7.30.2016

Rambling Over Coffee: Possible Changes to the Way Third-Party Debt Collectors Collect Debts (You know, the ones that call your workplace, scream at you, swear at you and threaten you and your extended family)

Source: https://www.yahoo.com/finance/news/regulators-propose-huge-overhaul-debt-collection-industry-040329014.html

Last night I was sipping some decaf and glancing through the news headlines when I saw an article about possible changes to the way third-party debt collectors collect their debts.  This is not addressing the way a company directly collects debts you owe to them; like if you are skipping payments on your car, credit card, mortgage... this is in regards to those horrible scammer companies who are constantly making the news for 'buying' piles of old debt for pennies on the dollar and then trying to hound people into paying the debt by unfair practices, harassment and even all out lies.

Since this has become a multi-billion dollar business in the past few years, the stories of innocent people getting pressured to pay debt that isn't theirs, is so old it's not legally collectible anymore or pay something just to get them to stop calling their friends, family, employer, co-workers has jumped off the charts.  If someone truly owes debt, of course they should pay but these companies randomly find names online that may or may not be the person, may or may not be related to the debtor, and proceed to call, harass, threaten, call names, scream at them and many times, do not follow the laws regarding debt collection.  That is the kind of debt-collection being discussed in the article for possible changes.

When we moved into our home almost five years ago we opted to keep a landline as a 'backup' phone for many various reasons that don't really matter in this post.  Our phone had been hooked up all of less than an hour when I got my first call; someone asking for a person with a different name.  I told them they had the wrong number, they didn't believe me and pushed to talk to this person.  I explained to them they probably had this number previous but we just moved in and it was our number now.  Within 2 hours another company was calling for that same guy.   Soon I stopped bothering to answer the phone and let the machine get all the calls because we found our 'new' number was pretty popular for the previous family.

Because their name and number was being sold all over the place, we were getting up to 8 calls some days.  Debt collectors, 'fake' charities looking for donations, offers for security systems, lowering our payments on credit cards and 'winning' a cruise or money from contests we never entered; as well as the India men in massive call centers saying their name is "Dustin" or "Brian" and are calling from Microsoft because there is a problem with my computer and they want to help.

Yes, I did come close to changing our number to stop the calls, but didn't for a variety of reasons.  And since most all the calls to the house were for people other than us, we just turned the ringer off and let the machine's robot like voice take them all.  Most hung up with no message.  I also figured that in time, all these companies would realize this number was useless to attempt to call. 

Ok... the coffee is talking again because I've filled this much of the post and haven't even gotten to the article yet!  Here is some bits from the article and the changes they are hoping to put into place.  Mostly;  the collectors can only call you 6 times a week and they have to have more proof the debt is actually yours, or is even owed.

"Once a debt is proven valid, 
a collector would be limited to no more than 
six communication attempts per week."


".... Consumers could no longer receive multiple calls per day from debt collectors and would have more ability to dispute their bills under proposals released Thursday to overhaul the multibillion-dollar debt collection industry. 

The new rules from the Consumer Financial Protection Bureau would also require collectors to have more documentation to prove a debt is owed, and initiate a 30-day waiting period for loans tied to someone who has recently died — halting all collection attempts from a spouse or child during that time.

Regulators estimate roughly 70 million Americans are contacted by debt collectors each year, and more Americans submit complaints to state and federal agencies about unfair or deceptive practices than any other part of the consumer financial system. These would be the biggest changes to the industry since Congress passed the Fair Debt Collections Practices Act nearly 40 years ago.
“This is about bringing better accuracy and accountability to a market that desperately needs it,” said CFPB Director Richard Cordray.

The changes, likely to face strong resistance from the industry and its allies in Washington, would affect only third-party debt collectors. The agency has yet to propose rules that would affect first-party debt collection practices, such as credit card companies and payday lenders.

Third-party collectors typically buy large databases of past-due loans and credit cards for pennies on the dollar, but those files can include loans discharged in bankruptcy or some too old to legally collect. Under the new rules, they would first have to more substantially show a debt is valid before starting collection.

Collectors would also have to provide clearer and easier ways for someone to dispute the debt. That would include a proposed “tear off” portion of a collection notice where someone can specify why the amount is wrong or why the debt is invalid, or allowing consumers to start disputing the debt over the phone. Right now, most disputes must be handled in writing.

If a consumer disputes a debt, collectors would be required to pause until they collect enough evidence to substantiate it. If the debt is sold, the new collector would inherit the dispute and would still have to provide validation, the CFPB says. This would solve a major source of complaints by consumers that collectors can harass them over debts that are in dispute already.

Once a debt is proven valid, a collector would be limited to no more than six communication attempts per week. If someone wants a collector to stop calling a certain number, such as a workplace, the new rules would make it easier to request that.

An advocacy group praised the CFPB for tackling the issue, but said the proposal does not go far enough. Margot Saunders with the National Consumer Law Center said the rules are overly complicated and still lets debt collectors rely on databases that may be inaccurate. The CFPB proposals do not address or increase the penalties that abusive debt collectors could face.

The agency will hold a hearing Thursday in Sacramento, California, to discuss the proposed rules. This is the first step in CFPB’s rulemaking process. Once formal rules are written, likely later this year, the public will have 90 days to comment before they go into effect.