Stopping abusive debt collection: Operation Collection Protection.WASHINGTON, D.C. — Auto finance wasn’t singled out, but it was mentioned when the Federal Trade Commission (FTC), joined by officials with Consumer Financial Protection Bureau (CFPB) and state and local authorities, announced on Wednesday during a press conference the first coordinate enforcement crackdown on deceptive and abusive debt collection practices.

In announcing Operation Collection Protection, the regulators said 30 new law enforcement actions were brought by federal, state and local law enforcement authorities against debt collectors, bringing the total number of actions brought this year to 115.

Two of the actions listed in the FTC’s 21-page enforcement list were Ohio-based Security National Automotive Acceptance Co. and Los Angeles-based Westlake Financial Services. On Oct. 28, the prior was ordered by the CFPB to pay $3.28 million in refunds and fines to resolve charges that its debt collection practices violated multiple consumer-protection laws. On Oct. 1, the bureau ordered Westlake and its title-lending subsidiary, Wilshire Consumer Credit LLC, to provide consumers with $44.1 million in cash relief and balance reductions and pay a $4.25 million civil penalty for similar violations.

During yesterday’s press conference, FTC Chairwoman Edith Ramirez stated that, although the coalition is looking across the board — not just at auto lenders — she knows that it is certainly an issue in the auto industry. “The CFPB, of course, has authority in this area and they have been very vigilant …,” she noted.

The enforcement initiative will include federal, state and local enforcement agencies, which will work together in an attempt to enforce proper debt collection practices and educate the public on what constitutes as abuse.

“I oversee about 20-plus industries, including non-depository institutions and lenders … in the auto lending space, in particular, too, and we have seen bad practices,” said Minnesota Commerce Commissioner Mike Rothman. “… It goes beyond just the lending. There are serious issues out there where consumers' rights are being ignored and/or abused, but it's an area on our radar screen as well.”

The crackdown has and will continue to target an emerging practice involving third-party collection agencies purchasing old, uncollected debts and attempting to collect on them despite the original creditor having written them off. Called “zombie” or “phantom” calls, the practice was the No. 2 compliant consumers reported to federal agencies in 2014.

For related resources, please see the FTC’s press release.