On July 2, the CFPB released its Summer 2024 Supervisory Highlights, which focused on the servicing and collection of consumer debt. The report shared key findings from recent supervisory examinations of auto and student loan servicing companies and debt collectors. In addition, the report highlighted issues with deposit and prepaid accounts, with a focus on medical credit card practices. Continue Reading Latest CFPB Supervisory Highlights Focuses on Servicing and Debt Collection Practices

On May 31, the CFPB filed suit in federal court in the Middle District of Pennsylvania against a Pennsylvania-based student loan servicer accusing it of illegally pursuing student loan debts discharged in bankruptcy and providing false information to credit reporting agencies. The CFPB’s lawsuit asks the court to order the servicer to stop its illegal conduct, provide redress to borrowers, and pay a civil penalty.Continue Reading CFPB Takes Legal Action Against Student Loan Servicer for Chasing Debt on Discharged Student Loans

In a significant ruling on March 19, the Third Circuit Court of Appeals held that the CFPB can proceed with its lawsuit against a group of Delaware student loan trusts rejecting their claims that they are just passive financing entities outside the reach of the Bureau’s authority. Continue Reading Third Circuit Ruling Gives CFPB Green Light to Enforce Against Student Loan Trusts

On January 10, the CFPB and the attorneys generals of Colorado, Delaware, Illinois, Minnesota, New York, North Carolina, and Wisconsin sued a New York-based debt relief company and its founders in the U.S. District Court for the Western District of New York for violating the Telemarketing Sales Rule as well as New York and Wisconsin state law.Continue Reading CFPB and Attorneys General Sue Debt-Relief Enterprise

In August, a New York federal district court denied a motion to dismiss a CFPB lawsuit against three affiliated companies engaged in the business of purchasing distressed consumer debt and several of the companies’ owners and officers. The CFPB’s lawsuit involves claims against the defendants for violations of the Consumer Financial Protection Act (“CFPA”) and Fair Debt Collection Practices Act (“FDCPA”) based on a theory of vicarious liability as a result of conduct of the companies’ third-party debt collection vendors.Continue Reading NY Federal Court Rules CFPB Vicarious Liability Suit Can Proceed

On July 7, the CFPB, HHS, and Treasury announced a joint inquiry into high-cost specialty financial products which are being offered to patients as alternate forms of payment for routine medical care. Traditionally, these financial products were used to pay for medical care not covered by traditional health insurance such as dental, vision, fertility services, and cosmetic surgery, but are now being offered to pay for a broader set of services. This inquiry is the next step in an ongoing effort to expand research into medical payment products and medical billing and collections procedures to finer tune actions aimed at relieving the burden these products and procedures place on consumers. To this end, the CFPB is seeking public input into the experiences of consumers, financial service providers, and health care providers alike. The CFPB press release noted the following as the primary concerns driving this inquiry:Continue Reading CFPB, other Federal Agencies Seek Public Comment about Medical Debt

On January 11, the CFPB and a debt-collection law firm it sued in 2019 for illegal debt-collection practices reached settlement. The CFPB included in its initial complaint against the defendant allegations that the law firm falsely represented to consumers that attorneys were actively engaged in overseeing and filing lawsuits, while in a two year period, such law firm employed less than a dozen attorneys and filed more than 99,000 debt-collection lawsuits with minimal supporting documentation. The CFPB alleged this was a violation of the CFPA and FDCPA, which prohibits collecting debts by using false, deceptive, or misleading representations. If the proposed settlement order is entered by the court, it would require that the law firm to:Continue Reading CFPB Settles with “Debt Collection Mill”

On September 8, the U.S. Court of Appeals for the Eleventh Circuit issued an order in Hunstein v. Preferred Collection and Management Services, Inc. dismissing the case after determining that plaintiff failed to allege a concrete harm, and thus lacked standing to sue the debt collector for its use of a third-party mail vendor in connection with its debt collection activities (we discussed this case in a previous blog post here).
Continue Reading Eleventh Circuit Dismisses Debt Collection Letter Case For Lack of Standing

On June 29, the CFPB issued an advisory opinion affirming that the Fair Debt Collection Practices Act (FDCPA) and Regulation F prohibit debt collectors from collecting pay-to-pay or “convenience fees” imposed for making a payment in a particular way, such as by phone or online, when such fees are not expressly authorized by the underlying agreement or otherwise permitted by law. In interpreting FDCPA Section 808, the Bureau’s advisory opinion explains that:
Continue Reading CFPB Advisory Opinion: Pay-to-Pay, “Convenience” Fees Prohibited by FDCPA