Consumer Debt Collection Practices (ANPRM)

[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 Similarly, comments originally made on this subtopic may be reported in another, more relevant section, including “Trying to locate the consumer” and the “Phones and mobile phones. 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.]

In order to document harassing or abusive practices, several consumer commenters on this (and other) posts emphatically want the ability to record calls from collectors without any fear of liability under state laws that might require consent of both parties:

A way for federal law to accomplish this was advocated by one commenter: “Consumer attorneys occasionally advise their clients not to record unlawful communications due to state laws requiring both parties' consent for recording. The CFPB should require that debt collectors subject to the FDCPA impliedly consent to recording by consumers.”

A collector (<50) responded that “both parties should be aware if any recording is going on. It is fair for both side,” although this commenter did not address implied consent (in contrast to giving notice).

One consumer commenter complained about a current inequity in recording: “If I ever tell a collector that I'm recording the conversation, the call ends rather abruptly or the calls just stop. Yet, I'm expected to be recorded whenever they initiate the call. They expect me to have an expectation to be recorded when they want to attempt to collect a debt, but the minute I want to record them while I dispute a debt, that's out of bounds.”

Another recounted his/her own experience, and advocated consumer self-help: “I did the same thing and the response was immediate to stop the abusive behaviors. Like you most debt collectors just hang up. Those who stayed on immediately changed their tone of voice and behavior. I would advise anyone receiving verbally abusive, harassing, or threatening phone calls from debt collection calls buy a cheap telephone recording device and to use it when they call. When they inform you at the mini-Miranda point interrupt them and tell them that you too are now recording all debt collection calls. It's the most powerful tool any debtor can use.”

This comment provoked a reaction from a creditor collecting own debts: “I don't believe in abusive behavior (i.e. the behavior spelled out in the FDCPA), but what this individual is saying that she owes a debt that she is not paying. Instead, she wants to be the offensive party and paint the collector into a corner using a recording device. Instead of purchasing a recording device, wouldn't she just be better served by using that money to pay the debt collector for the debt she owes?”

The original commenter responded with more details: “I was following the advice of our bankruptcy attorney. I was allowed to tell creditors only a limited amount of information. I could confirm- my identity, that yes I owed the debt, and third that I was not able to start repaying my debt. No, I was not allowed to tell the debt collectors that we would be filing bankruptcy. It took almost six months to complete tasks prior to notifying creditors about the bankruptcy. During that time I was subjected to verbal abuse, threats, illegal intimidation tactics, and outright lies. The tape recorder completely stopped the bad behavior. It's amazing what debt collectors will say and do when they call debtors. It's a totally different story what they want recorded. The best money you will ever spend is a cheap $20-25 telephone tape recorder. Consumers should be able to record. End of discussion.”

One commenter had a different spin on recording calls: “With today's technology, the debt collector or creditor should not only record the conversation, but provide the recording to the consumer via an email link as well as to a repository within the FTC / CFPB in via an email link. This way everything is documented. This would curb the verbal abuses and threatening attempts some rogue collectors practice. If a dispute is made by the consumer over a debt, they can document the call, yet the debt collector or creditor cannot provide thier copy of the call, then the debt is Cleared. That will force the debt collectors and creditors to obey the law. This is an easy process to implement given today's technology.”

One commenter (law student and former intern at consumer law organization) called for CFPB to clarify and/or extend the scope of liability for abuse and harassment:

“There is currently dispute among federal district and circuit courts as to whether a post-default assignee of a debt comes within the creditor exception. The CFPB should issue a rule providing that a post-default assignee is a collector for FDCPA purposes. The FDCPA contains an exception for creditors. The CFPB should include in any rule confirmation that the same practices prohibited for collectors under the FDCPA would be unfair, deceptive, or abusive acts and practices if done by a creditor.”

Several commenters called for criminal penalties for harassment. E.g., “Something must be done where criminal charges can be pursued if a collection agency continues to harass through phone calls and email”; “I also think that their behavior is criminal when it comes to making threats against consumers and harassing people with disabilities and seniors. So, yes i think criminal charges should be pursued for their cover ups and harassment.” Another argued for changes in the way FDCPA penalties can be calculated:

“The current penalty for violating the FDCPA is "not less than $100 and up to $1000." Further, the violations cannot be "stacked" so those violating the law 10 times on one debt, will generally only face the maximum of a $1000 penalty. Punitive damages are hard to prove. A $1000 penalty is not a deterrent to the debt collection industry, and too low to get most attorney's interest is taking these cases. If we want to see the law upheld, raise the penalty to $10,000 per violation - and you'll see most of these characters clean up their act and stop using abusive collection tactics.”

A second consumer agreed, arguing that "$1000 is of little consequence to most companies." This commenter advocated raising the maximum penalty and increasing the statute of limitatons from 1 to 7 years.

Echoing a concern raised elsewhere (“Notice that the debt has been sold”), commenters identified the problem of serial relisting and/or attempted collection of the same debt:

“The same debt will be recycled by changing the date and placing with various agencies. In some instances the debt has been paid, but the various collection agencies are still reporting the debt and trying to collect.” (commenter works in the finance industry)

An industry-perspective commenter responded: “The majority of the time, when a debt has been paid off, it has been paid to the client, not the collection agency. Most of that time when that debt has been paid to the client, the client neglects to report it to the agency. So the collectors continue to call on a paid debt that they have no knowledge of. It's really not the collectors fault, it is generally the client's.” (debt collector; <20)

“As someone who regularly reviews credit reports, I am appalled by a practice I see regularly. Debt Collectors frequently resubmit the report of a debt as delinquent every month. This will have a highly adverse impact on the consumer's credit scores.” (mortgage broker)

Numerous stories of harassing behavior appear in “Trying to locate the consumer” but this story contained some different elements:

“I have a creditor who begins calling within a few days of becoming past due. They are relentless calling up to 10+ times a day. I don't call them back because once on the phone with them, they hound you until you agree to make a payment or post-date a payment. If I don't call them within about 15 days of becoming past due, they start calling my relatives and neighbors and say "we're trying to locate xxx - do you know them?" When they answer yes, they ask them to deliver a message to me (phone number and name). I've been told this is not illegal since they are using public information and not revealing who they are or what the call is in relation to, but this tactic is shameful. We are making an honest effort to get current and stay current, but when my neighbor hands me a piece of paper with a note on it, I feel pretty powerless. This is both harassment and abuse in my opinion and it should be addressed.”

