CFPB: Prohibition of Unfair, Deceptive, or Abusive Acts or Practices in the Collection of Consumer Debts

Business Concepts

Unconscionable Acts by Debt Collectors

 

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act), all covered entities are legally required to refrain from committing unfair, deceptive, or abusive acts or practices (collectively, UDAAPs) in violation of the Act.
Certain acts or practices related to the collection of consumer debt that could, depending on the facts and circumstances, constitute UDAAPs prohibited by the Dodd-Frank Act. Whether conduct like that described in this bulletin constitutes a UDAAP may depend on additional facts and analysis.

The examples described in this bulletin are not exhaustive of all potential UDAAPs. The Bureau may closely review any covered person or service provider’s consumer debt collection efforts for potential violations of Federal consumer financial laws.
A. Background

UDAAPs can cause significant financial injury to consumers, erode consumer
confidence, and undermine fair competition in the financial marketplace. Original
creditors and other covered persons and service providers under the Dodd-Frank Act
involved in collecting debt related to any consumer financial product or service are
subject to the prohibition against UDAAPs in the Dodd-Frank Act.
In addition to the prohibition of UDAAPs under the Dodd-Frank Act, the Fair Debt
Collection Practices Act (FDCPA) also makes it illegal for a person defined as a “debt
collector” from engaging in conduct “the natural consequence of which is to harass,
oppress, or abuse any person in connection with the collection of a debt,” to “use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” or to “use any unfair or unconscionable means to collect or
attempt to collect any debt.”

The FDCPA generally applies to third-party debt collectors, such as collection agencies, debt purchasers, and attorneys who are regularly engaged in debt collection.

All parties covered by the FDCPA must comply with any obligations they have under the FDCPA, in addition to any obligations to refrain from UDAAPs in violation of the Dodd-Frank Act.

Although the FDCPA’s definition of “debt collector” does not include some persons who collect consumer debt, all covered persons and service providers must refrain from committing UDAAPs in violation of the Dodd-Frank Act.
B. Summary of Applicable Standards for UDAAPs

1. Unfair Acts or Practices

The Dodd-Frank Act prohibits conduct that constitutes an unfair act or practice. An
act or practice is unfair when:

(1) It causes or is likely to cause substantial injury to consumers;
(2) The injury is not reasonably avoidable by consumers; and
(3) The injury is not outweighed by countervailing benefits to consumers or to
competition.
A “substantial injury” typically takes the form of monetary harm, such as fees or
costs paid by consumers because of the unfair act or practice. However, the injury
does not have to be monetary.

Although emotional impact and other subjective
types of harm will not ordinarily amount to substantial injury, in certain
circumstances emotional impacts may amount to or contribute to substantial injury.
In addition, actual injury is not required; a significant risk of concrete harm is
sufficient. An injury is not reasonably avoidable by consumers when an act or practice
interferes with or hinders a consumer’s ability to make informed decisions or take
action to avoid that injury.

Injury caused by transactions that occur without a consumer’s knowledge or consent is not reasonably avoidable. Injuries that can only be avoided by spending large amounts of money or other significant resources also may not be reasonably avoidable.

Finally, an act or practice is not unfair if the injury it causes or is likely to cause is outweighed by its consumer or competitive benefits.

Established public policy may be considered with all other evidence to determine
whether an act or practice is unfair, but may not serve as the primary basis for such
determination.

2. Deceptive Acts or Practices

The Dodd-Frank Act also prohibits conduct that constitutes a deceptive act or
practice. An act or practice is deceptive when:

(1) The act or practice misleads or is likely to mislead the consumer;
(2) The consumer’s interpretation is reasonable under the circumstances;
and
(3) The misleading act or practice is material.
To determine whether an act or practice has actually misled or is likely to mislead a
consumer, the totality of the circumstances is considered.

Deceptive acts or practices can take the form of a representation or omission.

The Bureau also looks at implied representations, including any implications that statements about the consumer’s debt can be supported. Ensuring that claims are supported before they are made will minimize the risk of omitting material information and/or making false statements that could mislead consumers.

To determine if the consumer’s interpretation of the information was reasonable
under the circumstances when representations target a specific audience, such as
older Americans or financially distressed consumers, the communication may be
considered from the perspective of a reasonable member of the target audience.
statement or information can be misleading even if not all consumers, or not all
consumers in the targeted group, would be misled, so long as a significant minority would be misled.

