CFPB Opens Inquiry Into Employer-Driven Debt

The Consumer Financial Protection Bureau yesterday announced it has opened an inquiry and is soliciting information from the public regarding debts that are owed by employees to their employers, often through requirements that employees pay for equipment, training, or other supplies.

A copy of the announcement can be accessed by clicking here.

The announcement from the CFPB comes less than six weeks after a group of Senate Democrats wrote a letter to CFPB Director Rohit Chopra asking him to investigate the use of Training Repayment Agreements (TRAs), which some companies use to require employees to pay a pre-determined amount of money if they leave their jobs within a certain period of time.

The Request for Information published by the CFPB specifically addresses the use of TRAs, as well as debts owed to an employer for up-front purchases of equipment and supplies that are required by the employer, but not paid for by the employer.

Among the questions asked by the CFPB in the RFI are a series related to how these debts are serviced and collected, including:

  • How are payments collected?
  • What collection practices are used by employers collecting employer-driven debt?
  • Are employers collecting employer-driven debt engaging in collection activities in-house or through third-party debt collection companies or finance companies?
  • If employers engage third-party debt collection companies, what type of oversight are they conducting?
  • Do employers or their agents threaten or engage in debt collection lawsuits to collect these debts?
  • Do employers or their agents cease collection efforts when a worker files for bankruptcy? Do employers or their agents cease collection efforts when a worker obtains bankruptcy discharge? How are payments collected?

“The labor market operates at its best when workers are able to move freely within it,” said Chopra, in a statement. “Our inquiry is about studying the effects of an emerging form of debt that may have the potential to trap employees in place.”

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