Other stories of behavior consumers considered harassing or abusive:

“My problem with those debt collection companies’ employees I have had to deal with is this...they either call themselves agent, investigators, or they are members of a special department investigating a debt, alluding to Law Enforcement or DA's office. Most recently, as last week, they have indicated, they are going to contact me at my place of employment and are going to initiate civil action if I don't contact them before the close of business. This is out of order and should be stop. One such collection company used the actual phone number of a District Civil Court office in a neighboring county in their phone message for my wife to collect on a debt many years old. This practice is deplorable and should have severe penalties towards any collection company/employee that uses this type of collection action.”

“I received several Robo calls leaving messages to have me served at my job on a debt I do not owe. They have threatened me via voice mail. They also use Voip numbers we have reversed them different each time. I have reported them several times but they continue to call.”

“During the past 2 years I have been repeatedly contacted by a variety of collection agencies. It began innocently enough, when one of them called me, asking ‘when can we expect your payment,’ when that statement had not yet arrived and was not due until the 20th of the month and the call occurred on the 11th. It was a collection agency hired by Capital One. Coincidentally, I purchased various items at Costco a few days later and received the shock of my little life when my credit card was denied. I called Capital One from a phone at Costco and was told I had not made my payment...this was even stranger because I pay off my balance each month. What I didn't know is that Costco switched from a very nice bank (HSBC) to Capital One, never notified me and Capital One immediately played hardball, albeit unnecessarily. To answer their strong-arm tactics, I wrote a letter to Robert Crawford, the incoming CFO of Capital One, in which I had cut up both credit cards and told him to ‘shove it,’ for treating a long-time customer like something you scrape off the shoe! When the collection calls began, I was in a great mood - after all, I had initiated this mess. However, they were unfair from the beginning. They use I.V.R. numbers. Without technical jargon, it means that the number we see on caller i.d. is never the number from which they're calling, so you can't block their call (my provider allows me to block 12 numbers and I wondered how these collection agencies were constantly squeaking by). They robodial, so you can and do get several calls per day and before 8:00 AM and after 9:00 PM, since they know there is very little you can do about the early or late calls, besides whine (thank you, Darlings who will pursue these jerks!) and sit around frustrated and without good credit. That said, what followed was even worse....the collection agency (Portfolio Recovery) which was able to place a bogus $9,924 ‘collection’ on my Experian credit score… they have no paperwork to substantiate this charge and it has completely ruined my credit, pulling down my FICO from 795 - 810 to 610!” (consumer; victim of ID theft; 62 or older)

“I have never been delinquent on my State taxes. Due to an error made by the company I worked for in 2008, which didn't take out taxes, I am now faced with dealing with the State Collection agency. I have never heard of the State threating the residents to try to collect taxes. I called and cooperated, however, the callers are harassing me from morning to night. How is that possible? I have excellent credit and have worked for many years to maintain my credit standing. I have never owed Federal taxes that I have not agreed to pay. And never in my life owed State taxes, and I am shocked that they can hound the residents like private collectors do. What is the recourse for this? I am retired and on a fixed income. For the State to be able to threaten the residents who are making attempts to pay the taxes, (one year) seems like a violation of rights.” (62 or older) [moderator suggested commenter contact state taxing authority to determine if a special hardship program exists]

“In 2010 I was sued by a debt collector for a debt. At the time I was in my final year of law school and was surprised at the amount of misinformation used by the plaintiff's attorney (e.g. claiming that no proof of assignment was necessary). I informed the attorney that I would need proof that this was my debt as well as proof that his client had proper assignment of the debt. He responded by threatening (via e-mail) to interfere with my Bar admission process. I did not believe that an unsubstantiated debt would affect my ability to sit for the bar and so I stood my ground. He dropped the case (without prejudice) in Magistrate Court and then re-filed in State Court five months later while I was going through my Certification for Fitness process. As a result of his second lawsuit, the State Bar did not allow me to sit for the Bar due to ‘a pending lawsuit’ about debt. He eventually also dropped the lawsuit in State Court. He never shared proof of this purported debt nor did he ever produce proof of assignment (presumably because he never had valid proof of either). Nonetheless he was effective in ‘punishing’ me by interfering with my ability to sit for the Bar after graduating from law school.”

"Sallie Mae ... has it on file that i dod not graduate from college and i did graduate. Their collections agencies are like loan sharks going to the extreme of making threats and cussing out students who cannot make payments. I know for some people it is easy to make payments on student loans but for many it is a struggle to get by. All students are trying to better themselves and sometimes they simply cannot afford to make payments. Companies like Sallie Mae are in the business of making peoples lives miserable. Their collection practices, customer service and lack of options are usually the reason why students default on their loans..." (consumer; victim of ID theft)

"Too many collectors call and never report the 'mini-Miranda warning.' They call all times of the day and night, and multiple times of the day. If they don't get you because your have called ID, they will change their ID and try again. It is simply harrassment. Many will challenge the the consumer, threaten, and even harrass them to the point that I saw someone actually contemplate suicide..."

At least one commenter identified the following as additional abusive or harassing behaviors and/or areas in which the legal rules should be changed:

1. “When calling about a debt, debt collectors MUST verify that they are speaking to the debtor(s) or other adult within the household. I know that is stated within the FDCPA but from experience I know it doesn't always happen. My situation goes back to the 1970's but it was done then and it's probably still being done today. Calling repeatedly, threatening, screaming, cursing at children gets collectors absolutely nowhere. It is a most disgusting form of abuse that should never be tolerated. New language in the FDCPA should specifically and clearly state this. Additionally, there should be some form of penalty for collectors who engage in this demeaning and useless practice.”
   
