Over 200 Organizations Call for Protection From Debt Collection Industry

Over 200 Organizations Call for Protection From Debt Collection Industry
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CFPB proposal would allow for more consumer abuse and harassment from debt collection industry

Washington, DC – Late yesterday, a coalition of 232 nonprofit organizations from all 50 states and the District of Columbia sent a letter to the Consumer Financial Protection Bureau (CFPB) in response to its proposal that protects abusive debt collectors more than consumers. Instead of giving the debt collection industry more weapons to harass and abuse consumers, the coalition urges the consumer bureau to limit the number of phone calls per week, require consent of the person before sending emails or text messages, allow people to opt-out of electronic messages, hold debt collection attorneys responsible for misrepresentations, and prohibit the collection of “zombie debt.”
In May, the CFPB released its proposal to weaken major consumer protections established by the Fair Debt Collection Practices Act. Some of those proposals include:

  • Allowing collectors to ring people 7 times per week per debt. For example, someone with 8 medical debts could hear the phone ringing 56 times a week;
  • Authorizing collectors to send emails, texts, and private social media messages without consumer permission and with no set limits, and to send important information through hyperlinks;
  • Allowing debt collectors to collect on “zombie debt” that is so old that the deadline for a lawsuit has passed and records of who owes the debt and for how much may be lost; and
  • Protecting attorneys who file baseless lawsuits against the wrong consumer or for the wrong amount without verifying account documents.

“The CFPB’s proposal greenlights collection of old debts past the legal deadline to sue, misrepresentations by collection attorneys, harassment and privacy violations by phone, email and text, and even security risks by requiring people to click on hyperlinks  to get required information about a debt and their rights. The current consumer bureau proposal is a gift to abusive debt collectors and the final rule must include much stronger protections for consumers,” said Lauren Saunders, associate director at the National Consumer Law Center.

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CFPB proposal

“This proposal does not come anywhere near protecting consumers from predatory debt collectors. In fact, it allows the debt collection industry to abuse and harass consumers more than is currently allowed,” said Linda Jun, senior policy counsel for Americans for Financial Reform Education Fund. “This proposal follows a consistent trend, set by the CFPB and its director Kathy Kraninger, of turning its back to consumers every step of the way.”

“The CFPB’s debt collection spam plan is incredibly unpopular, likely illegal, and payback for the over $340,000 the debt industry funneled into Republican campaigns including Donald Trump’s,” said Jeremy Funk, spokesman for Allied Progress. “When Director Kraninger decided to grant the industry’s wish for more options to harass consumers, did she ever wonder, ‘Would I mind getting never-ending texts from strangers asking for money?’”

Debt collection industry and CFPB

“The CFPB has fumbled its opportunity to issue a proposal that will protect consumers from the worst misconduct in the debt collection market where abuse runs rampant,” said Christine Hines, legislative director at the National Association of Consumer Advocates. “Our only hope is that the bureau will heed the advice and feedback from stakeholders, particularly consumer advocates and consumers themselves, to ensure a final rule that will strengthen existing safeguards instead of weakening them.”

“This proposal is yet another step backward for a CFPB that is determined to ignore its mission to protect consumers. Consumers deserve clarity and compassion when it comes to debt collection not misinformation and harassment,” said Leandra English, director of financial services advocacy and outreach at Consumer Federation of America.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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