Two consumer advocacy groups will urge the new head of the Consumer Financial Protection Bureau to impose strict limits on debt collectors.
In a letter they plan to send Thursday, the Americans for Financial Reform and the National Consumer Law Center will ask CFPB Director Kathy Kraninger to restrict debt collectors to having "one live conversation per week" with a borrower and up to three attempts per week to reach a consumer by phone.
“We particularly ask the Consumer Bureau to focus on preventing harassment, increasing consumer privacy, stopping the collection of time-barred debt, and improving the clarity and accuracy of debt collection notices,” they said in the letter, a draft of which was obtained by American Banker. The letter is signed by other civil rights, labor and legal services groups.
The CFPB is expected by March to issue a proposal to address how to update enforcement of the 40-year-old Fair Debt Collection Practices Act to keep pace with technology. The initiative is focused primarily on communication practices and consumer disclosures, since the FDCPA was enacted before cell phones and text messages.
Debt collection problems are a leading source of consumer complaints to the CFPB, which received roughly 87,500 complaints about debt collection in 2017.
Consumer advocates are urging far stricter limits on debt collectors than a 2016 proposal issued under former CFPB Director Richard Cordray. That plan would have limited third-party debt collection attempts to six per week while requiring confirmation of a debt before a collector could contact a consumer.
“One of the most prevalent problems with debt collection is harassing communications from debt collectors that violate consumers’ privacy and can cause serious harm to individuals and their families,” the letter said.
The groups also said the CFPB should let consumers decide on the form of communication with a collector.
“Text and email communications should only be allowed if a consumer agrees to communicate with the debt collector electronically,” they said.
A 2017 survey by the CFPB found that one in four consumers contacted by a debt collector felt threatened. In addition, 20% of consumers with debts were contacted eight or more times a week by a collector and 75% who asked to stop receiving calls reported that creditors and debt collectors did not comply.
“Consumers have too often used money they needed for rent, housing or medical attention to pay debt collectors, even for debts they do not owe, just to stop the harassment,” the letter said.
Advocates urged the CFPB to stick to the statutory purposes of the FDCPA, which seeks to “eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.”