   
2. "[C]ompanies who have their own collection companies should not be allowed to negotiate terms with loan holders."
   
   
3. Repeal the exception for child support collection. (entire comment of this commenter appears below)
   
   
4. “One issue I am experiencing is that since I allegedly received an overpayment of wages from a former employer, I have NONE of the consumer protections that I should. I fall into the gray space of being a consumer and my alleged (and incorrectly so) debt is considered ‘commercial’ and therefore there are absolutely NO regulations on the activities of the debt collector. The individual assigned to my account has repeatedly revealed to a third party that he is trying to collect a debt from me. The alleged debt has never been substantiated, so why am I not protected as I would be if I had received a loan from a bank.”
   
   
5. “Once I tell a debt collector I am a unpaid CareGiver and that is why I had to stop making payments, why do they keep calling me? In essence they were telling me to let my parents die if necessary and go get a job. I was repeatedly baited with the comment, ‘So you are a "refuse to pay".’ I found this type of conduct outside the lines of common decency.”
   
   
6. “The Pro Publica piece on one ‘installment’ loan lender has plenty of examples of harassment that goes over the line that is not covered by this language -- collection at place of work, filing lawsuits to seize a borrowers payroll card effectively leaving the borrower with no income. Truly dreadful conduct. http://www.propublica.org/article/installment-loans-world-finance”

One industry-perspective commenter pointed out that there is another side to the story:

“I would have to point out that [the] many complaints in regards to how abusive or harassing debt collectors are according to consumers. As a third-party debt collector, I receive dozens harassment complaints daily. I would just like to note that 80% of the time, these consumers that my fellow co-workers and I come across, are complaining of harassment and abuse; and 100% of them are truly just unwilling to face the facts. That's what they are complaining about. When we tell them that they owe a debt, they consider it harassment and abuse. They just don't want to hear their problems. Yes, grant it, there are some debt collectors that are harassing and abusive, but the other 98% are just pointing out the truth. When consumers realize that it is them and not us, debt collectors would receive a better reputation. But until then, we are the enemy in the consumer's eyes.” (debt collector; <20)

This comment sparked some thoughtful responses:

“I think part of the problem is that the 2% of collectors who harass and abuse are responsible for a disproportionate share of the contacts that consumers have with your industry. Everyone (whether they owe a debt or not) has had an encounter with one of these bad apples, and then they want to take out their anger on you. And when you make an honest mistake and get sued for a technical violation, you pay the same penalty as a company that has deliberately harassed someone with 100 phone calls.” (consumer; continuous calls for other people’s debts)

“It might help to take a look at how debt collectors are compensated. I think, based upon people I know who have held such work, that collectors who receive their pay based on a commission are incentivized to abuse the consumer.” (researcher)

Finally, one industry-perspective commenter pointed to the existence of multiple legal standards:

“States Rights versus Federal Rights are the biggest issues with the rule making process. There is a vast divergence of state law requirements that create areas that confuse consumers, regulators, and those in the industry as to what laws apply in what settings. A universal rule that would apply in all settings would assist all parties to remove the ambiguity and conflict that currently exists with state multiple levels of regulation at the municipal, state, and two regulators at the federal level.” (debt collector; 20-50)

Other comments:

“I had a business, I had to give up the business to become an unpaid CareGiver. If I had been shown at the time I apparently agreed to the credit card agreement that there truly were no ifs ands or buts in regards to monthly payments forgiveness on an ‘unsecured’ debt, I would have come up with a different business model that did not require credit card debt. Credit card companies get to present themselves as pro family in their advertising when the exact opposite is true in times of crisis. Ask people who had a dramatic life changing incident occur how the credit card companies treated them. Ask the Colorado flood victims, or the Hurricane Sandy Victims, or the person who was the victim of a hit and run how the credit card companies treated them. These are the same credit card companies that lobbied the comptroller of the currency in 2002 to keep their monopoly on credit card debt suspension insurance and the outrageous overpriced premiums they were charging their customers. One of the best ways consumers had to be responsible regarding their credit card debts was having AFFORDABLE credit card debt suspension insurance. This option was stolen from consumers in 2002 when the comptroller of the currency allowed credit card companies to overcharge by 1000% to 2000% on monthly credit card debt suspension insurance premiums. I created a time line document that shows how the financial elite stole fairness from the people in regards to credit card products. [providing link to] My appearance in front of the CFPB in May of 2013 and the research I shared with them.” (consumer)

“I am pleased to hear that information that is being given to the people of America is something that we can wield and stand up for to protect our rights. A debt is a debt is a debt. But how that debt is collected upon can be a very nasty vicious circle. I would certainly hope that with just this information that I read that it covers one of the biggest Welfare Reform Act that is called Child Support Enforcement that basically feeds the governmental bureaucratic pockets of not just the states but hoe states enforce their bullying tactics in pursuing astronomical amounts from bad billing practices, high interest rates above and beyond what other types of creditors, mortgagers even come close too. We seem to have a very big problem in this country that I have read and researched from the lowest courts to the highest courts where we are in the staggering amounts of billions and everybody wants to blame ‘dead beats’. Reading and talking with attorneys, they themselves have had to challenge improper arrears at astronomical amounts that are owed in the court system several times, and they will bluntly tell you on factual stories and reports of stories such as – they already seem to know that improper billing will be the case and let the client know that up front…Why??? If the federal government mandates these laws including the FDCPA why is child support excluded? I would hope that what is taking place at this point in time will actually be covering what millions and millions of men and women are being threatened with wage garnishment, property seizure, and banks levies, prison, and destroying credit reports. And yet the state says, ‘it is the law’ and yet the law is not governed by the states, to a point, but it is the federal gov that needs to take action and perform a good clean audit that the federal government is the one that started this, ‘we are owed,’ they are solely all behind these federal laws of consumers rights and fair debt practices. So I hope that this chain of events will cover what simply boils down to is a -debt is a debt is a debt. I don’t think Americans have a problem paying the debt they have gotten themselves into…it is the way your city, state, county, and federal regulations keep passing the buck to the next agency and never accomplishing anything. There is no excuse.” (consumer; child support debt in collection)

