Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology
GAO-09-748
Published: Sep 21, 2009. Publicly Released: Oct 21, 2009.
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Highlights
Approximately 6.6 percent of credit cards were 30 or more days past due in the first quarter of 2009--the highest rate in 18 years. To recover delinquent debt, credit card issuers may use their own collection departments, outside collection agencies, collection law firms, or sell the debt. GAO was asked to examine (1) the federal and state consumer protections and enforcement responsibilities related to credit card debt collection, (2) the processes and practices involved in collecting and selling delinquent credit card debt, and (3) any issues that may exist related to some of these processes and practices. To address these objectives, GAO analyzed documents and interviewed representatives from six large credit card issuers, six third-party debt collection agencies, six debt buyers, two law firms, federal and state agencies, and attorneys and organizations representing consumers and collectors.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| To help ensure that the debt collection system better protects consumers without unduly burdening the legitimate process of collection, Congress may wish to consider modifying the Fair Debt Collection Practices Act to account for changes in the marketplace that have occurred in recent years. Among such modifications, Congress may wish to consider, in particular, options for modifying FDCPA to help ensure that debt collectors and debt buyers have adequate information about the debts transferred and adequate documentation to verify the debts they seek to collect from consumers. | Congress has not amended the Fair Debt Collection Practices Act (FDCPA) to specifically address the adequacy of information and documentation of debt collectors and debt buyers. In addition, although the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, granted the Bureau of Consumer Financial Protection rulemaking authority with respect to the collection of debts by debt collectors, the agency has yet to prescribe regulations related to the adequacy of information and documentation of debt collectors and debt buyers. | |
| To help ensure that the debt collection system better protects consumers without unduly burdening the legitimate process of collection, Congress may wish to consider modifying the Fair Debt Collection Practices Act to account for changes in the marketplace that have occurred in recent years. Among such modifications, Congress may wish to consider, in particular, options for modifying FDCPA to reflect technologies that were not prevalent when the act was originally enacted. | Congress has not amended the Fair Debt Collection Practices Act (FDCPA) to specifically address technologies that were not prevalent when the FDCPA was originally enacted. In addition, although the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, granted the Bureau of Consumer Financial Protection rulemaking authority with respect to the collection of debts by debt collectors, the agency has yet to prescribe regulations to address technologies that were not prevalent when the FDCPA was originally enacted. | |
| To help ensure that the debt collection system better protects consumers without unduly burdening the legitimate process of collection, Congress may wish to consider modifying the Fair Debt Collection Practices Act to account for changes in the marketplace that have occurred in recent years. Among such modifications, Congress may wish to consider, in particular, options for modifying FDCPA to provide FTC with the authority to issue rules to implement the act. | In July 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which transferred some authority over the Federal Debt Protection Act (FDCPA) from the Federal Trade Commission (FTC) to the Bureau of Consumer Financial Protection (CFPB). Section 1089 of the Dodd-Frank Act granted CFPB rulemaking authority to prescribe regulations with respect to the collection of debts by debt collectors. |
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