October 28, 2019 at 5:00 am ET
Abusive debt collection practices take a regular toll on people across the nation. As a consumer attorney and board member of a legal services nonprofit focusing on debt-related issues, I frequently see how consumers’ lives have been upended by debt collectors who pursue old, time-barred, “zombie” debt; who file lawsuits without evidence against people who do not owe the debts; and who violate consumers’ privacy and jeopardize their jobs.
The Consumer Financial Protection Bureau has the opportunity to address these and other problems as it writes regulations under the 1977 Fair Debt Collection Practices Act. Unfortunately, the CFPB’s recently proposed rule would instead green-light abusive debt collection practices in a veritable bonanza for debt collectors.
One consumer found herself plagued by a “zombie debt”– a debt seven years outside the statute of limitations that prohibits a collector from filing a lawsuit on it. That debt came back from the dead while she was recovering from brain surgery. The debt collector called her multiple times a day, including many back-to-back calls. Finally, they told her that she would face a lawsuit and a judgment if she did not immediately authorize a recurring credit card charge. Even worse, the collector also called her father and threatened him with a lawsuit and judgment. The debt collector, of course, had no right to a judgment after the statute of limitations expired. But, she was so scared that the debt collector would get a judgment against her that the consumer agreed to authorize the payments, restarting the statute of limitations.
The CFPB’s proposed debt collection rule would encourage collectors to pursue expired debt without banning this kind of trickery. Collectors could also claim not to know that the deadline has passed, forcing consumers to get inside the debt collectors’ heads and show that the collector knew or should have known that the time for a lawsuit had expired.
The reckless practices of a debt collection law firm hit home with another consumer, a veteran who was pregnant at the time. She received a collection letter for a debt that she did not believe was hers. Before she could provide additional information about what she believed was fraud, the law firm sued her. After reaching out to the law firm, she was sent a signed court notice showing that the case was being dismissed. Believing the case was over because of that notice, she did not go to court. Instead of dismissing the case, however, the law firm got a default judgment based on her absence, generating a level of stress pregnant women are supposed to avoid.
Instead of requiring debt collectors to review original account documents before they file a lawsuit, the CFPB has proposed to give attorneys a “safe harbor” from liability for false or misleading statements in court documents as long as they reviewed unspecified “information.” Yet debt collection law firms frequently file lawsuits in bulk, based on little more than spreadsheets, with little regard for the accuracy of their filings. The proposed rule would only encourage the same type of careless filing that consumers, like the expecting veteran, faced.
Finally, debt collection tactics may have cost one consumer a promotion. The collector left messages with their supervisor and human resources department — both after he told them not to call him at work. The collector did not specifically mention the debt, but the employer was well aware that a debt collector was calling. The CFPB’s proposed rule would allow debt collectors much freer range to leave “limited content” — but obvious — messages with third parties..
There are millions of Americans with stories like these. Despite efforts to avoid past-due debt, they find themselves on the wrong end of debt collection. Debt collectors have numerous tools under current law to collect unpaid debts without any changes to the rules. Likewise, consumers have remedies under the current law. But the CFPB’s proposed rule amounts to nothing more than a series of loopholes to the Fair Debt Collection Practices Act’s prohibition against unfair and deceptive debt collection that would strip away consumer protections. The very consumers the Bureau is mandated to protect will only suffer more if the CFPB finalizes its proposal.
Courtney Weiner is a consumer attorney and founding board member at TzedekDC, a legal services nonprofit focusing on debt-related issues.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.