Likewise, if a representation conveys more than one meaning to
reasonable consumers, one of which is false, the speaker may still be liable for the
misleading interpretation.

Material information is information that is likely to
affect a consumer’s choice of, or conduct regarding, the product or service.
Information that is likely important to consumers is material.
Sometimes, a person may make a disclosure or other qualifying statement that might
prevent consumers from being misled by a representation or omission that, on its
own, would be deceptive. The Bureau looks to the following factors in assessing
whether the disclosure or other qualifying statement is adequate to prevent the
deception: whether the disclosure is prominent enough for a consumer to notice;
whether the information is presented in a clear and easy to understand format; the
placement of the information; and the proximity of the information to the other
claims it qualifies.
3. Abusive Acts or Practices

The Dodd-Frank Act also prohibits conduct that constitutes an abusive act or
practice. An act or practice is abusive when it:

(1) Materially interferes with the ability of a consumer to understand a
term or condition of a consumer financial product or service; or
(2) Takes unreasonable advantage of –
(A) a consumer’s lack of understanding of the material risks, costs,
or conditions of the product or service;
(B) a consumer’s inability to protect his or her interests in selecting
or using a consumer financial product or service; or
(C) a consumer’s reasonable reliance on a covered person to act in
his or her interests.
It is important to note that, although abusive acts or practices may also be unfair or
deceptive, each of these prohibitions are separate and distinct, and are governed by
separate legal standards.

C. Examples of Unfair, Deceptive and/or Abusive Acts or Practices
Depending on the facts and circumstances, the following non-exhaustive list of
examples of conduct related to the collection of consumer debt could constitute
UDAAPs. Accordingly, the Bureau will be watching these practices closely.

• Collecting or assessing a debt and/or any additional amounts in
connection with a debt (including interest, fees, and charges) not
expressly authorized by the agreement creating the debt or permitted
by law.

• Failing to post payments timely or properly or to credit a consumer’s account with payments that the consumer submitted on time and then charging late fees to that consumer.

Taking possession of property without the legal right to do so.
• Revealing the consumer’s debt, without the consumer’s consent, to the consumer’s employer and/or co-workers.
• Falsely representing the character, amount, or legal status of the debt.
• Misrepresenting that a debt collection communication is from an
attorney.
• Misrepresenting that a communication is from a government source
or that the source of the communication is affiliated with the
government.
• Misrepresenting whether information about a payment or nonpayment
would be furnished to a credit reporting agency.

• Misrepresenting to consumers that their debts would be waived or
forgiven if they accepted a settlement offer, when the company does
not, in fact, forgive or waive the debt.

• Threatening any action that is not intended or the covered person or
service provider does not have the authorization to pursue, including
false threats of lawsuits, arrest, prosecution, or imprisonment for
non-payment of a debt.

Again, the obligation to avoid UDAAPs under the Dodd-Frank Act is in addition to
any obligations that may arise under the FDCPA. Original creditors and other
covered persons and service providers involved in collecting debt related to any
consumer financial product or service are subject to the prohibition against UDAAPs
in the Dodd-Frank Act. The CFPB will continue to review closely the practices of
those engaged in the collection of consumer debts for potential UDAAPs, including
the practices described above. The Bureau will use all appropriate tools to assess
whether supervisory, enforcement, or other actions may be necessary.

For a copy of this document click here: 201307_cfpb_bulletin_unfair-deceptive-abusive-practices.

6 Responses

  1. JUST FILE MY 10 COMPLAINT TO THE CFPB, LETS SEE WHAT THEY WILL DO ABOUT THIS.

    Describe what happened so we can understand the issue…
    WELLS FARGO & COMPANY, AND ALL AFFILIATES AND ALL SUBSIDIARY’ S OF THE PARENT, WELLS FARGO & COMPANY. IS SAYING THEY OWN MY MORTGAGE AND NOTE/ I HAVE CHECK IT BY AUTOMATION ON THERE PHONE SYSTEMS. AND HAVE COME UP WITH IT SAYING THEY DO NOT HAVE A MORTGAGE IN THE NAME OF THE PARTY. SO HOW COULD A AFFILIATE OF OR A SUBSIDIARY OF WELLS FARGO & COMPANY SAY THEY OWN MY MORTGAGE AND NOTE? WHEN THEY SAY THEY DO NOT AND HAVE NEVER HAD A MORTGAGE AND NOTE OF THE SAID PARTY? I HAVE FILED THIS SAME COMPLAINT TO THE DOJ,FBI, AND ATTORNEY GENERAL OF MASS. WANTING ANSWERS.
    DESIRED RESOLUTION