“Based on my personal experiences in dealing with debt collectors, here are my personal opinions about the debt collectors of the debt collection industry as followed: 1. It appears that the debt collectors of the debt collection industry are conducting a money laundry and racketing operation by exploiting and obtaining monetary from consumers for products that they don't sell to them or services that they don't provide to consumers with no initial purchase contract with consumers. 2. It appears that debt collectors are obtaining monetary from consumers where they don't have licenses to sell products to consumers or provide services to consumers. 3. It appears that debt collectors are costing companies money when companies are trying to recover their losses when they miss payments from their customers for the products that they sell to their customers or the services that they provide to their customers with illegal purchase contracts…. [It] appears that this federal law have debt collectors thinking that they have the power to say or to do what they want by abusing , oppressing, and harassing to control consumers to collect money from consumers' debt for an income to pay their bills in my opinion is form of financial terrorism.”

[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.]

Industry-perspective commenters favored a rule that would define a “reasonable” period of time for a collector to await a response from the debtor’s attorney:

“FDCPA should define what constitutes reasonable period of time. In my experience most attorneys who represent a debtor do not return communication inquiries about representation. In most cases the delay in response may be caused by the debtor paying installment payments to the attorney to file a bankruptcy proceeding. When the debtor does not keep the repayment terms a creditor is presently not notified that the representation has terminated and there is no attorney representation.” (debt collector; <20)

“Since the UCC and to the best of my knowledge, State laws do not define reasonable period of time, this is a problem and has been a problem for most lenders and third party collectors based on me experience of over 40 years. Consumers should be able to seek assistance from an attorney and be required to provide the attorney contact information to a collector, unless the attorney has not already. The attorney should be required to notify all creditors of representation within 20 business days of the consumer's signed agreement of that representation. While most attorneys do notify lenders and/or third party agencies some do not and some do not respond to inquiries concerning representation. After the first lender/third party inquiry the attorney should be required to notify the lender and/or agency within 10 business days in writing of representation. The attorney should be required to notify a lender and/or third party within 7 business days that representation of the debtor has been terminated. It should not be a violation for a lender or third party to contact the debtor after 30 days to only determine if the debtor has continued representation of an attorney if there has been no communication provided by the attorney after 30 days of the initial notification in writing of representation. I have experienced no communication after the initial notice by the debtor and/or attorney received over 60-90 days and even six months. If nonprofit credit counseling agencies can send notification to lenders and third party collectors for representation of a consumer to reduce payments after an initial meeting I believe attorneys should be able to notify in the time periods specified. Setting rules of notification time frames would benefit all parties.” (debt collector; <20)

Other comments:

“There is now a class of ‘consumer representatives’ which obtains from debtors a signed ‘Power of Attorney’ and who then claim to be authorized to act as the consumer's attorney for purposes of debt resolution. They routinely seek to avoid the debt, most commonly by not answering their phones. My current practice is to advise the relevant state bar of the unauthorized practice of law by these jokers; perhaps a clarification statement that such persons must be licensed to practice law in the state in which the debt is being collected would cut down on the confusion.” (debt collection law firm; >50)

A consumer argued: “Once an attorney is retained all debt collection action should cease as a bankruptcy usually follows.”

[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 majority of the clients I work with try to settle their accounts. The main issue is that most of the collection companies will not provide the client with a letter of agreement until after the payment is made. They also will often wait weeks for a receipt. I have even had clients tell me that the company required a $10.00 payment for the receipt.” (commenter works for not for profit debt relief/credit counseling organization)

“I often find that some banks won’t allow their agencies to take debit or credit card. Why can’t I pay with my debit or credit card?? Why do they want my routing and account number. All agencies should accept debit and credit payments.” (commenter; victim of ID theft; servicemember)

“There should never be a fee for payment. In fact, in about 1/3 of the states have state laws that prohibit any fees/surcharges for payment by credit/debit cards (unless it is a government agency). if a debt collector accepts credit/debit cards for payment, there should not be any fees for payment processing. Nor should there be any fees for payment processing for any other payment method for that matter. Debt collection companies should also be able to accept prepaid debit cards for payment as a means of privacy and security for the debtors, rather than access to a bank account. Payment processor Visa has general information and the corresponding state statutes about the 10 states that prohibit companies from charging credit/debit card fees located on their website. Here are a couple of links from visa. Texas, which most people would think would be business friendly, is actually really consumer friendly when it comes to these fees, for example. Texas has had a long-standing state law against credit card fees, and just recently this year created a new state law to cover against debit card fees and other stored value cards (like prepaid debit cards)…” (consumer; collector calling looking for someone commenter doesn’t know)

Other comments:

“I always pay my debts on time, and this bill collector posts on my account late - which always has a 'late fee'. Is there a way to stop this?” (consumer; medical and student loan debt in collection) Another commenter responded: “I think part of the issue has to do with balance forward billing systems where the payments are automatically applied to the account balance, not to an actual invoice.”

