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How to Keep Debt Collectors Honest, and at Bay How to Keep Debt Collectors Honest, and at Bay
(about 9 hours later)
CALLS from a debt collector, 30 to 40 times a day. Embarrassing calls about a payday loan debt to friends and family. And ruined credit, incurred through thousands of dollars in credit card debt that a consumer didn’t actually owe.CALLS from a debt collector, 30 to 40 times a day. Embarrassing calls about a payday loan debt to friends and family. And ruined credit, incurred through thousands of dollars in credit card debt that a consumer didn’t actually owe.
Such stories are some of the many complaints submitted by the public to the Consumer Financial Protection Bureau, which says that grievances against debt collectors are the most common type of complaint it receives.Such stories are some of the many complaints submitted by the public to the Consumer Financial Protection Bureau, which says that grievances against debt collectors are the most common type of complaint it receives.
About a quarter of consumers who had been contacted by a debt collector said they felt threatened, according to a national survey that the bureau published on Thursday. Nearly 40 percent of consumers contacted reported that a collector called four or more times per week, and more than half reported being contacted about a debt that was incorrect in some way — for example, the amount was wrong, or they weren’t the person who owed the money. About a quarter of consumers who had been contacted by a debt collector said they felt threatened, according to a national survey that the bureau published on Thursday. Nearly 40 percent of consumers contacted reported that a collector called four or more times a week, and more than half reported being contacted about a debt that was incorrect in some way — for example, the amount was wrong, or they weren’t the person who owed the money.
Generally, debt collectors are prohibited by law from harassing or abusing consumers. But the bureau is weighing a proposal to set more detailed rules for third-party collectors, such as placing specific limits on the number of calls collectors can make weekly, and requiring them to verify the accuracy of debts before calling borrowers. Generally, debt collectors are prohibited by law from harassing or abusing consumers. But the bureau is weighing a proposal to set more detailed rules for third-party collectors, like placing specific limits on the number of calls collectors can make weekly, and requiring them to verify the accuracy of debts before calling borrowers.
“The bureau is working to clean up abuses in the industry and to see that all consumers are treated with fairness, decency and respect,” said Richard Cordray, director of the Consumer Financial Protection Bureau, who spoke Thursday in Washington at an event focused on debt collection practices.“The bureau is working to clean up abuses in the industry and to see that all consumers are treated with fairness, decency and respect,” said Richard Cordray, director of the Consumer Financial Protection Bureau, who spoke Thursday in Washington at an event focused on debt collection practices.
About 70 million people — more than a quarter of the adult population in the United States — have a debt in collection or have been contacted about one, the bureau said. “The number of consumers is just astounding,” said Margot Saunders, a lawyer with the National Consumer Law Center, which supports additional rules for debt collectors.About 70 million people — more than a quarter of the adult population in the United States — have a debt in collection or have been contacted about one, the bureau said. “The number of consumers is just astounding,” said Margot Saunders, a lawyer with the National Consumer Law Center, which supports additional rules for debt collectors.
The bureau also published a report highlighting potential risks from online debt marketplaces, where bundles of consumer debts are sold and resold to third-party collectors, sometimes for pennies on the dollar or less. After a credit card issuer or other lender, like a payday lender, tries and fails to collect a debt, it may sell the “charged off” debt to a debt buyer, which may in turn sell it again to another collector. Some portfolios eventually end up for sale online.The bureau also published a report highlighting potential risks from online debt marketplaces, where bundles of consumer debts are sold and resold to third-party collectors, sometimes for pennies on the dollar or less. After a credit card issuer or other lender, like a payday lender, tries and fails to collect a debt, it may sell the “charged off” debt to a debt buyer, which may in turn sell it again to another collector. Some portfolios eventually end up for sale online.
Internet “bazaars” may serve a function by matching debt sellers with responsible buyers, Mr. Cordray said in prepared remarks. But the portfolios most likely contain sensitive consumer details, like Social Security numbers, account numbers and home and workplace phone numbers, and their “bargain-basement rates” raise the risk that the information “could fall into the hands of irresponsible parties or outright criminals,” he said.Internet “bazaars” may serve a function by matching debt sellers with responsible buyers, Mr. Cordray said in prepared remarks. But the portfolios most likely contain sensitive consumer details, like Social Security numbers, account numbers and home and workplace phone numbers, and their “bargain-basement rates” raise the risk that the information “could fall into the hands of irresponsible parties or outright criminals,” he said.
