This coming January, the Consumer Financial Protection Bureau will begin supervising large debt collectors. This is welcome news to many debtors. The Federal Trade Commission reports that the debt collection industry has been at the top of the list in terms of the number of complaints received for the past 4 years.
Most Americans have experienced some level of financial hardship over the past couple of years, and that oftentimes leads to unpaid bills. There are strict guidelines to follow for debt collectors, but unfortunately not every debt collector follows the rules. To be fair, chances are that someone is more likely to file a complaint against a debt collector who abuses his position as opposed to reporting a debt collector who was courteous and followed the guidelines. Add in the fact that a person dealing with a debt collection agency is most likely already stressed out. That combination means that the debt collection companies who break the rules and harass debtors continue to cast a shadow on the industry as a whole.
Debt Collection Rules
The Consumer Financial Protection Bureau, or the CFPB, was established by Congress to protect consumers by carrying out federal consumer financial laws. The Federal Trade Commission (FTC) is in charge of enforcing the Fair Debt Collection Practices Act. This Act prohibits deceptive, unfair and abusive collection practices. These two organizations will work together to find the debt collectors who give the industry a bad name.
The Consumer Financial Protection Bureau will oversee collection agencies with more than $10 million in annual receipts from consumer debt collections. According to Richard Cordray, director of the Consumer Financial Protection Bureau, this new authority will “extend to about 175 debt collectors, which account for over 60 percent of the industry’s annual receipts in the consumer debt collection market.” The $10 million amount encompasses both large and small collection agencies, but exceptionally small agencies remain unchecked by the federal government to this extent. Many large banks and other lenders already fall under the authority of this bureau.
The Bureau will check to see if debt collectors take the following steps:
- Provide Accurate information regarding the debt they are attempting to collect
- Provide the required disclosures by properly identifying themselves as debt collectors and providing the correct debt amounts
- Provide a complaint and dispute resolution process
- Communicate honestly with customers and refrain from harassing customers
Pat Morris, chief executive of ACA International said that the ACA’s members “embrace consumer protection but it has to be balanced with the industry’s ability to do their jobs in recovering rightly owed consumer debt.”
The Consumer Financial Protection Bureau, the Federal Trade Commission and the ACA understand that this is a difficult situation. It is bad financial and public policy to allow debts to go uncollected, but collection agencies should not resort to threats and harassment to collect payments from consumers.
Hopefully the Consumer Financial Protection Bureau will be able to eliminate the unscrupulous debt collectors and create a clearer more amicable collection process. Nevertheless, if you are the victim of illegal debt collection, contact our office to discuss your situation.