Consumers Union calls for reforms to protect consumers from unfair practices
Wednesday, March 21, 2018
WASHINGTON, D.C. – Consumers Union, the advocacy division of Consumer Reports, called on state and federal regulators today to protect vulnerable consumers from abusive debt collection practices. The consumer group renewed its call for reform as a new report by the Consumer Financial Protection Bureau and the Federal Trade Commission found that debt collection practices continue to generate a large number of complaints from consumers frustrated with being harassed about money they don’t owe and other abusive tactics.
“Far too many consumers continue to report that debt collectors hound them about money they have already paid off or never owed in the first place,” said Suzanne Martindale, senior attorney for Consumers Union. “Debt collectors often lack proof that the debt even existed let alone that the person they are targeting is responsible for it. We need reasonable standards and better oversight to ensure consumers are treated fairly and protected from abusive debt collection practices.”
The CFPB collected approximately 84,500 complaints about debt collection and found that the most common one was about attempts to collect a debt that is not owed by the consumer, followed by complaints about the failure of debt collectors to provide proper notice documenting the debt or informing the consumer of their rights. Complaints about abusive communication tactics were the third most common complaint, including frequent or repeated phone calls and the failure of debt collectors to stop calling after the consumer requested them to stop.
To address widespread debt collection and debt buying abuses, Consumers Union has urged state and federal regulators to enact a number of reforms, including:
- End robo-signing and attempts to collect without proper documentation: Debt collectors should be required to document that they are attempting to collect from the right person, for the right amount, and on a debt that they can lawfully recover.
- Establish a sell by date for all debt: It should be illegal to sell or attempt to collect debt that is more than seven years old, which is too old to be reported on a credit report under the federal Fair Credit Reporting Act.
- Require debt collectors to provide more information to consumers: All debt collectors, including debt buyers, should be required to identify the name of the original creditor and to provide an itemized record of the total principal, interest, fees, and other charges that have been added to the debt, and to provide detailed records about the debt to consumers within five days after the first notification.
- Require debt collectors to submit more detailed information when filing suit: Debt collectors should be required to submit basic information about the debt, including the name of the original creditor and an itemized record of the total principal, interest, fees, and other charges that have been added to the debt, when they sue over a debt, so that the consumer can see if it is his or her debt, and in the right amount.
- Increase oversight to ensure consumers are properly notified of lawsuits: Courts should be required to provide supplemental notice of all filed debt collection lawsuits to debtors and default judgments should be prohibited if the notice is returned to the court as undeliverable.
In 2013, Consumers Union helped pass legislation in California that strengthened state oversight over debt buyers by requiring them to provide consumers and the courts the documentation to prove a debt is actually owed. The law also requires debt buyers to access records from when the original account was active and show how the debt was calculated, stating principal, interest and other charges separately.
Michael McCauley, mmccauley@consumer.org, 415-902-9537 (cell) or 415-431-6747, ext. 7606