Commentary: Watchdog must protect Delawareans from bad debt collectors

From frequent and unwanted robocalls to threats of lawsuits over old and invalid debts, Delawareans are no strangers to the abusive and harassing collection tactics made popular by banks, credit card companies, and third-party debt collectors. In 2017, Delaware consumers submitted nearly 2,000 complaints to the Federal Trade Commission (FTC) concerning inaccurate information, ignored instructions to “stop calling,” and other debt collector misconduct.

According to the Urban Institute, 36 percent of Delawareans have a debt in collection, with an average balance over $1,300. For residents of predominantly non-white areas of the First State, the share of residents with debts in collection leaps to 60 percent. For this reason, Delaware residents are counting on the Consumer Financial Protection Bureau (CFPB) to issue a strong rule to curb debt collection abuses.

But unfortunately, the CFPB’s proposed debt collection rule falls willfully short of protecting consumers — going as far as to greenlight new and excessive forms of collector contact. Public comments are due Aug. 19.

The proposal would allow far too many collection phone calls — adding to the nearly 15 million robocalls made to consumers in the 302 area code each month. The proposed rule allows up to seven attempted calls per week, per debt. This means a consumer with eight medical debts, not an uncommon result of just one medical emergency, could hear the phone ringing 56 times per week!

Rashmi Rangan

But it’s not just phone calls. The CFPB is making it easier for debt collectors to send text messages, email, and private direct message on social media — without consent! Consumers will have a right to opt out but collectors might try to make that difficult. Collectors will have new channels for harassment and could violate consumer privacy if the message goes to a reassigned number or non-private channel.

Worse, vitally important information about the debt and consumer rights could be sent in emails or texts that people won’t get or through hyperlinks that people will be afraid to click on. Notices about dispute rights could end up in unused inboxes or be sent to consumers with limited or no internet access. For pay-as-you-go phone customers, unwanted texts and emails could prove costly.

And there’s more. Debt collectors routinely pursue the wrong person or wrong amount, but the proposal protects collection attorneys who do not review account documents and make false, deceptive or misleading representations in court documents. The CFPB even fails to hold collectors responsible for knowing the legal deadline before they sue or threaten to sue people on old, time-barred “zombie debt.”

The CFPB was formed in the wake of the 2008 financial crisis to safeguard consumers from predatory companies and risky financial products. For years, the bureau remained true to its mission, returning $12 billion to some 30 million wronged consumers. The current CFPB has on the other hand slowed enforcement and cast aside meaningful measures in pursuit of benefiting bad financial actors.

The rule is not yet finalized. There remains hope that the Bureau will hear the concerns of ordinary Americans and consumer advocates. We encourage consumers to tell their personal debt collection story and urge the bureau to strengthen its final rule by limiting collection calls to three attempts and one conversation per week, per person; requiring consent for emails and text messages, allowing consumers to opt-out via any convenient method, banning collection of time-barred debt and holding collection attorneys responsible for misrepresentations. The CFPB is accepting public comments through Aug. 19 via email or here.

Rashmi Rangan is executive director of the Delaware Community Reinvestment Action Council, Inc. in Wilmington. Founded in 1987, DCRAC is a nonprofit in the business of transforming financial lives for Delawareans. It operates The Money School (a school without walls for a community of learners), Law @ DCRAC (a sliding scale fee for legal services), and Stepping Stones Community Federal Credit Union (to serve Wilmingtonians). Their advocacy platform includes fair debt collection practices.

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