The Federal government has cracked down on debt collectors using abusive/illegal practices
Back in January 2nd 2013 the first business day of that year, there was a significant change to the way many debt collection agencies went about their business.
It was on this date the Consumer Financial Protection Bureau (CFPB) was given the power to oversee and regulate debt collection agencies with more than $10 million in receivables.
Currently in effect these relatively new rules were created to add special watchdog powers that could impact consumers nationwide.
Powers that are designed to prevent collection agencies from hounding debtors much like the following.
- Phoning a debtors parents
- Impersonating a government prosecutor
- Requesting a parent to get the debtor to call about a criminal investigation regarding the debtor
- Threatening the debtor and his parents with criminal charges for capital gain tax fraud
- Calling 5-15 neighbors in a brief period of time, informing them that the debtor was a suspected of receiving stolen goods
- Soliciting postdated checks in order to later threaten criminal bad check prosecution
- Threatening to report Latinos to immigration authorities and posing as an immigration officer
- Encouraging illegal activities to pay a debt
CFPB examiners are currently able to investigate large collection agencies making sure that debtors are getting fair treatment. Performance evaluation will also include accurate disclosure of the debt owed, proper identification by the caller or visitor, and no attempt to collect debt that does not exist or has been paid in full. Collection agents must now refrain from “engaging the consumer in telephone conversations repeatedly or continuously with intent to annoy, abuse or harass.”
In an October 23, 2012 statement, Richard Cordray, director of the Consumer Financial Protection Bureau said, “Millions of consumers are affected by debt collection and we want to make sure they are treated fairly.” He went on to say, “We want all companies to realize that the better business choice is to follow the law. Not break it.” Debt agencies will now answer directly to the CFPB.
The CFPB said about 175 companies representing close to 60% of all collections made, will be impacted by the new legislation. In 2011, the FTC reported over 180,000 complaints registered by debtors for the treatment collectors used when trying to recover amounts owed. Past punitive action taken by the FTC for business that operated outside the rules includes judgments in the millions and forfeiture of future business in the industry.
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About the author
Elizabeth Karwowski founded Get Credit Healthy, Inc., a consumer advocate organization to help individuals get back on the right path to credit health. She has obtained her FICO & Fair Credit Reporting Act certification. As a recognized credit expert, Elizabeth has been featured on NBC and Fox News, published in Scotsman’s Guide, Today’s Chicago Women and other print media. Over time, she has helped countless individuals restore their credit.
She is an active SCORE counselor and a board member for the City of Miami Beach Success University. Elizabeth Karwowski was formerly the President and CEO of Trust One Mortgage Corporation. After Graduating from Northern Illinois University with honors, Elizabeth worked for Ernst & Young LLC and RSM McGladrey as part of the consulting team.