Debt Collection Litigation Trends Down for Five Months

Here is some good news for the collection industry: Fair Debt Collections Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA) litigations were down during July 2016. The drop was significant: FDCPA suits were down 12.6% and FCRA suits were down 35.1%.

Looking back at previous months to see the trends, we see that filed FDCPA litigation has been dropping consistently. July represents the 5th month in a row of declines, as compared to the same periods in 2015.

Measuring the quantity of actual lawsuits: through July 2016, there were 6211 filed FDCPA cases compared to 7120 at the same time last year. That decline of 909 lawsuits is good news for the industry because it indicates more compliance with federal regulations. In addition, Consumer Financial Protection Bureau (CFPB) complaint volume is lower than 2015 numbers by 10.9%. (Source:

The drop in FDCPA litigation is not due to the CFPB reducing the quantity of inspections. On the contrary, the CFPB is aggressively increasing the number of inspections and causes for non-compliance. As we discussed in a previous blog post titled “The CFPB Steps Up Collection Agency Scrutiny”, in March 2016 CFPB Director Richard Cordray referred to recent consent orders as a “guide” for all participants in the ARM industry to adhere to in order to avoid violations. He specifically told the Consumer Bankers Association that any company not following the precedents set by the CFPB’s consent orders is committing “compliance malpractice.”  (You can read his entire remarks here).

CFPB compliance is always a critical issue for collection agencies. Consumer complaints and filings can result in penalties and fines that can cost a business many thousands of dollars. Sometimes it takes only one financial penalty to put an agency out of business. The wise agency is regularly checking their compliance adherence to ensure that they can prove that they are meeting the regulations’ requirements.

In addition, a big part of compliance is the payment processing services and solutions utilized by an agency to collect payments. It is vital that your payment processor, and any other vendors involved in the payment process, can provide PCI-DSS, HIPAA, and SSAE-16 certifications to ensure your payment cycle is compliant with all governing entities. BillingTree has completed another successful year of achieving compliance with the following standards; PCI-DSS 3.1, HIPAA Security, and SSAE 16, so you can rest assured that our payment processing is well within code guidelines. If you would like to learn more about compliance issues and to find additional compliance resources Contact Us today.