2024 Year in Review: Debt Collection and Debt Settlement

Looking Ahead to 2025 

Although Consumer Financial Protection Bureau (CFPB) priorities and mandates are undergoing shifts with the new Trump administration, the CFPB pledged in 2024 to continue its efforts to eliminate allegedly illegal debt collection practices, particularly in the areas of medical debt and rental debt, and protect consumers from abusive collection tactics, relying primarily on the resources available under the Fair Debt Collection Practices Act (FDCPA). That said, state agencies may overtake federal enforcement actions in 2025, as they did during the first year of President Trump’s first term in 2017. Back in 2017, state attorneys general and agencies brought more than half of the debt collection and debt settlement enforcement actions. Year over year, from 2017 to 2020, the overall number of debt collection and settlement actions decreased (although total recovery during the last year of President Trump’s first term peaked to just higher than 2018 levels). It is expected that 2025 federal enforcement actions may be significantly lower than the 2024 level, and state agencies may step in to enforce state debt collection laws and regulations. 

Key Trends From 2024 

State and federal enforcement agencies continued to investigate and enforce debt collection laws throughout 2024 but at a lower rate than in years past. Goodwin tracked 16 enforcement actions related to debt collection and settlement in 2024, which represents a decline from the 22 such actions in 2023. Of those 16, nine were brought by the Federal Trade Commission (FTC) or CFPB, five were initiated by state agencies, and two were joint federal-state efforts. These regulators primarily relied on the FDCPA, the Federal Trade Commission Act (FTC Act), and the Consumer Fraud and Abuse Prevention Act (CFPA), as well as various state statutes and regulations, to assist in their investigatory and enforcement efforts in the space. Collectively, these actions resulted in more than $30.3 million in monetary recovery, including civil penalties, consumer relief, and disgorgement.  

In the News 

Medical debt was a significant focus of the CFPB in 2024 and one of the two areas highlighted in the CFPB’s 2024 annual report.  

The CFPB issued a proposed rule in June 2024 to prohibit the inclusion of medical bills on most credit reports and prohibit lenders from using information regarding a consumer’s medical debt to determine credit eligibility. The rule was finalized in January 2025 and, according to the CFPB, will have the effect of removing an estimated $49 billion in medical bills from the credit reports of approximately 15 million Americans.  

The CFPB also issued an advisory opinion in October 2024 “to remind debt collectors” of their obligations to comply with the FDCPA’s and Regulation F’s prohibitions on false, deceptive, or misleading representations or means, and the use of unfair or unconscionable means, in connection with the collection of medical debt. According to the CFPB’s advisory opinion, “debt collectors are strictly liable under the FDCPA and Regulation F” for engaging in any of the following practices when collecting medical bills: collecting an amount that is (1) not owed due to federal or state law, (2) in excess of amounts permitted under law, (3) already paid (including by insurance), or (4) for services not rendered; misrepresenting the nature of legal obligations; or collecting medical bills without a reasonable basis for asserting that the debts are valid and the amounts accurate. The CFPB also issued a related consumer advisory detailing suggested actions consumers may take upon receipt of an attempt to collect a medical debt.  

In addition, as highlighted by the 2024 annual report, the CFPB has continued to focus its attention on residential rental debt, an area the CFPB began monitoring in August 2023. According to the report, with respect to both medical and rental debt collection, the CFPB has identified a trend in complaints related to increased “financialization” (i.e., the introduction of new financial products into a debt market). Specifically, the CFPB has reported an increase in consumer complaints about high interest rates, the attempted collection of debts not owed (including due to the alleged assessment of improper fees and charges), the retroactive application of interest after a period of deferment, and negative credit reporting on debt-servicing products offered by nonprofit hospitals and other medical providers.

2024 Enforcement Highlights

CFPB and State Attorneys General File Suit Against Debt-Relief Companies 

In January 2024, the CFPB and seven state attorneys general filed suit in federal court against a New York–based financial consultant company, Strategic Financial Solutions LLC, its chief executives, and several related entities for allegedly running an illegal debt relief service scheme in violation of the Telemarketing Sales Rule and various state laws. According to the complaint, the company and its alleged “web of shell companies” targeted consumers and charged illegal advance fees for promised debt relief services but actually provided very little debt-relief services. Instead, it allegedly employed a scheme to use shell companies and law firms to hide the company’s illegal activities from law enforcement. In January 2024, the U.S. District Court for the Western District of New York granted the plaintiffs’ request for a temporary restraining order. In September 2024, several defendants filed motions to dismiss, and in December 2024, the magistrate judge for the case issued a Report and Recommendation recommending that the motions to dismiss be denied.  

FTC Files Suit Against Third-Party Bill Payment Company 

In April, the FTC filed suit against Washington-based third-party bill payment company Doxo Inc. and two of its chief executives for allegedly engaging in deceptive and misleading practices in violation of Section 5(a) of the FTC Act, Section 521 of the Gramm-Leach-Bliley Act (GLB Act), and the Restore Online Shoppers’ Confidence Act (ROSCA). According to the complaint, the company misled consumers regarding its relationship with billers to which consumers owed payments and charged consumers “junk fees” for using its third-party bill payment service. The FTC alleged that the company misrepresented itself in search engine advertisements and charged consumers millions of dollars in “delivery fees” for using its bill payment service, which the consumers allegedly would not have paid had they paid their bills through their billers’ official channels. The FTC is seeking a permanent injunction to prevent future violations of federal law as well as unspecified monetary damages and other relief.  

FTC Sues Debt Collector Over Alleged Deceptive Practices 

In October, the U.S. District Court for the Northern District of Georgia granted the FTC’s motion for a temporary restraining order (TRO) to enjoin debt collector Global Circulation Inc. and its owner and chief executive officer from misrepresenting the status of any debt or its authority to collect to any consumer, threatening to take any unlawful action in connection with promoting or offering any goods or services, or using any false or deceptive means to collect a debt or obtain personal consumer information. The TRO also froze all the company’s assets. According to the FTC’s complaint, the company repeatedly called consumers or their family members regarding a purported “legal matter” but would routinely not disclose its status as a debt collector in violation of the FTC Act and the FDCPA. The FTC also alleged that the company would falsely threaten consumers with legal action or arrest if the purported debt was not paid, including in many instances in which the consumers did not even owe the debt in question.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.