    What do you think would be a fair resolution to your issue?
    I WANT A CERTIFIED AND NOTARIZED, LETTER SIGN BY THE BOARD OF DIRECTORS, CEO, FROM WELLS FARGO & COMPANY, STATING THAT THEY AND ALL AFFILIATE TO AND ALL OF THERE SUBSIDIARY’S OF ANY KIND, HAVE NEVER HAD THE MORTGAGE AND NOTE OF THE PARTY, IN THE LAST 12 YRS,
    AND THAT THE SAID PARTY DOES NOT OWN WELLS FARGO & COMPANY , OR ANY OF THERE AFFILIATES, OR ANY SUBSIDIARY OF WELLS FARGO & COMPANY. ANY MONEY FOR A NON-EXISTENT MORTGAGE AND NOTE OF SAID WELLS FARGO & COMPANY, OR ANY OF THERE AFFILIATES OR ANY SUBSIDIARY’S OF WELLS FARGO & COMPANY THE PARENT OF ALL SAID AFFILIATES AND SUBSIDIARY’S.

    ALSO THERE IS ANOTHER NAMED PERSON ON THE MORTGAGE, ALONG WITH MR.MARSHALL. THE NAME IS , JOANNA L. BELANGER, I WOULD WANT THE SAME CERTIFICATION ,TO BE GIVEN TO HER. NOW BECAUSE I DO NOT WANT ANY INFORMATION TO BE NOT GETTING TO YOU, AND WELLS FARGO & COMPANY OR ANY OF THERE AFFILIATES OR SUBSIDIARY TO SAY THEY DON”T HAVE ENOUGH INFO , ON THE PARTYS. I AM INCLUDING THAT.
    WILLIAM A MARSHALL, SR. DOB 8-20-1923. SSN. ***********.
    JOANNA L. BELANGER, DOB 6-10-1963. SSN. ***********
    ADDRESS FOR BOTH, ARE THE SAME. 9 RODMAN AVE,SHIRLEY MA,01464

  2. lms, the fact that they used the alleged mods to collect more fees with no intent to modify is a violation.

  3. You may copy and modify the foregoing write-up while writing to law makers to abolish deficiency judgment in all States of the United States.. I disclaim any proprietary reservation to the below.

    Many states have enacted laws that prohibit deficiency judgment following a foreclosure, short sale and deed in lieu and some States do not have laws to prohibit deficiency judgment. One such state is Rhode Island even though the state is the smallest state in the US with hardest hit unemployment during the great recession. The foreclosure in Rhode Island are usually done nonjudicial depriving home owners to redress grievances such as fraudulent and defective assignments and missing promissory notes. The absence of a State statute preventing deficiency judgment against homeowners is like having an insult to injury in these states.

    As many are well aware of, mortgage lenders in the year 2007 or around that time disingenuously designed a scheme to make fast money by introducing tactics such as no document loans, loans with unconscionable interest rates and negative amortization mortgages to quickly generate large profits while pushing the inherent risks off onto others. Mortgage lenders knew that a large portion of the loans were going to be sold to Freddie Mac, Fannie Mae or securitized and sold to investors. Therefore, they even artificially inflated the appraisals of the homes prior to approving mortgages to deceptively attract investors. While mortgage borrowers did in fact sign promissory notes with the original lenders obligating them to repay a certain amount of money, the borrowers did so in reliance on the lenders’ appraisers on the properties that were hugely inflated and were largely unaware that real estate prices were well beyond sustainable levels. This was a massive predatory lending scheme before the recession pushing risks onto homeowners at any cost. The lenders assumed the risk that a market full of upside-down properties would result in massive default judgments with a wishful thinking that they could still make money at the hardship of foreclosed homeowners. This is unjust and unfair.

    Commonsense which is a foundation of law may state that between two parties, the party in the best position to assess the risk should bear the loss. Knowingly lending to people who can’t afford payments is immoral and a predatory lending practice. As equity prevents duplicative or multiple recoveries for the same alleged damages, deficiency judgments after foreclosure, deed-in-lieu or short sale in the State of Rhode Island must be abolished as soon as possible.

