The Consumer Financial Protection Bureau (CFPB) has released a report detailing over 30,000 complaints received about the debt collection industry. Many consumers have voiced concerns over being aggressively pursued for debts they assert they do not owe, with additional grievances about the use of intimidating communication tactics and threats of unlawful actions by debt collectors.
CFPB Director Richard Cordray emphasized, “It is unacceptable for consumers to be badgered over debts they do not owe. Harassment and threats of prohibited actions in debt collection will not be tolerated. We remain committed to ensuring consumers are treated with respect and fairness.”
Debt collection, a billion-dollar sector, involves over 4,500 firms across the country. These firms may be directly collecting on behalf of the original creditors or might be third-party collectors or debt buyers. In 2013, around 30 million Americans were dealing with an average of $1,400 in collections. The primary regulation safeguarding consumers in this industry is the Fair Debt Collection Practices Act (FDCPA) of 1977, with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 giving the CFPB authority to enforce and issue rules under this law. The Bureau’s annual report to Congress highlights its efforts to enforce the FDCPA.
Consumer Complaints Overview: Since July 2013, when the Bureau began accepting complaints about debt collection, these reports have become the largest category of complaints received monthly. Key issues identified include:
Persistent attempts to collect a debt not recognized by the consumer, constituting more than a third of all complaints. Many consumers disputed the validity of these debts, citing reasons such as mistaken identity, previous payment, identity theft, or bankruptcy discharge.
Nearly a quarter of complaints involved debt collectors using aggressive or inappropriate communication tactics, including frequent calls, sometimes to incorrect numbers, or the use of offensive language.
Around 14% of complaints related to debt collectors taking or threatening unlawful actions, such as false threats of arrest or property seizure.
2013 Advances in Debt Collection Oversight: In 2013, the CFPB implemented a rule bringing approximately 175 major debt collection firms under its supervision. Additionally, the Bureau initiated the process for potential consumer protection regulations in the debt collection industry with an Advance Notice of Proposed Rulemaking (ANPR), seeking insights on various topics including information accuracy and consumer rights.
The CFPB also undertook enforcement actions against entities like CashCall Inc. for illegal debt collection practices and Cash America International, Inc., mandating a refund to consumers for wrongful debt collection lawsuit practices.
Furthermore, the Bureau has provided resources for consumers, including sample letters for correspondence with debt collectors and an online tool, Ask CFPB, offering answers to over 85 debt collection-related questions. Through continued supervision and enforcement, the CFPB aims to address and prevent legal violations within the debt collection market.
Check the original article on this link.
Comments