If you have had a bad experience with a debt collector, the Consumer Financial Protection Bureau wants to hear from you. The bureau says it’s getting ready to update rules governing how debt collectors may communicate with borrowers.
The bureau said it was also seeking information from debt collection companies and consumer advocates as it prepares the new rules.
“We want to hear how we can better protect consumers and bring greater accountability to this multibillion-dollar industry without hamstringing legitimate debt collection activities,” the bureau’s director, Richard Cordray, said in a call with reporters.
This summer, the bureau began receiving complaints about debt collectors. Since then, Cordray said, gripes about collections have outnumbered complaints about other financial products the bureau covers, like credit cards and private student loans. Collection companies have responded to 5,000 complaints from consumers, he said. Complaints include having collectors try to collect on debt that consumers have already paid off, or that they never owed in the first place.
Debt collection has become more of a problem since the recent recession, Cordray said, when many people lost their jobs or their homes and couldn’t afford to pay their bills. An estimated 30 million people have at least one debt in collection, at an average of about $1,400 per person.
The bureau’s rules would apply to all sorts of debt, including medical debt, which tends to end up frequently on consumer credit reports because of the complexities of health insurance billing.
“We agree that modernizing the nation’s consumer debt collection system is important so long as changes are based on common sense solutions that preserve balance between consumer protection and the ability of a creditor or debt collector to lawfully recover debts,” said a statement from ACA International, a trade group representing debt collectors.
Third-party debt collectors — those hired by lenders or businesses to collect debts on their behalf — are already barred from harassing or abusing consumers by the Fair Debt Collection Practices Act, enacted in 1977.
But Cordray said his bureau was given authority in the Dodd-Frank Act to issue new rules to update the law and address new concerns. The bureau now has primary responsibility for the fair debt collection law, but shares enforcement responsibility with the Federal Trade Commission.
The fair debt collection law predates cellphones and texting. So while it bars collectors from calling early in the morning or late at night, that restriction can become confusing when consumers move to an area code that may be in a different time zone and retain their old phone number, bureau officials said.
The Federal Trade Commission recently brought what it said was the first enforcement action against a debt collection company that violated the law by texting consumers without their consent and failing to include necessary disclosures in its text messages.
Margot Freeman Saunders, a lawyer with the National Consumer Law Center, said collection firms were increasingly seeking access to consumers through mobile phones, which poses privacy issues. Unlike landlines, which you answer in your own home, mobile phones can be called when you are in public, she noted.
“Debt collectors don’t just make one phone call,” she said. “They make hundreds, thousands of calls. They can be quite abusive.”
Bureau officials said they would also be considering whether companies that collect debts on their own behalf, like banks, should be subject to restrictions similar to those for outside collection firms.
Here are some questions to consider:
How can I submit a comment about debt collection?
You can go to Regulations.gov, or to RegulationRoom.org, a site operated by Cornell University. The bureau said it expected to accept comments until sometime in February.
Where can I see debt collection complaints filed with the Consumer Financial Protection Bureau?
The bureau makes complaints available through a Consumer Complaint Database on its website.
How can I submit a complaint about debt collection?
The bureau’s website has an area where you can file complaints. You can also contact your state attorney general’s office; some states have different rules for debt collectors, and their office may be able to help you decide what to do. The National Association of Attorneys General has contact information.