    Banks can only foreclose on the collateral -not on the future life of any home owner. Many states such as Alaska, Arizona, California, Hawaii, Minnesota, Montana, Nevada, New Mexico, North Dakota, Oregon, and Washington all have Anti-Deficiency Statute to protect the people who lost their homes by foreclosure sale. The Equal Protection Clause of the Constitution to the United States of America may support the fact that the preclusion of anti-deficiency judgments in certain states including is discriminatory.

    Please write to State senators to bring legislation to prohibit deficiency judgment.

  4. The bankers are “insolvent”, by any stretch of anyone’s abacus (1200 Trillion is 20 X the combined GDP of every country on the planet; an impossible sum).

    There is zero allowance, within Article 1, Section 8, for a criminal, privately-owned and operated, English-based, central banking cartel, to manipulate the “Good Faith and Credit” of the American People.

    The 1200 Trillion are inter-bank, zero-sum game, criminal debts, predicated upon seizing homes in foreclosure, using fraudulent interest rates (LIBOR), forged documents (robo-signing) and counterfeit titles (empty REMIC Trusts designed to conceal the true “Holders In Due Course”) to the debt (mortgage) on the underlying collateral (the home).

    Every single, REMIC Trust is proving DEVOID OF ASSETS!!!

    THERE ARE NO AMERICAN MORTGAGES (RES) IN THOSE “TRUSTS”: IT IS ALL A SCAM!!!!

    The investors to the “Trusts (pools of loans)” and homeowners, alike, have been defrauded by the banks, in order to re-capitalize, in the wake of subprime lending and “Short Sale Derivative’s Speculation”.

    When the time, rapidly approaching, comes, the American Public must be made to understand the banks have destroyed themselves and the phony Federal Reserve, not the United States, its financial capability, or, “Greenback Dollar”.

    The 1200 Trillion are predicated upon “Naked Short Sale Bets” that are, in turn, collateralized by counterfeit titles to American Homes.

    http://stopforeclosurefraud.com/2013/08/31/michael-keane-i-personally-destroyed-thousands-of-mortgage-documents-through-the-same-process-using-a-desk-top-scanner/

    see also, Lynn Szymoniak: http://www.cbsnews.com/news/whistleblower-facing-foreclosure-wins-18-million/

    The “MERS- Mortgage Electronic Registration System” is the first “shell company” used to “PRETEND” to “own” American Homes.

    “Residential Capital – RESCAP” is the second, “shell company”, used to “PRETEND” to “own American Homes.

    The Obama Administration is concealing the fact, Bank of America, Wells Fargo and HSBC (Hong Kong Shanghai Banking Corp- an English-Chinese-hybrid bank), are PRESENTLY!!!! using American Pension plans to pay American “Mortgages”, by laundering terror and drug cartel money.

    See Judge Gleeson’s analysis of the “Deferred Prosecution Agreement”, here: Case 1:12-cr-00763-JG Document 23 Filed 07/01/13.

    At least two Federal Judges, first Gleeson and now, Donnelly, are aware the banks are in violation of “THE TRADING WITH THE ENEMIES ACT”, “THE BANK SECRECY ACT”, “THE ANTI-LAUNDERING MONEY ACTS”, “THE INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT”.

    The banks are using American Pensions to launder terror and drug cartel money and forged documents and fraud and counterfeit titles to homes they never owned, in the first place. Obama’s Justice Dept. under, first Holder and now, Lynch, are concealing these criminal, treasonous behaviors…

    American Soldiers died, at the hands of these cartels, while the Obama Administration covered for the cartels that killed those American Soldiers…

    If that isn’t “Treason”? I cannot imagine a better example…

    >>> And, the present, FBI Director, James Comey, sat, as an executive on the board of the English-Chinese-hybrid bank, “HSBC”, that gave the money to kill American Soldiers, while his banking playmates were busy robbing the families of those soldiers, of their homes, using forgery, fraud and counterfeit title.

    ~Michael Keane 8/26/16

  5. I would like to knowwhat recourse i have when the bank reneged on 2 loan mods that chase offered me under different corps( they obviously had no clue who owned my note at the time they offered me the loan mods and then after reneging on them slammed me into foreclosure and acting as if they never offered me anything. I believe the term is called NOVATION and that is when they change the terms of the original contract which Chase did and thenTreated the loan in the same predatory manner they originally gave it to me. I wont even go there with the iincompetence of their stupid stupid attorneys.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: