Markets Wired

At a time when many consumers are having trouble paying their debts, the Federal Trade Commission issued its 33rd annual report describing the agency’s law enforcement and other efforts to protect consumers from unfair, deceptive, and abusive debt collection practices. The Fair Debt Collection Practices Act (FDCPA) prohibits these and other improper practices by third-party debt collectors and requires that the Commission submit annual reports to Congress discussing the agency’s administration of the FDCPA.

Data in the report show that in 2010, as in other recent years, the FTC received more complaints about debt collection than any other single industry. Specifically, the agency received 140,036 debt collection complaints in 2010, up from 119,609 complaints in 2009. The top three categories of complaints about third-party collectors were:

• calling repeatedly or continuously;
• misrepresenting the character, amount, or status of the debt (including demanding a larger payment than is permitted by law); and
• failing to send consumers a statutorily required written notice about the debt and their rights.

The annual report also reviews the Commission’s debt-collection law enforcement actions, consumer and industry education efforts, and research and policy initiatives. It describes a series of workshops that the FTC conducted about consumer protection concerns that arise in the arbitration and litigation of consumer debts, culminating in a report issued by the FTC in July 2010 that made recommendations for further actions. In addition, the report describes an industry-wide investigation that the Commission is conducting of the debt buying industry; a developing enforcement policy on collecting the debts of deceased persons; and an upcoming workshop on the consumer protection impacts of advancing technologies employed in debt collection.

Finally, the report notes that there will be changes in FDCPA administration under the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted last July. As of July 21, 2011, a new agency created by the Act, the Consumer Financial Protection Bureau, will have the authority to issue rules under the FDCPA governing debt collection practices. Both the FTC and the CFPB will have the power to enforce the FDCPA and any rules issued under it. Future annual reports to Congress on the administration of the FDCPA will be prepared by the new agency.

The Commission vote to issue the report was 5-0. (FTC File No. P114807; the staff contact is Julie Bush, Bureau of Consumer Protection, 202-326-3224.)