The Federal Trade Commission, for instance, has taken action against online debt markets in recent years for failing to protect sensitive consumer information.The Federal Trade Commission, for instance, has taken action against online debt markets in recent years for failing to protect sensitive consumer information.
ACA International, an industry group representing credit and collection professionals, criticized the report as flawed, saying that the survey was based on a relatively small number of consumers who interacted with debt collectors and that the form used leading questions. The group also said the timing of the bureau’s report, as the new administration prepares to take over in the nation’s capital, was politically motivated.ACA International, an industry group representing credit and collection professionals, criticized the report as flawed, saying that the survey was based on a relatively small number of consumers who interacted with debt collectors and that the form used leading questions. The group also said the timing of the bureau’s report, as the new administration prepares to take over in the nation’s capital, was politically motivated.
“The C.F.P.B. has made a calculated move to release inflammatory but unreliable findings in an obvious attempt to strengthen its justification for its very existence in Washington,” Pat Morris, ACA International’s chief executive, said in a statement.“The C.F.P.B. has made a calculated move to release inflammatory but unreliable findings in an obvious attempt to strengthen its justification for its very existence in Washington,” Pat Morris, ACA International’s chief executive, said in a statement.
The bureau’s report said that the survey was mailed in two stages in late 2014 and early 2015 to nearly 11,000 consumers identified from a database maintained by a major credit bureau, and that more than 2,000 people responded. The bureau said the survey’s estimates are representative of all consumers with a credit record. The bureau’s report said that the survey was mailed in two stages in late 2014 and early 2015 to nearly 11,000 consumers identified from a database maintained by a major credit bureau, and that more than 2,000 people responded. The bureau said the survey’s estimates were representative of all consumers with a credit record.
Here are some questions and answers about debt collection.Here are some questions and answers about debt collection.
What should I do if I am contacted about a debt that I don’t think I owe?What should I do if I am contacted about a debt that I don’t think I owe?
Ms. Saunders advised consumers to seek help from a lawyer. If they can’t find affordable legal help, they should demand proof of the following from the debt collector: that the collector has the legal right to collect the debt; that the consumer is the person who actually owes the debt; and that the amount the collector is seeking is accurate. Often, she said, collectors pad the amount with fees and interest that they aren’t legally entitled to collect. Ms. Saunders advised consumers to seek help from a lawyer. If they can’t find affordable legal help, they should demand proof of the following from the debt collector: that the collector has the legal right to collect the debt; that the consumer is the person who actually owes the debt; and that the amount the collector is seeking is accurate. Often, she said, collectors pad the amount with fees and interest that they are not legally entitled to collect.
Consumers can also complain to the consumer bureau, the F.T.C. or their state attorney general’s office.Consumers can also complain to the consumer bureau, the F.T.C. or their state attorney general’s office.
How can I tell if a debt collector is legitimate?How can I tell if a debt collector is legitimate?
John McNamara, the consumer bureau’s assistant director of consumer lending, reporting and collections markets, advised that consumers ask some questions, such as the street address of the collection company and the name of the original creditor. “Scam” callers, he said, are apt to disconnect once the consumer starts pressing for details. Also, legitimate collectors will mail you written materials, including information about your right to dispute the debt, within five days after calling you for the first time, as required by law. John McNamara, the consumer bureau’s assistant director of consumer lending, reporting and collections markets, advised that consumers ask some questions, like the street address of the collection company and the name of the original creditor. “Scam” callers, he said, are apt to disconnect once the consumer starts pressing for details.
Do I have the right to stop calls from debt collectors?Do I have the right to stop calls from debt collectors?
Under the Fair Debt Collection Practices Act, collectors generally must stop contacting you if you tell them to do so in writing. The Consumer Financial Protection Bureau includes templates that consumers can use on its website. Bear in mind, though, that if you owe the money, stopping the contact won’t make the debt go away. Under the Fair Debt Collection Practices Act, collectors generally must stop contacting you if you tell them to do so in writing. The Consumer Financial Protection Bureau includes templates that consumers can use on its website. Bear in mind, though, that if you owe the money, stopping the contact will not make the debt go away.