Robo-calls from unrecognized or blocked numbers, calling for payments that we don’t owe. Collection agencies calling multiple times per day, failing to identify themselves, lying about what’s owed, or violating Mainers’ privacy by speaking about the debt to whomever answers the phone. Companies calling at all hours even after they’ve been told to stop or send information in writing.
Federal data shows that even if you haven’t experienced harassment by debt collectors, you likely know someone who has. Nearly one in three Mainers has a debt in collections, with most of that debt coming from unpredictable, unavoidable medical expenses.
Mainers are also increasingly subjected to debt scammers, who use predatory tactics and threats to squeeze hard-earned money out of Mainers for nonexistent debt, expired debt, or debt owed by someone else.
We need strong federal regulation to protect Mainers, but President Donald Trump’s Consumer Financial Protection Bureau, or CFPB, is proposing weak rules that will do little to stop debt harassment and scams.
The CFPB has proposed weak federal regulations that will do little to protect us from notoriously abusive collection tactics. The proposal would undermine the Fair Debt Collection Practices Act, which is meant to stop harassment, protect consumer privacy, and prevent collection against the wrong person or in the wrong amount.
Mainers have an opportunity to make their voice heard by telling the Trump administration to protect Mainers, not debt scammers. Click here to tell the CFPB that we need stronger rules against scheming debt collectors.
Debt harassment and scams are prevalent
Consumers struggling with unemployment, illness, divorce, or other unanticipated hardships who default on their loans often have their debt put into “collection.” Lending companies hire third-party debt collectors to try and collect on loans. Even after companies write off loans or after the statute of limitations has expired, debt collectors buy up these loans for pennies on the dollar and go after consumers for payments the original lender will never see.
Twenty-nine percent Mainers have debt that is in collection. Of the 1,100 Mainers who filed formal complaints to the Federal Trade Commission in 2017, 62 percent say they receive harassing phone calls from debt collectors; 35 percent of those after the Maine consumer has filed a “stop calling” notice. Other Mainers say debt collectors lie about the debt they owe, fail to identify themselves as a debt collector when they call, and talk to friends or family members about their debt.
Nationally consumers receive more than a billion calls a year from debt collectors. The CFPB reports that debt collectors for some credit card companies make as many as 15 calls per day to the same person. The callers have been found to sometimes use abusive language and threaten to take debtholders to court. They use illegal tactics too: impersonating lawyers, threatening to have people jailed, contacting consumers’ workplaces, claiming to have the consumer’s Social Security number, and using racial slurs or insulting religious beliefs. Faced with this onslaught and worried about being sued, distraught consumers will often concede payment even if they contest the debt or don’t owe anything.
Debt collectors often try to collect debt from the wrong person, in the wrong amount, or on debt that is no longer owed. Debt buyers purchase lists of old debt, then aggressively try to collect them along with interest, penalties and attorney’s fees. Old debt that is sold and resold is often wrong or outdated. But that doesn’t stop debt collectors and their attorneys from filing thousands of lawsuits a year, often against the wrong person or for the wrong amount.
With so few protections for consumers, the worst offenders in the debt collection industry resort to outright scams. These companies fake debts and fabricate lenders’ names and amounts owed to increase their debt collection profits; a scheme uncovered by the Federal Trade Commission. Twenty-four percent of consumer complaints about debt collectors nationally and 22 percent of complaints from Mainers describe illegal misrepresentation of debt.
Proposed rules are too weak to protect Mainers
The CFPB’s proposed rules for third-party debt collectors “provides numerous gifts to debt collectors with limited new protections for consumers,” according to experts at the National Consumer Law Center.
There are three major problems with the proposed rule: First, it allows debt collectors to make seven calls to consumers every week, per debt. That means a consumer with five outstanding debts could receive as many as 35 calls every week. The rule would also allow collectors to speak to the consumers’ friends and family, an excessive technique that threatens consumer privacy.
Second, the proposed rule puts no limits on the number of texts, emails, and direct messages that a debt collector can send a consumer. And it would allow debt collectors to send legally required notices electronically via hyperlink. In an environment where scams are so prevalent, many consumers may not click the link for fear of jeopardizing their privacy or the security of their devices. Consumers without smartphones or regular Internet access could miss legally required notices entirely.
Third, the rule has only loose requirements that collectors exercise due diligence with debt records. It would allow them to file lawsuits against consumers even if the legal time limit to sue has expired and would allow collectors to outright trick consumers into re-starting the collections process on debt that has passed the statute of limitations under state laws. The statute of limitation, which in Maine is six years, is for debt that is so old that the records of who owes the debt and for how much may be lost.
The CFPB’s proposed debt collection rule is just another step to systemically roll back consumer protections. It comes on the heels of other attacks that limit protections for payday loan borrowers and student loan borrowers, as the Trump-appointed leadership at CFPB has halted much of that agency’s protection and enforcement work.
Tell the CFPB: Protect Mainers, not debt scammers
Consumers have until August 19 to submit comment to the CFPB about the proposed debt collection rules. MECEP has built a portal through which you can submit you own comments. Tell them to:
- Limit the number of call attempts to three calls per week, per consumer, and to honor consumers’ oral request to stop calling.
- Text, email and direct message communications should only be allowed if the consumer opts in, and that consent should not transfer automatically to new debt buyers.
- Ban the collection of time-barred “zombie debt” that is older than the statute of limitations, both in and out of court.
The National Consumer Law Center has compiled a complete list of protections that should be included in the new debt collection rules, you can find it here.
All of us have a responsibility to pay down what we owe, but nobody should be subjected to harassment, threats, or illegal schemes by debt collectors. Make your voice heard.