Daddy, Make the Bad Man Go Away

5. Protect the Privacy of Debtors

The scam artists who try to collect those phony debts are able to do so because the personal information of so many people is so easily available in so many places. No reader of this column can doubt that personal information is not adequately protected by law, or by any other way. But even if a given debt collector is not a hardened criminal, the banks and other vendors who sell off their bad debts necessarily include the personal information of the debtor as part of the sale! So yet again, you can’t know who’s got their hands around the neck of your identity. But given the fact that abuses are commonplace and complaints are soaring, the CFPB needs to take immediate steps to ensure that whatever information is given to debt collectors, there are strong procedures and incentives designed to be certain that dogged pursuit of the debtor cannot extend to the abuse of his identity. At the very least, there must be a due diligence requirement such that banks and other vendors cannot simply sell off their bad debts willy-nilly to the highest bidder; sellers of that debt must know their customers so that there is at least some assurance that your personal information is not being handed over to the modern equivalent of the James gang.

[Article: Judge Orders Debt Collector to Stop Using Facebook]

Capitalism always provides a way for someone to win, and thus some fortunes are improved during even the worst of times. In the US, many who profit more during a recession are easy to think of as “bad guys.” Repo men, short sellers and debt collectors fall into this category, but they’re simply doing what they do. Debt collectors are perhaps the worst of the lot because in addition to living off the misery of others, regulation of the debt collection business is badly conceived and administered, and it’s overregulated. Given this lack of effective oversight and the huge amount of newly-minted bad debt floating around out there, ravenous debt collectors have far too many opportunities to abuse people struggling to get through life in this abysmal economy. All of this drags our economy, not to mention our spirits, down further.

So if Washington wants to show it’s serious about dealing with the issue of debt collection abuse and wants to keep the financial boogeyman out of your 13-year-old daughter’s life, Congress needs to stop partisan bickering about the funding and authority of the CFPB and appoint a strong director—right now. Elizabeth Warren was the president’s first choice for that job and, as any reader of this column knows, I believe she would make an excellent chief executive. Now there is word circulating that the president may choose Raj Date—a good man with an excellent background—instead of Warren to circumvent the problem that Republicans seem to have with her. Although I have still not heard one good argument against Warren’s appointment, one of them needs to be appointed immediately so that the Bureau can hit the ground running on July 21.

Perhaps to make our point we’ll have to start robo-calling Congressmen—at home at 10 p.m.

[Resource: Consumer Guide to Debt Settlement]