Consumer Bureau Targets Rental Debt Collection, Junk Fees

The Consumer Financial Protection Bureau (CFPB) has received more than 1,700 complaints about rental-debt collection, according to a new report, and has been taking action against debt collectors.

The report says that in the United States, rental debt is estimated to be more than $9 billion, with more than 4.5 million households behind on rent payments.

Rental-debt collectors often charge renters collection fees in addition to the unpaid rent itself. As the CFPB has observed with medical debt, many debt collectors furnish rental debt to credit-reporting companies as a means of collecting debt through coercion.

The complaints submitted by consumers and the CFPB’s own research show that the infusion of consumer financial products and services into the rental market raises risks for renters, including improper debt collection due to:

• Illegal price-fixing: Law enforcement officials in several states as well as individual renters have alleged that rapid increases in rent have been driven by illegal price-fixing. Landlords and management companies may have used “revenue-management software” to collect improper amounts that ultimately end up in debt collection. Debt collectors collecting on bills that are inflated due to illegal price-fixing may be violating the Fair Debt Collection Practices Act.
• Tacked-on rental fees: Renters, as well as landlords, have complained to the CFPB about rental junk fees, including fees from rental-payment processing services that are added onto and required as a condition for rent payment. It is often not clear whether these fees are allowed under the lease agreement or local law, and, thus, able to be targeted by debt collectors.

Consumer Financial Protection Bureau Actions

The CFPB is taking steps to ensure that debt collectors follow consumer financial protection laws, including the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.

The CFPB also has brought enforcement actions against debt collectors for their efforts to collect on unsubstantiated debt, unlawfully threatening legal action against consumers, and other violations.