CFPB’s April actions: It’s raining UDAAP

April has been a busy month for the Consumer Financial Protection Bureau (CFPB), from delaying the debt collection and general qualified mortgage rules, to taking action against three different companies for three different violations.

First, on April 6th the CFPB issued a consent order against Yorba Capital Management and the company’s former owner in his individual capacity for violating the Fair Debt Collection Practices Act (FDCPA). The CFPB states that the debt collection company mailed litigation notice letters to consumers, “threatening to file suit against a consumer if the consumer did not pay [the debt] amount indicated on the letter.” The letters also contained language that implied that legal action against consumers had already begun and listed several methods by which the company could collect on a judgement. The CFPB found that these practices violated the Consumer Financial Protection Act (CFPA) because the letters were deceptive because “the letters falsely represented that consumers would be sued and that there would be further legal action if the consumers did not pay the debt amount on the notices.”

As explained in our blog FDCPA Series Part I: CFPB Issues Final Rule on Debt Collection, the FDCPA does not apply to credit unions that are collecting on their own debts, but this action against Yorba reemphasizes the CFPB’s ability to find debt collection practices a violation not only under the FDCPA but also under the CFPA for being unfair, deceptive, or abusive acts or practices (UDAAPs).

 

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