Consumer Financial Protection Bureau should write strong rules to protect
SEATTLE – Companies engaging in debt collection activities use abusive and deceptive practices that include harassing people for debts not owed, threatening illegal actions, calling people at work, and contacting their employers and neighbors.
These are among the findings of a new report, Unfair, Deceptive & Abusive: Debt Collectors Profit from Aggressive Tactics, released today by the Alliance for a Just Society. Researchers analyzed 75,000 consumer complaints filed during the last two years with the Consumer Financial Protection Bureau.
The report profiles the 15 companies with the most complaints. The list includes:
Encore Capital Group – San Diego, CA
PRA Group – Norfolk, VA
Enhanced Recovery Company – Jacksonville, FL
Citigroup – New York, NY
Expert Global Solutions – Plano, TX
JPMorgan Chase – New York, NY
Navient (the student loan servicer) – Wilmington, DE
Wells Fargo – San Francisco, CA
The CFPB is considering whether new rules are warranted to protect consumers from deceptive and aggressive collection practices. Next steps in a rulemaking on debt collections are anticipated as early as February.
About 35 percent of adults in the U.S. with a credit file have a report of debt in collections, leaving a broad swath of households vulnerable to abusive collection tactics.
“This analysis makes it clear that debt collectors routinely engage in unfair, deceptive and abusive practices to maximize their profits,” said LeeAnn Hall, executive director of the Alliance for a Just Society. “We need the Consumer Financial Protection Bureau to stand up for consumers and write strong rules that ends these abusive practices.”
The report includes detailed recommendations to end abusive collection practices.
Meanwhile, secretive groups with undisclosed funding sources have launched a series of dubious attacks on the Bureau since November, seeking to undermine its work to strengthen consumer protections in the financial sector.
“We need the CFPB to stand strong in the face of these deceptive attacks from dark money groups with financial industry ties,” said Hall. “It’s time to rein in abusive debt collection practices and we need strong leadership and a strong rule from the CFPB to do it.”
Findings from the report include:
- More than 40 percent of the complaints were about continued attempts to collect debts consumers said they did not owe.
- Nearly 20 percent of complaints were about collectors’ communication tactics; 8 percent cited false statements and 7 percent cited the collector taking or threatening an illegal action.
- Complaints tied to credit card debt were most common, followed by medical debt, payday loans, student loans, mortgage debt, and finally auto debt.
- The two companies with the most collection-related complaints, Encore Capital Group and PRA Group, each more than doubled their profits from 2010 to 2014.
The report’s recommendations for the CFPB’s rulemaking include:
- Apply the new debt collection rules to original creditors – such as payday lenders, credit card companies, and banks – along with third-party collectors and debt buyers.
- Strengthen remedies and increase penalties to stop abusive debt collection practices.
- Require debt collectors to have complete documentation before initiating collection actions.
- Set specific limits on phone calls from debt collectors to prevent harassment.
- Prohibit the sale, purchase, and collection of time-barred debt (also known as “zombie debt”).
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The Alliance for a Just Society is a national organization that focuses on social, economic and racial justice issues.
The full report can be found here: https://www.allianceforajustsociety.org/wp-content/uploads/2016/01/2016.01_Debt.Collectors_FINAL.pdf