The CFPB agrees with consumers: Action needs to take place against illegal debt collection practices and it needs to happen now.
Do you agree? You will if you are one of the 77 million Americans who are hounded each year by debt collectors. And now the Consumer Financial Protection Bureau (CFPB) is taking on this $13 billion industry. At a July 28 field hearing in Sacramento, Richard Cordray, CFPB Director, announced the Bureau’s intent to rein in illegal practices that harass and rob consumers.
“Today we are considering proposals that would drastically overhaul the debt collection market. Our rules would apply to third-party debt collectors and to others covered by the Fair Debt Collection Practices Act, including many debt buyers. . . . The basic principles of the proposals we are considering are grounded in common sense. Companies should not collect debt that is not owed. They should have more reliable information about the debt before they try to collect,” said Director Cordray.
“In the debt collection market, notably,” he continued, “consumers do not have the crucial power of choice over those who do business with them when creditors turn their debts over to third-party collectors. They cannot vote with their feet. They have no say over who collects their debts, and they likely know next to nothing about the collector until they receive a call or a letter. This can quickly lead to a barrage of communications, which in some cases are designed to be harassing or intimidating.”
What are the some of the specifics? A recent national consumer poll found broad and bipartisan concerns regarding debt collectors that sue without evidence. Overall 84 percent of respondents expressed concerns about a million consumers being sued each year without evidence to prove their cases in court.
Other violations include repeated nuisance calls, calls made to neighbors, employers and relatives, threatening calls and calls that include profanity.
Collection letters often include wording not allowed by the CFPB and sometimes letters will indicate they are from government agencies or law firms when they are not.
Will the efforts by the CFPB be met with success? It is too early to tell, however, Lisa Stifler, Deputy Director of State Policy and leader of CRL’s debt collection work is hopeful but cautious: “We commend the CFPB for seeking reforms to this issue that harms millions of people, particularly low-income consumers and communities of color. However, we are concerned that the proposals do not go far enough to protect consumers from unfair collection attempts. Specifically, the proposal does not go far enough to require that debt collectors adequately document that they are pursuing the right person for the right debt,” Stifler added. (Italics ours)
So if efforts “do not go far enough” how exactly will consumers find relief from the law-violating debt collection industry? Our next blog will cover some proven remedies that work well for proactive consumers who are not content to wait to be rescued.