“I recently discovered that my mortgage company does not have the note on my mortgage and they cannot locate the note. I am current and have no concerns on reducing the payment. But in 23 years when am done paying what then . I have asked the mortgage holder what should we do. For the last 8 months they have sent us notices saying they are researching the issue. So what is a consumer to do?” (consumer)

“After having a perfect payment history for 15 years, I had to across the board default on six accounts because I became an unpaid caregiver for my parents. However, before I ever defaulted, I contacted each account and explained what was going on. I would also like to note that five of the six accounts were still being paid down until I ran out of savings. I discovered the credit card companies HAVE NO INTAKE for potential defaulters. I consider a potential default division a cost of doing business that credit card companies have eschewed because they have co-opted the courts to do all the work for them for a very nominal fee. Why pay people to track involuntary defaulters who want to continue making much smaller payments until they can create more income when the account can be written off and parceled out to others who in turn clutter our courts up. My goal was simple, keep making monthly miniscule autopay payments on all six accounts in exchange for no harassing phone calls so that I could concentrate on CareGiving AND modifying my self employment so that I could make something every month. Everyone refused, and the harassing and MORE IMPORTANTLY REPETITIVE phone calls started. I ended up having to convert my land lines to 6 dollar a month cell phones, and then I rarely used them because I could not afford the 20 cents a minute cost. In essence the credit card companies and debt collectors destroyed the best way I had to regenerate earnings while still being an unpaid CareGiver. And… an additional roadblock is the debt collectors ABSOLUTE REFUSAL to put any verbal agreement reached in writing!” (consumer)

[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.]

Experiences recounted by consumer commenters:

“Debt collectors should announce themselves and refrain from acting like: investigators, attorneys, or hitmen. There needs to be an enforced code of behavior that represents a professional on the other end of the phone. Most recently, my husband has been receiving threatening phone calls from a collector pretending to be a law enforcement investigator. The most humiliating part is that the calls have escalated to his ex-wife, cousin, and associates. He has a common name and the ‘investigator’ has not properly identified himself or clearly identified if my husband is the right person that the debt belongs too. In addition, the so called debt is 8 yrs old, and they call from unknown numbers or if the number shows up and its googled there are comments stating that the persons calling are harassing.”

“I have had debt collectors call and tell me that I am not cooperating to get the debt resolved, yell at me, tell me I must be lazy or not understand I owe the money. They have called me from 7:00 am to 9:00pm at least 10 times during the day using a different company name, different phone number and location including my city and other cities and states all in the same day. When I tell them I am a senior they tell me to borrow the money from a family member or friend. When I tell them I am not going to do that the harassment starts all over. Many of them call and act like I am an old friend before they tell me who they are. They threaten to ruin my credit rating, confiscate my home and belongings and car. The most annoying is when they call and I answer they hang up and call again an hr later and hang up again. I know it is them because I have caller id.” (62 or older)

“The debt collector should not give false information to Credit bureaus, like intentionally changing your address, especially when the person that owes the debt has already supplied the Credit Bureaus with the correct information.” (victim of ID theft; 62 or older) Another commenter (debt collector; >50) questioned this: “Most debt collectors and collection agency don't report to credit bureaus. I never heard of a debt collector being able to change your address with the credit bureaus. You say you supplied the credit bureaus with your address and a collector changed it? What did they change it to? What good would it do for a collection company to change your address? Then they can't mail your letters either.” The original commenter replied: “Sorry, but you are mistaken about debt collectors not being able to change information in your credit file. Yes, they can, and yes they do. If my account has been sold (several) times to other people and my original creditor no longer owns the account, then how would my account be (updated/reported) by that company (debt collector) that purchased it?” In response to questions from the moderator, this commenter continued: “you'd be surprised at how many times this does happen and how many times the Credit Bureaus Do change correct information to false information supplied by the 'furnisher/debt collector'. Because I had to send in numerous Certified Letter to the Credit Bureaus, (all of them), in order to stay on top of all the false information and tricks that they did supply. And I have written proof that this does and is still happening to other consumers, right now.”

“I had a debt collector tell me that if I'd make a payment right then, they'd make a payment plan. This was an American Express collector. Once I made the payment they said their supervisor would have to approve it and they weren't there. But that she would call back at 7pm MST to make the arrangement. Needless to say no one called back and American Express would not make arrangements with me because they said I was able to pay that amount so I shouldn't need arrangements. I was so dumbfounded by the collection practices of American Express. It was from their internal collections department.” (servicemember)

“Within the past six months, a debt collector revealed my full social security number, full amount of alleged debt, and other personal information to a family member who only gave them my month and day of birth. I did not provide this family member's contact information to the debt collector. The debt collector never identified to whom I owed the debt. Today (Jan 2014), I was contacted at home by a man with an entity that called itself ‘Enterprise Litigation.’ The telephone number was ‘private caller.’ The man, who identified himself as ‘Shawn LeFay,’ said he was trying to reach a friend of mine. I asked if he was a law firm, and he said no, he was with ‘a courier service.’ I then asked if he was a process server, and he hung up on me. He would not give me his address, and I had no number for him. I called my friend about this strange telephone call, and she said she had received a strange voice message to call someone who had something for her. I think this was a debt collector. I do not know, in either of the above scenarios, how the debt collector obtained the phone number of my family member or why a debt collector called me at home searching for my friend. In neither case was the contact information provided as a credit reference. I suspect the debt collectors are using some type of tracing technology, either by phone or e-mail. I think this because in the case of my friend, for example, who I haven't e-mailed for about two years, I had recently sent and received several e-mails from her.” (a researcher)

“I have experienced collection companies who buy the debt from the 1st, 2nd, or 3rd party, add on its fees along with the other companies’ fees, then submit a new account number … as though it was a new account. So, an original account for the sake of argument was $500.00 turns out to be listed on your credit report as a $3,000 delinquent account. Government laws should not allow this practice to exist. Whatever the original account is that's what should be reported, not interest and additional fees a collection company deems it can add to your credit bureau report.”

