Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36For more information, please visit or 23 22 key Trends Federal and state agencies are continuing the trend we identified in last year’s report of working together and pooling resources to initiate joint investigations and actions. These actions continue to focus primarily on debt collectors providing false or unverified information to credit reporting agencies, attempting to collect un- verified debts, and using unlawful collection practices like harassing phone calls and threats of legal action, misrepresenting affiliations with government agencies, altering collection affidavits filed in courts, and inflating the amount of acquired debts. Federal and state enforcement agencies also contin- ued to focus on national banks and credit unions trying to collect debts owed by military servicemembers. In three separate actions, all brought by the DOJ, an auto finance company, national bank, and regional credit union each entered into settlements after they alleged- ly repossessed servicemembers’ vehicles without SCRA-required court orders. We predicted last year that enforcement actions relat- ed to student debt relief may become more prominent as the volume of student debt continues to climb. That proved true as federal and state enforcement agencies launched many high-profile actions against companies offering modification services pertaining to student loans. While the CFPB and FTC each brought multiple actions, attorneys general in Massachusetts, the District of Columbia, Florida, and Washington also targeted student debt, focusing on the imposition of up-front fees for modification services (often offered for free by government agencies), promises to reduce student loan debt by fixed amounts, and misrepresenting affiliations with government agencies. State attorneys general also brought enforcement actions related to payday lending, securing temporary restraining orders and settlements with payday loan companies that attempted to collect unowed debts and engaged in misleading telephone calls with consumers and third parties geared toward embarrassing delinquent consumers. 2016 Highlights Supreme Court to Decide Whether FDCPA Claims Are Preempted by Bankruptcy Code. On October 11, 2016, the Supreme Court granted review in Johnson v. Midland Funding LLC, and a decision is expected this year. In Midland, a bankruptcy appellate panel of the Eleventh Circuit ruled that “debt collectors may be liable under the FDCPA for bankruptcy filings they know to be time-barred.” That court found no “irreconcilable conflict” between the Bankruptcy Code and the FDCPA, reasoning that “[a]lthough the Code certainly allows all creditors to file proofs of claim in bankruptcy cases, the Code does not at the same time protect those creditors from all liability.” The Seventh Circuit recently reached debt collection + debt settlement During 2016, Goodwin tracked over 50 federal and state enforcement actions related to debt collection and debt settlement relief services. Debt collection actions primarily focused on misleading or harassing communications, altering collection documents filed in state courts, reporting disputed or unverified debts to credit reporting agencies, and failing to comply with protections afforded to military servicemembers. Debt settlement actions targeted false promises to reduce a consumer’s debt, charging up-front fees, and misrepresenting affiliations with government agencies. The total number of actions tracked in 2016 represent more than a 25% increase in overall enforcement activity related to debt collection and debt settlement services, largely attributable to a significant increase in the number of actions related to student loan debt relief operations. All told, these actions resulted in federal and state agencies securing just over $400 million in consent judgment and court judgments, and many of these actions resulted in temporary restraining orders or permanent injunctions requiring cessation of all operations. Many of these judgments and injunctions were the result of the FTC’s joint enforcement initiative with states attorneys general called “Operation Collection Protection,” which seeks to bring civil and criminal enforcement actions against debt collection companies engaged in illegal collection tactics In addition to initiating a plurality of these enforcement actions, the CFPB published an outline of proposals for the first significant amendments to rules promulgated under the FDCPA since the statute’s enactment. A formal notice of proposed rulemaking has yet to be published in the Federal Register, but if the Small Business Review Panel’s outline is any indication, debt collectors and debt purchasers are likely to face stringent new compliance burdens. 3B - Revised Debt Collection Number of Actions 0 5 10 15 20 25 CFPB State AG or Agency FTC DOJ / USAO U.S. Postal Inspection Service OCC $4.2M $8.3M $16.6M $77.4M $84.3M $265.1M 2 2 11 14 22 8 4 - Total Actions 0 10 20 30 40 50 60 70 80 S t a t e S t a t u t e o r R e g u l a t i o n C F P A F T C A F D C P A T I L A F C A E C O A F H A F C R A E F T A S C R A R E S P A F I R R E A 2015 2016 7 7 5 4 1 8 6 8 2 12 8 14 12 5 11 11 20 16 13 24 35 34 24 45 57 62 $224.0M 2016 Actions by Agency — Debt Collection & Debt Settlement