Closed Rule

Consumer Debt Collection Practices (ANPRM)

Summary

The Consumer Financial Protection Bureau (CFPB) might propose new federal rules on how creditors and debt collectors can act to get consumers to pay overdue credit card, medical, student loan, auto or other loans. This decision matters to you if you

  • had an experience with debt collection (good or bad)
  • counsel consumers with overdue debts
  • have a business where you do your own account collection or
  • work in the debt collection industry

Here, you can learn what CFPB is thinking and what it needs to know. You can share information and experiences and discuss ideas with others. At the end of the discussion, CFPB will get a detailed summary and your input will help it decide what to do next. (This phase is for gathering information and brainstorming. The next phase would be where CFPB comes up with specific proposals and asks people to comment again before it decides whether to adopt those proposals as new regulations.)

Consumers and business both have a stake in effective, responsible debt collection practices. Don't be a bystander. Help CFPB make the right decisions about new consumer debt collection regulations. Share what you know and encourage family, friends and coworkers to do the same.

Draft Discussion Summary Making sure debt collectors & buyers have info about the debt - 6

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Subtopics

1|What's happening now? - 1

Draft Summary of Discussion

[NOTE that comments reported in this section may have originally been made under another subtopic. Similarly, comments originally made on this subtopic may be reported in another, more relevant section. Information in parentheses comes from commenter response to interest survey; the “servicemember” designation may apply to the commenter or someone in their family. Numbers in parentheses for industry-perspective commenters refer to number of people involved in debt collection in the firm.]

"The price of paper (bad debt) varies depending on the collectability of the debt based on info known about the debtor and also varies based on the amount of documentation purchased from the original creditor. Most debt buyers only pay for a couple of recent credit card statements. They may provide a ‘bill of sale’ but these never identify a specific account being sold and reference a master purchase contract which is never provided." (attorney who defends consumer debt collection suits)

"I work in healthcare and believe there should be standardization. …I had a MRI, received the insurance EOB and paid the balance. That should have been the end of it. Two plus years later I receive a notice for the balance, which should have been the contractual allowance. When I called the collection agency all they knew was that the MRI business had closed and turned my balance over to them as bad debt. They were able to see both the insurance and my payment. However, since they didn't have the insurance EOB, they suggested that I contact the insurance company and obtain a copy. Why is it the consumers responsibility to chase down information, it feels like I am doing their job. There should be standards for turning over collections to a agency. If the provider is going to send a bill to bad debt, they should have to supply a file with all the information. In this case, the claim and itemization (1500 and/or UB) the insurance EOB and/or COB and all notes pertaining to the claim. Maybe having to provide all the required documentation would allow the provider review the claim to determine whether the balance is the patient's responsibility." (consumer)

"A recent case filed by the Colorado Attorney General in the District Court 11/25/2013 against four entities encompasses what is wrong from selling debt by two financial banks, to a debt buyer, and then collection by an agency and law firm on why oversight/rules/actions must take place and should have been in the past. Two important points. First the complaint is an allegation as of now. The second is the complaint isn't representative of the number of debt buyers and collection agencies/law firms in my opinion. It does reflect why rules must be established and enforced against those who do not conform to the laws and regulations. It also shows the need of better controls and due diligence by banks who sell accounts and be held accountable even though the accounts change ownership. It is long overdue to place accountability and responsibility to bad players, and include individuals who manage the enterprises from start to finish." (debt collector; <20)

"I am currently going through a miserable experience with a creditor and debt collector. In 2004 I completed my college education and consolidated all of my student loans through Nelnet. In 2005 (or so) I started to get calls from debt collectors stating that I was delinquent on my loan repayment. I explained the situation that I had made all of my timely payments through Nelnet and, before I would pay anything else, I would need to see some proof of the debt. I never received any proof of the debt and this conversation reoccurred several times for the next five years. In 2011 I wanted to buy my (wife’s) dream home. It was a significant purchase and the bankers I talked with indicated I needed to clear up the student loan issue to be approved. I reached out to the original creditor and the debt collector and begged for some proof of the loan. They then provided me with a loan application (nothing to indicate that the application was approved or that any funds were ever dispersed to me). While I was not comfortable with the proof, I knew that fighting it out in court would take longer than I was willing to take. So, I was very purposeful in my conversations with the original creditor and the debt collector to make sure that the issue would be cleared on my credit report if I paid the full value of the (alleged) loan. I also recorded the conversations I had with the original creditor and the debt collector. I paid the original loan amount and (if you didn’t see this coming) the original creditor refused to update my credit report. And, even after providing the credit reporting agencies with proof that the debt was paid, they also refused to update my credit report. To make matters worse, after the debt was paid, I received a notice from the debt collector that several thousands of dollars had been excused. I immediately contacted the debt collector and requested documentation that would support their amount due, including documentation where I agreed to a specific interest rate. No response from the debt collector. So, I am now arguing it out with the IRS regarding any additional taxes that may be due. And, even though I paid the debt two years ago, my credit report has not yet been updated. It is simply ridiculous than any business would have this much power to have such a negative impact on an individual without any documentation to back it up. Any creditor should be required to provide certain documentation prior to making a negative credit reporting and there should be significant consequences for any creditor/debt collector that pursues a debt without having the required documentation. ... There should be a national registry of attorneys that are competent to handle credit dispute issues. I’m not sure of the evaluation criteria or who would perform the evaluation, but there should be a way to guide a debtor involved in one of these disputes. Anything you can do to help would be appreciated. I continue to be turned down for loa[n] applications due to this inaccurate reporting." (consumer)