Three industry-perspective commenters emphasized the other side of the story:

“I have worked in collections for 13 years with mostly first parties. All of these institutions have complied with the FDCPA and seek to service their lost members to the best of their abilities.” (creditor collecting own debts; <20)

“Dear CFPB: I hope you will separate the comments about debt buyers from those about debt collection in general. This is another area where you should throw the book at collectors telling deliberate lies or misrepresentations. On the other hand, there are too many federal suits brought by consumers who were not misled but who allege that the least sophisticated consumer might have been misled by a letter written in good faith. The only ones who benefit are attorneys. The CFPB has power under UDAAP in addition to the FDCPA to punish liars. They should use it. Collectors, who are just lay people in most cases should not be held to a strict liability standard. Punish bad actors but restore reasonableness to the act.” (debt collector; >50)

“I am all for consumers right protection but when you see CFPB, FDCPA and other law they are all to make it difficult for collection agencies to do their honest job. But there is never a talk about consumers’ responsibilities. I agree that some collection agencies are aggressive. But I think a good honest collection agencies also need their rights to do honest work.” (debt collector; >50) When asked by the moderator for more details, this commenter responded: “It would take me many pages to respond, but I will try to keep it very short and you will understand my point. (1) Why [is] a collector required to get consent to call on Cell Phone? In this day and age, cell phone is the way of communication. (2). Why there are so many restrictions to use Predictive Dialing capabilities? It simply makes collectors more efficient. (3) Why [are] collectors required to mail certain letters within certain time frames? It should be [up to the] collector to decide when a letter is needed. I can go on and on. I guess you get my point. Law should only be around aggressive collection methods. But when someone owes money they have certain responsibilit[ies] to make good on their commitments and if you would ask me, all these laws and cottage industry of lawyers created by these laws is simply not helping honest collection service business.”

Commenters identified the following as other behaviors that CFPB should regulate:

1. Filing false documents in court. “falsifying court documents in regards to false service or a sub service” (consumer; credit card debt in collection) “Any court documents filed by a debt collector that are found to be altered, doctored, should automatically dismiss the action with prejudice and a fine and sanctions against the collector and attorney processing the paperwork.” (different consumer; credit card debt in collection) [For more consumer complaints about what happens in state court litigation, see the last post].
2. Implying government affiliation. “New agency rules should stop collections companies from the use of form letters and mailer envelope appearing to look like government or state government departments.” (consumer)
   
3. Lawyers acting as debt collectors. “I think it should be an unfair practice for a law firm or lawyer to engage in debt collection. Many consumers receive letters containing statements about their credit sent under the name of a law firm/lawyer. They presume the information is correct, even though the law firm/lawyer will have a caveat that they have not determined the validity of the statement they have just said... It is an unfair practice because of the disparity in power and knowledge between the average consumer and the lawyer/law firm.” (a researcher) “All lawyers should not [sic] be banned from becoming debt collectors. Here is a group of people that are trained, licensed in their State but they lie to circumvent the law and the courts. At the heart of the mortgage fiasco were unethical lawyers who acted strictly for greed. None of them were prosecuted or disbarred because they hid themselves as representing lenders.” (commenter works for state, local or tribal govt)

Several comments focused on licensing/registration of debt collectors:

“All debt collectors should be required to register on a national database, including phone numbers, that's publicly available online which they must update within 5 business days regarding any changes.” (commenter works for state, local or tribal govt)

“I have found that persons who buy old debts are not competent and rely on software and letter services to fulfill their collection obligations. Perhaps it is time to return to licensing of collectors.” (consumer)

“It would be a good idea to create a national database of collectors and assign them an ID number just like the IRS. Require them to state their name and ID number just like IRS employees do. This would allow debtors to easily identify an abusive collector or just call a debt collection agency and ask to speak to a specific employee. If they call and leave a voicemail they are required to state their ID number somewhere in the recording. It would be good for both debtors and collectors.” (consumer) When the moderator raised the issue of cost, this commenter continued: “Like most regulatory programs additional cost would be inevitable, it could be paid for by a yearly fee that collectors pay to be a licensed collector.”

Another commenter responded to this thread: “The national database and licensing would be a good idea if it were used effectively to weed out the bad collectors and put them (and their corporate officers) out of business permanently. Not those who get caught up in technical violations over mini-Mirandas, but the ones who knowingly commit serious violations of the FDCPA, FCRA, and TCPA… [T]he ‘private policing’ we have now has not been effective in stopping the worst abuses.” (consumer who gets continuous calls for other people’s debts)

Another comenter added: “This designated database/website could also list Summary of Rights for state laws and Fed laws. Then this same website might also be able to be used as a way to report abusive behaviors (or link to the appropriate websites to do so), and other relevant information for consumers regarding consumer debt, credit, and credit reports, and other various useful information that is currently available but is spread across many agency websites. The website could be paid for and maintained by the debt collectors (sort of like how annualcreditreport.com is paid for and maintained by the credit reporting agencies). It could be a way to help bring legitimacy to the debt collection industry by having a way to identify them to separate the legit companies from the bad ones while allowing collectors to operate effectively.” (consumer who collectors are calling looking for someone s/he doesn’t know)

“Many states currently have laws that make it illegal to engage in debt collection without being licensed to do so in the state. However, this does not stop debt collectors from violating these state laws and threatening to sue individuals, even though they legally cannot because they are unlicensed in the state. This is unlawful and menacing behavior. It would be easier to bring claims under the FDCPA if the act were more clear that threats to sue when a debt collector is unlicensed to collect on a debt in a state is a false, deceptive, or misleading representation. This clarity combined with stronger penalties might serve to better dissuade debt collectors from continuing to violate the law in attempts to collect on debts in state where they have no right to.” (law student working for legal services organization) When asked by the moderator about the idea of a national registration system for collectors, this commenter continued: “I'm not sure a registration system for debt collectors really addresses the issue. I'm not exactly sure how the registration system would operate. In MA, consumers can check online to see whether a debt collector is licensed to practice in the state, many just don't know about the website or on a more basic level don't know that the debt collector has no right to try to collect from them. Is the registration system meant to displace state laws requiring licensing of debt collectors in the individual states? I hope that's not the case since states have a strong interest in regulating debt collectors for the protection of its consumers."

