CFPB cracking down on debt collectors
The U.S. Consumer Financial Protection Bureau announced that it is considering new consumer protection rules for debt collectors.
The bureau is also adding thousands of consumer complaints about debt collections to its public consumer complaint database.
“Through its Advance Notice of Proposed Rulemaking (ANPR), the Bureau is collecting information on a wide array of issues, including the accuracy of information used by debt collectors, how to ensure consumers know their rights, and the communication tactics collectors employ to recover debts,” said a CFPB press release on Wednesday.
“For decades, many consumers have reported various unacceptable practices in the debt collection industry. Today’s action will allow us to hear from the public as we consider what rules are needed,” said CFPB Director Richard Cordray. “We want to ensure that all players in the industry are working with correct information, that consumers are fully informed, and that consumers are treated fairly and with dignity.”
In 2010, the Dodd-Frank Wall Street Reform law revised the 1977 Fair Debt Collection Practices Act to give CFBP the power to “issue substantive rules under the statute.”
The CFPB started accepting debt collection complaints in July of this year, which have already become one of the “highest categories of grievances,” the bureau said. Approximately 5,000 consumer debt collection complaints are being added on Wednesday.
“Consumers say that some collectors harass them, demand amounts they do not owe, and threaten dire circumstances if they don’t pay, such as jail,” said the release.
In particular, the CFPB is concerned about the transfer of records from an original creditor to third-party debt collection firms and from those parties to other debt collectors and credit bureaus. CFPB wants to improve the accuracy of the consumer information being transferred and examine the communication practices of debt collectors.
“The CFPB is concerned that debt collectors may try to collect money for debts from the wrong consumers. Debt collectors have been known to send a notice of debt to the wrong address and, in some cases, to incorrectly furnish information to credit bureaus on the wrong person,” said the CFPB’s release.
“The CFPB is concerned that debt collectors may try to collect more than what the consumer owes on a debt. The CFPB has heard reports that sometimes the consumer already paid off the debt in part or in whole, but the collector’s records do not accurately reflect the consumer’s payments,” the release also said.
The bureau intends to better educate consumers so they have a clear understanding of their rights when being pursued to pay off a debt.
The CFPB said its complaint database “currently contains more than 155,000 complaints on a wide variety of financial consumer issues, including mortgages, student loans, and credit cards.”
The public can comment on the ANPR by following instructions at www.regulations.gov. The comment period will last for 90 days from the date the ANPR is published in the Federal Register.