"From approximately 18 years ago, my family and I participated in family therapy related to depression in one of my sons. The therapy was conducted through a series of insurance policies . . . During our time with them, the [treating doctor] changed ... from “in-Network” to “Out of Network” and near the end of our involvement ultimately sold his practice to a larger Medical system. Throughout the entire process, we paid every Co-pay and required share of expense for services, but the ... insurance would pay whatever they determined the services to be worthabd expect the medical practice to absorb the difference. We were never billed for that difference, but I believe the Company that absorbed the practice did so at a value that was based on a total billing value. I believe when they did a bookkeeping merger, [they] decided that the uncollected value was uncollected debt. It is possible that the combined organization went bankrupt – I do not know, because we did not continue our involvement. All I do know is a few years after we stopped receiving treatment, we started getting calls from a collection agency. We were concerned about impact to our credit rating and went to extraordinary lengths to deal in good faith with the company. Since they were the first recipient of the 'debt' they were able to tell us where the debt came from. My wife provided copies of a VERY large file of medical bills that showed that we had paid EVERY required co-pay. The individual handling the account agreed with our assessment and they stopped calling. A few years later, it appears that uncollected amount was consolidated and sold to another collection company and the process started all over again. This time the collections company appeared to have no information about the origination of the debt and no interest in facts. After speaking with them several times it became clear that they would only accept money to stop the harassing calls. Over time, the calls would slow, then stop, only to start up again when the account was sold to yet another company. In the past two years, the calling has become incessant with the introduction of robo-dialing. We get calls at 8am on weekends, we get calls at dinner time, we get calls almost every day. About 2 years ago, I tried talking to the person who picked up after the computer detected that someone was on the line. He would not offer ANY information about who owed money, what the purported debt was from or when it was incurred. All he wanted was to get some form of payment – he claimed that if I paid $40, that would close it out. I believe, from things I have read that this is just a trick to gain current legitimacy of the debt. I am angry that this has been allowed to continue so long without a reasonable method of remedy... I resent the notion that I would have to pay a lawyer several thousand dollars to try to take this on in court."

Comments1

Commenting is now closed.

Just a reminder that the only question at this point is whether the draft summary missed, or misstated, something relevant in the comments that RegulationRoom participants made before CFPB’s public comment period closed on Friday, Feb. 28.

2|Info about disputes and verification - 1

Draft Summary of Discussion

[NOTE that comments reported in this section may have originally been made under another subtopic. Similarly, comments originally made on this subtopic may be reported in another, more relevant section. Information in parentheses comes from commenter response to interest survey; the “servicemember” designation may apply to the commenter or someone in their family. Numbers in parentheses for industry-perspective commenters refer to number of people involved in debt collection in the firm.]

"I believe the most significant problem is due to financial institutions having two systems that are not fully integrated. One is the system of record that contains account level information and the second is a charge off system that is used to track events that occur after the account is charged off. Events that occur on the charge off system are normally not reported to the system of record. Also, charged off system does not or is not used for credit reporting. The second problem is a result of mergers and/or acquisitions where the financial institution only converts the system of record and not the acquired charge off system. This leaves a void as to the particular status after the account was charged off. As accounts are outsourced or purchased the reliance of information resides on the system of record and NOT the charge off system. The third problem involves a consumer who has more than one account with the original lender so the risk of one account going to a different agency or debt buyer is highly likely. Even if access by the debt buyer and collector is available, the events that took place on the account are normally not recorded in the system of record and the charge off system may have been decommissioned. As to the issue of credit reporting of disputes depends upon whether an agency or debt buyer furnish data to a credit reporting agency. The amount of consumer data currently and in the past reported to credit reporting agencies may not be accurate specific to charged off accounts and to require a chain of title would be expensive and the likely hood of accuracy would still not be achieved. Going forward I think the first focus must be on credit reporting accuracy." (debt collector; <20)