Four commenters offered ideas on new enforcement strategies:

“The Consumer Finance Protection Bureau needs to have a large core of undercover agents that get jobs at collection agencies, credit agencies and servicers. These agents need full federal law enforcement powers with guns and badges so they can perp-walk suspects out of their offices and take them to federal holding facilities for trial when they have proof of criminal activity. Currently it seems many creditors, servicers and debt collectors consider themselves above the law. There's only two ways to discourage that thinking and that's jail time and/or fines. After conviction, victims should receive a framed and signed (first name or nickname of the agent) photograph of the perp-walk. They usually don't get their money back but that's something they will treasure.” (consumer)

“Although I don’t think that it is necessary for the CFPB to have undercover agents, I do think that the CFPB should create a new class of examiners. Currently the CFPB examiners only do examinations of the financial lenders and nonbank lenders. But since the CFPB is now taking on the collection industry, the CFPB should create a new classification of examiners to do onsite examinations of the debt collection companies. This would not create any harm to the CFPB nor would it impact the CFPB’s budget or operations. The CFPB’s budget is not allocated through congressional legislation – it is allocated through monetary transfers from the Federal Reserve. All the CFPB would need to do is ask for additional transfers from the Federal Reserve to create this new classification of examiners. These new examiners would help the CFPB monitor the debt collection industry and would help stimulate the economy by adding more jobs. This is a win-win solution.” (consumer; collectors calling for someone commenter doesn’t know)

“There is no need for these so-called examiners but there is definitely a need for courageous and dedicated attorneys determined to enforce the laws that the CFPB should pass, laws that protect the ordinary folk, the innocent, those who're unable to protect themselves, even those who may have actually failed to pay their bills because our constitution guarantees the right to our innocence unless proven guilty. We cannot allow expediency to deny us such fundamental rights. I believe there is such a thing as the Gideon Decision by the Supreme Court that provides for any accused to an adequate defense, so if any debt-collector or creditor for that matter denies the alleged debtor the right to have his day in court or to a proper defense, then the CFPB attorneys should come down hard on such violators. The principle behind any rules promulgated by the CFPB must ensure that no alleged debtor get bullied into paying up or blind-sided by the court into doing so. Sometimes, there are reasons why the outstanding bills are not paid and the consumer should be allowed to confront the creditor to resolve any complaints by the consumer before the bills are paid. It's a very straight-forward and simple situation actually. All the CFB needs to do is to enact basic regulations that protects the consumer and stipulates very clearly that the burden of proof must be borne by the creditor before any debt-collector can be engaged to pursue such debts. The debt-collector must only be allowed to follow specific guidelines when doing so and the matter should be referred to a small claims court to have both sides plead their case before the court issues a ruling, rather than to allow the claim to be reported to a credit reporting agency that will destroy the credit score or rating of the consumer without his knowledge, which is absolutely wrong. Only lawful and valid debts, i.e. when a judgment order has been made, should be allowed to be reported to any credit reporting agency, to avoid creditors and debt-collectors from using such agencies to damage the interests of alleged debtors with unfounded or unproven debts.” (consumer; victim of ID theft; 62 or older)

“I think some of these practices could be discouraged by increasing the amount of the statutory penalty, and providing attorney fees and punitive damages under the statute.” (researcher)

One commenter (consumer; victim of ID theft) recounted in detail her payday loan fraud experience:

“As an identity theft victim, I have had dozens of experiences with debt collectors. I will start with what I consider the worst of the worst. A large portion of my theft was through online payday loan companies. The thief would deposit payday loans of around $1000-$1,500 into bank accounts she had opened online in my name. Collection agencies buy the debts after they have gone unpaid, and I have not had a positive experience with a single agency that is collecting the debt from a payday loan. They do not care what the FDCPA says, and in many cases, don't even know what the FDCPA is!

“They will call and leave a message. You return the call to the person and that person is never available. He is always ‘in court’. This immediately sends a red flag to me. I know the FDCPA by heart. The fact is, they want to give the consumer the impression that they are suing debtors constantly and will tell you that your case has been referred to ‘the courthouse’ for filing. When prodded, for example, if I ask which courthouse, you can actually hear them typing in the background as they try to google your county court information. Unfortunately, they never get it right. I have been told it was filed in the Dallas, Connecticut court. The identity thief in this instance had used an old address of mine in Texas and the address was somehow merged with my actual Connecticut address.

“When I prod further, it becomes even more disturbing. They will not give me their actual name. I have actually been told that the person I was speaking to was Bill. Bill Collector. I have been called names that truly brought me to tears. There is no debt validation with these collectors. I can't even get the actual company name is some cases. They are debts previously owned by Speedy Cash and Check n Go (Check N Go being the absolute worst) or they are hired by Speedy Cash or Check N Go to collect debts on their behalf. The original creditor is no help at all. Submitting a police report and identity theft affidavit does nothing. They do not care about what the laws state they must do when notified by a consumer with proper supporting documents that the consumer is a victim of identity theft. They will ignore it. They ignore everything sent via Certified Mail. They receive it, but they do nothing with it. The consumer is left to complain to the state attorney general or file a lawsuit. How has the theft of my identity become my problem to fix?

“Law enforcement will not involve themselves in civil disputes regarding debt. All they will do is provide you with a police report. But they will also accuse you of being your own ‘identity theft.’ When I filed my report in person, I was taken to a detective who sat with my husband and myself in a small room with nothing but a small table and three chairs. He documented our information and then he attempted to scare us into confessing to attempting to use the police department as a way to escape our financial obligations. His reasoning was that if the account is in my name, has my birthday and SSN linked to it, why in the world would he consider me a victim of identity theft? What proof do I have?

“That's the million dollar question. How do you prove you didn't open an account online with Speedy Cash or Check N Go? They do not require so much as a bank statement, a photo ID, an employment verification or even proof of residency. They will deposit a payday loan into an account that IS NOT EVEN IN YOUR NAME. I learned through speaking with these banks that some loans deposited into the accounts in my name actually were loans with an entirely different person's name on the EFT transfer. The banks do not have any kind of system in place to reject transactions that do not match the account holder's name. So the bottom line is, I have no actual PROOF. It is very easy to prove that I DID actually apply for and receive these loans. And the easiest route is always the best route when it comes to detectives who are over-worked, short-staffed, and are under pressure by the Chief to get the case out of the office and on to the DA.

