFPB comments that negative employment consequences can still result from workplace visits when the consumer’s employer prohibits employees from having personal visitors. It also states that workplace visits can be likely to cause substantial injury if their likely or actual consequence is consumer harassment.
FDCPA. The bulletin cautions that in-person debt collection visits by debt buyers and third-party debt collectors subject to the FDCPA could violate the provisions of the FDCPA that prohibit:
- Communications with a consumer in connection with the collection of a debt “at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer” or “at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication”
- Communications with any person other than the consumer in connection with the collection of a debt
- Engaging in any conduct the natural consequence of which is to harass, oppress or abuse any person in connection with the collection of a debt
- Using unfair or unconscionable means to collect or attempt to collect any debt
The bulletin’s clear message is that the CFPB does not like creditors, debt buyers or third-party debt collectors to engage in in-person debt collection activities and that companies do so at their extreme peril.