April 1, 2020 marked the day that the COVID-19 pandemic morphed from a public health crisis to a consumer protection crisis. After March bills strained already stretched household finances, April 1st marked the first missed mortgage, rent or credit card payment for millions of people, with no relief in sight.
For many, that missed payment was swiftly followed by a call from a debt collector demanding payment. Debt collectors have extraordinary collection powers — from seizing military pay to having borrowers arrested. And now all across the country, debt collectors are challenging stay-at-home orders and fighting to be deemed “essential” amid a pandemic so they can continue to pursue consumers for unpaid debt.
At a time when group gatherings can prove deadly, debt collectors continue to put collecting debts above protecting lives. Weeks after President Trump declared a national emergency, the nation’s largest student loan companies were still aggressively filing lawsuits against struggling borrowers. In Oklahoma, eviction filings continue by phone so that debt collectors can avoid the health risk of a court appearance while a family is forced out onto the street.
It is abhorrent that debt collectors continue to call consumers in the middle of the crisis. It is reprehensible that a collector would demand that families — furloughed from jobs, desperate about a lack of health insurance, anxious about obtaining basic food staples — come up with the money to pay a past due bill.
Some state and local governments have stepped in to curb these practices. Illinois halted vehicle repossessions and encouraged all debt collectors to suspend collection activity for 60 days. New York suspended collections on all state-owned debts and halted court filings. Chicago ceased collections on city-owned debts. Massachusetts banned most forms of debt collection.
But this is a national emergency that affects all of us living in every state and territory. We need a national solution. And we should have one in the Consumer Financial Protection Bureau. The CFPB, created in the midst of the Great Recession, was provided with strong tools to protect consumers. And it has the authority to stop abusive debt collection practices that threaten our collective public health as well as the tenuous security of the most vulnerable among us.
The CFPB can — and must — take action.
Congress gave the CFPB the authority to define abusive practices — a term that necessarily takes on new meaning when hundreds of millions of consumers are ordered to stay at home and forced into unemployment. And Congress gave the CFPB authority under the Fair Debt Collections Practices Act, which prohibits debt collectors doing anything “the natural consequence of which is to harass, oppress, or abuse.” And yet, collectors continue to engage in abusive and harassing and oppressive tactics — subjecting people to endless collection calls while they are ordered to stay at home or attempting to haul them into court amid a public health emergency.
It is abusive to repossess a nurse’s vehicle when it is his only means to get to work during a public health crisis.
It is abusive to garnish wages of a family now supported by a single income after mass layoffs.
It is abusive to make collection calls all day long as a single mother is juggling her new role as full-time teacher, caretaker and employee.
The CFPB has the ability to prohibit these abusive acts and practices. That is what the CFPB must do — now — to protect consumers. The CFPB has eagerly sought to loosen requirements to provide “flexibility” for industry, but cannot even take the first step to help consumers. The hypocrisy is not only sickening — it is dangerous. Millions of Americans are being subjected to these predatory tactics as the nation’s top consumer watchdog sits on its hands. The CFPB should immediately ensure the law represents our new reality by prohibiting the all-too-common tactics employed by the debt collection industry for the duration of the crisis.
Families have no protection in these circumstances; they cannot take on another job or move to cheaper accommodations, at least not without violating state orders, risking their health and endangering the health of others. They, and we, need the CFPB to step up to the job Congress gave it.
It took American families more than a decade to dig out of the last financial crisis. Some never did. The current pandemic has further exposed the fragility of the American consumer finance system. The CFPB was born of the last financial crisis. As our nation faces its next great financial crisis, it’s time for the CFPB to do its job.
Diane Thompson is an Open Society Foundations Leadership in Government fellow. Previously, she was deputy assistant director and acting assistant director of the Office of Regulations in the Consumer Financial Protection Bureau.
Seth Frotman is the executive director of the Student Borrower Protection Center. He previously served as assistant director and student loan ombudsman at the Consumer Financial Protection Bureau, where he led a government-wide effort to crack down on abuses by the student loan industry and protect borrowers.
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