“I finally convinced him to take my complaint and file a report. But it is completely useless to me. I have tried submitting my police report directly to the credit reporting agencies, who are then required by law to block all fraudulent information. However, there is a loophole there, as well. They don't have to accept your report if they have reason to believe that you have made a misleading or false statement. And when I originally disputed these debts as ‘NOT MINE’ instead of ‘FRAUDULENT’, that was proof enough for them to reject my request for blocking. At the time they were reported, I had not been contacted by any creditor or collector, I had not received any notifications in the mail. All I knew is the accounts were ‘Not Mine’.

“The system is so broken. Punishment for violating the FDCPA is not harsh enough, and it is up to the consumer to go it alone, hire a competent attorney, and go through the entire process for ‘$1,000 per violation.’ How do I even prove a violation when I cannot record a call on my end? Is it worth my money? The time it takes is equally unjustifiable. Collection agencies like the ones I have described that collect for payday loans don't care about the law. They don't follow the law, and until the states or US Attorney General fines these payday loan companies or legislation is made that makes it so that payday loan companies cannot report outstanding debt to ANY consumer data provider, they will continue to ruin the lives and credit of identity theft victims. Because they make it so very easy for thieves to commit a crime.

“In doing so, the only viable solution for punishing these companies and not verifying that the loan information is actually real, by requiring hard documentation or shutting down the online loan altogether, is for them to have the right to collect on these loans taken away. I have learned many valuable lessons and have much more to share regarding other types of accounts, but in this case, I am guilty. I must hire a team of private detectives, computer forensics experts and expert polygraph examiners to prove my innocence. Identity theft victims as a whole will continue to be guilty until proven innocent until we find a better way to manage credit files. The social security number as identifier of your entire credit history needs to be seriously researched. I think you will find that as a means of identifying a person for credit applications and credit reporting, it is archaic. Who knows how many people have access to my SSN? It doesn't even represent who I am. It hasn't for many years.”

Other comments

“Sallie Mae shouldn’t be able to send out notices claiming a debtor qualifies for a repayment plan with lower payments and then when the debtor calls they claim no such plan exists.” (consumer)

[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.]

Consumer commenters complained about two types of service-providers affiliated with debt collection:

1. Process service. “Please go hard after the service industry. They have done a lot to foul up the debt collection process by having their service people FALSE SERVE and FALSE SUBSERVE prospective debt collection alleged defaulters. It's happened to me twice, the first time the process server simply guessed by using the most generic age size, weight and assign[ed] a made up name! The second time the servicer simply called the sub server "Jane Doe" and once again made up the most generic cut across as many age, height and race descriptions they could come up with, which meant they could not be more far off. Then when I went to court I just happened to hear another defendant make the claim to the judge that they were never served, that the paper work was left outside the door. Besides the service company lying in court documents about serving someone that was not actually served, which in and of itself should be enough to give the judge some type of latitude to do something to protect the defendants, when a debt collector knows they can get a false service, they have MUCH LESS MOTIVATION to negotiate with the defendant. Judges don't seem to get this aspect of false service. Although the fact that the debt collectors and their hired agents are lying in court documents should be enough, no? I know what I know and I will state unequivocally anywhere that I have twice been false served/subserved.”
   
   
2. Skip tracing. “I would like to see strict regulation of the so-called ‘skip-trace’ vendors. These are the companies that debt collectors and others hire to provide them with contact information. From my own personal experience (common last name, many debt collectors after me), I can say that I believe that I'm at the mercy of these vendors. They gather all sorts of information about people without verifying any of it, as far as I can tell. One debt collector told my state's Attorney General that they hired one of these vendors who provided my phone number as a valid contact for someone with my last name and first initial. This person was a stranger to me, but the debt collector wanted me to pay the debt. I think that these vendors should be strictly regulated and use a research tool other than the phone book to gather their information. They should not be able to provide ‘valid’ information unless it really is valid.” (consumer, common last name being bombarded with collection calls; 62 or older)

Other comments

“I would take a hard look at 'credit reporting' from what is being reported by a creditor and then what is reported by a debt collection or debt buying company. For example, if a creditor obtains a judgment amount greater than the account balance, that amount is likely not reported because creditors seldom have system capabilities to make adjustments to accounts.” (debt collector; <20)

“There are laws on the books. There is no enforcement by the regulators.” (consumer; no debts, but pursued by collectors for others debts when phone number changed; 62 or older)

[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.]

"Ohio has a good law that the instrument must be attached to complaint. This law is usually enforced by the judges, but only after the complaint has been filed and the defendant-consumer makes the request. For most consumer debts, the law is unhelpful, as the complaint proceeds directly, almost always, to default judgment. For example, one of my neighbors recently discovered she had a lien on her house for a retail credit card. She is a senior citizen, and she has no way of removing the lien herself -- and was surprised to discover there was such a lien. It disqualified her from several housing programs. If lawyers/law firms will continue to be able to function as debt collectors (a practice I think should be banned as inherently unfair), I believe the law firm/lawyer should be held to the same standard in debt collection as in any other type of practice of law: they must have the instrument, the original file, and the prior correspondence and phone calls, if any, of the alleged debtor. They must be prepared to engage in meaningful discovery, and they should not be able to hide a multitude of omissions, errors, and sins behind their signature on a complaint." (researcher)

For comments on substantiation to verify the debt, see “When consumers dispute a debt: How should collectors investigate and verify the debt?”

On the issue of substantiation relating to credit and credit score:

“Collectors should be barred from stating that payment of a debt will definitively improve a consumers credit score as FICO (the industry standard) uses proprietary algorithm that the collection agent cannot possibly guess at. [A] collection agent, in good faith negotiation for resolution of the alleged debt should be able to remove the collection trade line from the consumers credit reports which should be stipulated in a binding settlement agreement signed by both parties.”

Also see comments on CRAs and impact on credit standing in “When consumers dispute a debt: How should collectors investigate and verify the debt?”