CFPB launches crackdown on phantom and abusive debt collection

The Consumer Financial Protection Bureau announced a nationwide law enforcement and outreach initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices.

The Consumer Financial Protection Bureau announced a nationwide law enforcement and outreach initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices. The agency was joined by the Federal Trade Commission and more than 50 federal and state law enforcement partners in the effort.

Called Operation Corrupt Collector, the initiative includes enforcement actions brought by the FTC, three federal partners, and partners from 16 different states against debt collectors engaged in these illegal practices.

The operation includes five cases filed by the FTC, two cases filed by the CFPB and three criminal cases brought by the U.S. Department of Justice and U.S. Postal Inspection Service. States reporting actions as part of the operation include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina and Washington.

“The CFPB is actively working to protect consumers from illegal actions of debt collectors,” said CFPB Director Kathleen L. Kraninger. “We will continue to monitor the financial marketplace, as well as consumer complaints received, in order to ensure that we identify and take action against debt collectors who are violating the law. Lastly, consumers should know that the Bureau’s consumer complaint system is a resource for them to submit any complaints they may have on their experiences with financial services providers.”

Earlier this month, the CFPB in partnership with the New York Attorney General filed suit against five companies for their participation in a debt collection operation using illegal methods.

Additionally, in 2019, the CFPB along with the New York Attorney General announced a $60 million judgment against a group of companies over allegations they purchased millions of dollars’ worth of consumer debt, inflated those consumer debts and relied on illegal tactics in violation of Fair Debt Collection Protection Act.

In addition to law enforcement actions, the CFPB and state and local consumer protection agencies are joining the FTC in rolling out new information to help consumers know their rights when it comes to debt collection and what steps to take if they receive a call trying to collect on a debt that they do not recognize.

Fredrikson & Byron Law