What the CFPB Should Do About Debt Collectors

Rein in Reckless Debt Buyers

ACA International, the collection industry’s main trade group, recently unveiled its own Blueprint for the CFPB. While I don’t agree with several parts of the proposal (including an attempt to lengthen the statute of limitations in many states to seven years), there is one part with which I can agree:

Assure Proper Debt Documentation: Improve the flow of information by clarifying the specific debt information that must be maintained by creditors and asset buyers in order to allow debt collectors to provide documentation responsive to a consumer’s dispute regarding the amount of the debt, to whom the debt is owed or who is responsible for paying the debt.

While Forbes isn’t a fan of the ACA’s Blueprint, dismissing it as being “completely self-serving,” he agrees that lack of proper documentation is a huge problem that often comes up when debt buyers sue consumers. Since most consumers don’t show up in court, much less challenge these suits, the abuse often goes undetected. “A lot of the states do require specific documentation (for a debt collector to bring a lawsuit). They don’t comply with it anyway,” he points out.

As ACA International recommends, this documentation should be provided to the consumer when he or she requests verification of the debt, as permitted under the FDCPA. As it stands now, this verification process is often a joke. When challenged, debt buyers just produce another letter that doesn’t provide enough information for the debtor to figure out whether her or she owes the debt, the amount is inflated, or the debt is too old.

[Article: What Can Debt Collectors Say On Answering Machines?]

Better Info About Debt Collection Complaints

According to Elizabeth Warren, the CFPB will be unveiling its new consumer complaint process this week. While the FTC’s system for gathering complaints about collectors has been helpful for understanding the problems consumers are experiencing, it can be improved. Specifically, it would be helpful for the CFPB to break down complaint categories even further than in the past, and clearly flag complaints about debt collectors:

Calling cell phones
Calling about a debt for a person other than the debtor—ideally noting if that person is a relative, stranger, or right name/wrong person
Trying to collect a debt belonging to a deceased relative when the debtor is not a cosigner
Contacting debtors online/through social media

How can the CFPB write effective rules if it doesn’t know how widespread specific problems are? More detailed complaint data would be helpful.

Debt Collection Do No Call List

We don’t know how many consumers repeatedly get calls from debt collectors trying to reach someone else because the FTC doesn’t define this as a specific complaint category. But as I described in my story about my young daughter’s experience with debt collectors calling her cell phone looking for someone else, these kinds of calls can be an enormous hassle, and getting them to stop can be nearly impossible at times.

The CFPB needs to look into creating some kind of Do Not Call List for the debt collection industry that would give consumers the opportunity to instruct debt collectors not to call them at a particular number if they don’t believe they owe the debt, or if there are other concerns such as paying for calls on a cell phone.

The counterargument will be, “What about debt collectors trying to collect legitimate debts? How will they reach debtors if they can’t call them on their cell phones?” The answer? “It’s called U.S. mail,” says Forbes.

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