"As there can be a substantial monetary impact from incorrect entries on a credit report in the form of higher interest rates or being unable to secure a loan, - bonafide disputes should NOT be allowed on a credit report" (consumer; adverse action taken against me for another person’s debts)

"After offering documentation that I didn't owe a debt, the collection company ignored what I offered as proof and continued to try to collect the debt - even stated they didn't care that I didn't owe it. They should be required to investigate and respond in writing to a consumer's defense, so a follow up can be made, or complaint filed with a governmental agency. Documentation should also follow the claim as collection companies sell their lists to new companies. Better, no documented defense of a claim should be eligible for sale until resolved." (consumer; 62 or older)

"[U]pon transfer, any failure to previously verify debt per consumer request [should go] with the debt sold. " (consumer)

Comments1

Commenting is now closed.

Just a reminder that the only question at this point is whether the draft summary missed, or misstated, something relevant in the comments that RegulationRoom participants made before CFPB’s public comment period closed on Friday, Feb. 28.

3|Info about consumer preferences and status - 1

Draft Summary of Discussion

[NOTE that comments reported in this section may have originally been made under another subtopic. Similarly, comments originally made on this subtopic may be reported in another, more relevant section. Information in parentheses comes from commenter response to interest survey; the “servicemember” designation may apply to the commenter or someone in their family. Numbers in parentheses for industry-perspective commenters refer to number of people involved in debt collection in the firm.]

"Wow, I didn't even know we had those rights--except for the one about the workplace, they're all news to me. So I've no experience, but my guess would be that the debt collectors would rather not receive this information." In response to moderator question about whether any type of information is especially important for communication, this commenter continued: "The most important would be not to call at work. That's really the most important to the collectors, too, because a person out of work isn't likely to pay" (consumer; 62 or older)

"The credit reporting agencies buy and sell consumer data and should be obligated to list preferred communication methods times (if applicable) and language (if applicable) which the collection agency must abide by." (consumer; adverse action taken against me for another person’s debt)

Comments1

Commenting is now closed.

Just a reminder that the only question at this point is whether the draft summary missed, or misstated, something relevant in the comments that RegulationRoom participants made before CFPB’s public comment period closed on Friday, Feb. 28.

4|Documentation - 1

Draft Summary of Discussion

[NOTE that comments reported in this section may have originally been made under another subtopic. Similarly, comments originally made on this subtopic may be reported in another, more relevant section. Information in parentheses comes from commenter response to interest survey; the “servicemember” designation may apply to the commenter or someone in their family. Numbers in parentheses for industry-perspective commenters refer to number of people involved in debt collection in the firm.]

"I would suggest a visit to the Federal Bankruptcy Rule 3001(effective 12/1/2012) and comments made during the proposed period, plus the hearing presentation statements published and are available. The Rule already addresses documentation issues. I again see [say?] that attaching all of the proposed documentation to the validation notice is not productive for the consumer or the sender. I do believe additional documentation as to chain of title [should] be available if a consumer is being sued in Court." (debt collector; <20)

In an earlier post, this same commenter had argued that documentation should not be required to accompany the validation notice, which should remain simple. A consumer commenter provided a different perspective: "I think probably the benefits of giving debt collectors and buyers access to these documents would NOT be worth the costs unless the documents have to be included with the validation notice. If the debt collectors were anxious to be sure they had the right debtor, sure, great. But I don't think they are. The actual guy on the phone is only anxious to get the money; he doesn't really care where it comes from or whether the debt is legal. Giving him the information, without giving it to the debtor, probably wouldn't be much good." (62 or older)

"Some useful documents would be the last three collection notices ACTUALLY sent to the consumer. Too many collection agencies have claimed they sent me regular notices regarding the debt when I have not have any contact with them for 2 - 3 years. But they claim they have ‘records’ that claim otherwise. Yet, there is no supporting documentation of such efforts. like say, copies of the notices.” (consumer)

"The collection agency should be able to furnish all of the documentation listed in the proposal [i.e., original signed contract/agreement (or e-copies), account statements, terms and conditions, account applications, payment history documents including periodic or billing statements and payment receipts, the charge-off statement, statement of all charges and credits after the last payment or charge-off ] upon request." (consumer; adverse action taken against me because of another’s debt)

"Collections Agencies are predominately seeking to collect debts previously deemed uncollectable that are consolidated and sold as a block. Each time the debt is sold, less information regarding the debt is passed to the receiving company. After a few cycles, it appears the receiving company only has a name, a purported value and contact information. . . . Require collection companies to have a legitimate pedigree on each debt in its portfolio – to include the name of the individual or corporation that initiated it, how the debt was incurred, what the terms were and what if any payments were made." (consumer)

Comments1

Commenting is now closed.

