United States: CFPB Issues FDCPA And UDAAP Guidance For Creditors And Their Service Providers

On July 10, 2013, the Consumer Financial Protection Bureau (CFPB) issued two Bulletins that address debt collection practices. The first Bulletin, CFPB Bulletin 2013-07, discusses acts or practices that could potentially constitute an unfair, deceptive or abusive act or practice (UDAAP) in violation of the UDAAP provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act").1 The second Bulletin, CFPB Bulletin 2013-08, addresses representations regarding the effect that debt payments may have on a consumer's credit report, credit score or creditworthiness and sets forth the CFPB's supervisory expectations on these issues.2

The Bulletins were accompanied by a set of form letters intended for consumers to use when communicating with debt collectors, and they also coincide with a field hearing in Maine on debt collection that marks the CFPB's acceptance of debt collection complaints through its consumer response system. This alert focuses on the two Bulletins.


The CFPB explains that the first Bulletin is intended to "clarify" the legal obligations of covered persons and their service providers under the Dodd-Frank Act with respect to UDAAP violations related to the collection of consumer debts. The Bulletin effectively imposes the principles of the federal Fair Debt Collection Practices Act (FDCPA) on creditors and does so without a formal notice and comment process. Although creditors are generally exempt from the FDCPA, the Bulletin makes clear that creditors and their service providers must abide by the FDCPA by proxy through UDAAP principles and guidance when engaged in collection practices.

The Bulletin draws heavily from, and in large measure is a restatement of, UDAAP guidance contained in the CFPB's Exam Manual.3 The Bulletin also draws from the unfairness and deception standards developed by Federal Trade Commission (FTC), including by citing to several FTC enforcement actions.4 The Bulletin provides a "non-exhaustive" list of 10 examples of conduct related to the collection of consumer debt that could constitute UDAAPs and states that the CFPB "will be watching these practices closely." Several of the examples are drawn from provisions of the FDCPA. Specific areas of concern identified by the CFPB in the Bulletin include:

  • 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 properly post payments in a timely manner and then charging consumers late fees;
  • Revealing the consumer's debt, without the consumer's consent, to the consumer's employer and/or co-workers;
  • Misrepresenting whether information about a payment or nonpayment would be furnished to a credit reporting agency; and
  • 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.

As a supervisory matter, a view expressed by the CFPB in the guidance, for which no citation to existing guidance is provided, is that the CFPB will look at "implied representations" and whether such representations about the consumer's debt can be supported. On this point, the CFPB states the following: "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." The Bulletin concludes by stating that original creditors, other covered persons and their service providers involved in collecting debt are subject to the prohibition against UDAAPs in the Dodd-Frank Act.


The second Bulletin is based on deception principles and focuses on statements and representations to consumers about the impact that payments on debts in collection may have on credit reports, credit scores and creditworthiness. According to the CFPB, the guidance in the Bulletin is being provided in response to practices observed during supervisory examinations and enforcement investigations.

According to the CFPB, creditors and debt buyers (together referred to in the Bulletin as "debt owners") and third-party debt collectors have been making what is described in the Bulletin as "material" misrepresentations intended to persuade consumers to pay debts in collection. The CFPB expresses concern about the following types of representations:

  • Statements about improvements in a consumer's credit report when the consumer pays debts in collection.
  • Statements about improvements in a consumer's credit score when the consumer pays debts in collection.
  • Statements about improvements in a consumer's creditworthiness, or enhanced likelihood of a consumer receiving credit or more favorable credit terms from a lender when the consumer pays debts in collection.

The Bulletin is clear that "will" statements with respect to these issues are deceptive and are viewed by the CFPB as deceptive under the FDCPA and the UDAAP provisions of the Dodd-Frank Act. For example, the CFPB explains in the Bulletin that statements by debt owners or third-party debt collectors that paying debts in collection will improve a consumer's credit report or credit score are deceptive. The CFPB's position in the Bulletin regarding statements about an improved credit reporting and scoring is based on the view that "numerous factors" bear on such scores and that a payment may not improve a particular consumer's credit score. In essence, these examples expand on the types of debt collection practices enjoined in the CFPB's consent order against American Express.

Additional statements in the Bulletin suggest that the CFPB could view any representations about credit-worthiness or lending terms by debt owners and third-party collectors as possible deception. According to the CFPB, the nature and extent of the impact of a payment on a particular debt in collection to a prospective borrower's creditworthiness can vary and may be based on factors that debt owners or third-party debt collectors will not know. The CFPB goes on to state the following in the Bulletin: "Debt owners or third-party debt collectors may well deceive consumers if they make representations about the nature or extent of improved creditworthiness that result from paying debts in collection."

The Bulletin states that the CFPB may review communication materials, scripts, training manuals and related documentation to assess whether owners of debts and third-party debt collectors are making the types of representations addressed in the guidance and the factual basis for them.


1 CFPB Bulletin 2013-07 is accessible on the CFPB's Web site at: http://files.consumerfinance.gov/f/201307_cfpb_bulletin_unfair-deceptive-abusive-practices.pdf .

2 CFPB Bulletin 2013-08 is accessible on the CFPB's Web site at: http://files.consumerfinance.gov/f/201307_cfpb_bulletin_collections-consumer-credit.pdf .

3 More than half of the legal citations in the first Bulletin are to the provisions of the CFPB's Exam Manual on UDAAP.

4 The CFPB states in a footnote that "to the extent [the Bulletin] cites FTC guidance or authority, such references reflect the view of the FTC, and are not binding upon the [CFPB] in interpreting the Dodd-Frank Act's prohibition on UDAAPs."

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions