Combating Harmful Debt Collection Practices: Debt Collectors Respond

The Consumer Financial Protection Bureau (CFPB) has put debt collection companies on notice against harmful debt collection practices. CFPB has also released new tools to help consumers communicate with debt collectors and resolve collection complaints.

CFPB explains that most collection firms treat consumers fairly, but the ones that don’t “can cause financial harm to consumers and undermine the financial marketplace.” The bureau is in the business of protecting consumers. It warns debt collectors that “any entity that is subject to the Consumer Financial Protection Act of 2010 is legally required to refrain from committing unfair, deceptive, or abusive acts or practices that would violate the Act.”

The “Action Letters” announced and published by CFPB are meant to inform and help consumers. The five letters include a request for more information about the debt, a letter disputing the debt, restrictions on how and when a debt collector can contact a consumer, a letter that would inform the debt collector that a lawyer has been hired, and a letter that tells debt collectors to stop all communication.

ACA International, the largest trade association representing the credit and collections industry, believes the announcement made by CFPB will encourage active communication between consumers and debt collectors.

Pat Morris, CEO of ACA International, said of the announcement, “Consumers are best served when they have an opportunity to communicate and resolve their complaints. ACA has been engaged with CFPB as it created the resolution process for debt collection related complaints and has jointly communicated this new process to help our membership be ready when it was launched.”

Helping consumers resolve complaints about debt collection practices was part of the announcement made by CFPB. Any consumer with debt (credit card debt, mortgages, auto loans, medical bills, etc.) can now take their complaint to CFPB. Consumers who file a complaint will get a tracking number and be able to check the status of the complaint online. CFPB expects resolutions within 60 days for most complaints.

There is one unique aspect to the new CFPB complaint resolution system. It will make complaints public. Morris warns, “It’s imperative to point out that just because a consumer has complained to the CFPB it does not mean or imply that the debt collector has actually violated the law or engaged in wrongdoing of any kind.” Consumer identity will be protected by only using a zip code for the consumer in the complaint.