Just a reminder that the only question at this point is whether the draft summary missed, or misstated, something relevant in the comments that RegulationRoom participants made before CFPB’s public comment period closed on Friday, Feb. 28.

5|Technology - 1

Draft Summary of Discussion

[NOTE that comments reported in this section may have originally been made under another subtopic. Similarly, comments originally made on this subtopic may be reported in another, more relevant section. Information in parentheses comes from commenter response to interest survey; the “servicemember” designation may apply to the commenter or someone in their family. Numbers in parentheses for industry-perspective commenters refer to number of people involved in debt collection in the firm.]

"The idea [of a central documentation data repository] is sound in principle, but as any technology geared towards convenience, there are risks against privacy encouraging identity theft. Having creditors, collectors, and consumers come together ‘on the same page’ regarding debt would be fantastic for everyone involved. But any technology which accomplishes this needs to be very secure with very strict authentication requirements to ensure *only* the relevant parties can view information concerning the debt. Otherwise, not only thieves would have access to this information - but also non-criminal third parties, who may never have learned of such information due to the protection of consumer privacy laws. Knowledge of the debt and money owed would need to have the same level of security afforded to consumer reports and information within a consumer report (as defined in the FCRA)." (works for an organization that assists victims of ID theft)

"I see some potential risks. First, disclosure requirement to the consumer the account information is in a central depository. Secondly, what if the notice is not sent and/or the information in the central data base is not accurate, who has the liability. Third, the central depository could be used as a means to support class action lawsuits or be a basis of a lawsuit. An alternative is already available but needs to be corrected and a national uniformity of information provided: Credit Reports. Credit reporting agencies, furnishers, and consumers need to have better accuracy across the board. Stop the finger pointing and excuses, in my opinion." (debt collector; <20)

"A central system has privacy concerns and it would be useful only if it included verification of who picked up the document and when. Instead creditors and debt buyers should be mandated to allow secure document uploading to their own website with official notification that the document has been reviewed. I have a pending case of a company misapplying my payments, I had to send many registered letters and faxes with proof of payment which cost some money and time. With this company anything you send them ‘doesn't exist’ unless you have verifiable proof they have been forced to accept it. It would be a lot easier for the consumers to just upload the documentation and get verification the company reviewed it which can be used for a complaint. There should be penalties of fines for not marking an uploaded document as ‘reviewed’ after a period of time … say, 48 hours." (consumer; mortgage debt)

Comments1

Commenting is now closed.

Just a reminder that the only question at this point is whether the draft summary missed, or misstated, something relevant in the comments that RegulationRoom participants made before CFPB’s public comment period closed on Friday, Feb. 28.

6|Privacy and data security - 1

Draft Summary of Discussion

[NOTE that comments reported in this section may have originally been made under another subtopic. Similarly, comments originally made on this subtopic may be reported in another, more relevant section. Information in parentheses comes from commenter response to interest survey; the “servicemember” designation may apply to the commenter or someone in their family. Numbers in parentheses for industry-perspective commenters refer to number of people involved in debt collection in the firm.]

"What are the laws and rules on who can create/own debt collecting companies? It seems that just about anyone can create a debt collection company and if the owners and/or employees have unscrupulous desires, then it seems that privacy is a big concern. Plus, if anyone can create/own debt collection companies, then it doesn't seem to surprise me why so many debt collecting companies break the laws. There should be tighter laws on the formation of debt collection companies and the employees that they can hire." (consumer; collectors have been calling looking for someone I don’t know) [another commenter responded that this was a matter for state law, and gave the information for Illinois regulation]

"The main problem with privacy is that we use the SS# for everything, so everything can be connected. That's been a bad idea since they started using it as a taxpayer i.d. It probably prevents a little fraud, but it's not worth it. We have, in effect, made it illegal to be untraceable--not a good thing for victims of domestic abuse, among others" (consumer; 62 or older)

"Collection agencies should abide by the rules and regulations surrounding HIPPA (medical), Customer Proprietary Network Information (FCC) and other statutes already in place. While the CRPB cannot change those statutes, agencies must still abide by it." (consumer; adverse action taken for another person’s debt)

Comments1

Commenting is now closed.

Just a reminder that the only question at this point is whether the draft summary missed, or misstated, something relevant in the comments that RegulationRoom participants made before CFPB’s public comment period closed on Friday, Feb. 28.

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