Feds weigh changes to make aggressive debt collectors back off

CONSUMER FORUM

By Russ Van Arsdale, executive director Northeast CONTACT

Posted Aug. 08, 2016, at 7:08 a.m.
Last modified Aug. 08, 2016, at 9:29 a.m.

As Maine gripes, so gripes the nation.

That twist on an old saying means the top consumer complaint heard by the federal Consumer Financial Protection Bureau, or CFPB, deals with bill collection. Of the roughly 400 complaints filed yearly with Maine’s Bureau of Consumer Credit Protection, or BCCP, about 100 concern debt collectors.

In late July, the CFPB made public a proposal to strengthen the rules governing debt collection.

When the proposals take effect, they would limit the number of times companies can contact debtors to six per week, and they would require debt collectors to have better information about debts before they collect them.

While collecting, companies would have to limit communications, explain details of the debt clearly and make it easy for consumers to dispute the debt. Collectors also would have to explain if debts are too old for the collectors to take them to court.

The CFPB said it has reasons for its proposed changes. When old debts are sold, the information about those debts may not be complete. Anything consumers have submitted might not be passed along, and errors can result.

The new CFPB rules would require collectors to verify information they have before contacting debtors.

William Lund is superintendent of Maine’s BCCP, and he said a lot of work went into the 200 pages of rules and reports the CFPB has made available to his office. Lund said eliminating indiscriminate calling by collectors, including the limit of six calls per week, is a positive step.

He also supports moves to verify debtor information, make disputing debts easier and limit actions by a collector during a dispute.

Lund said another change would affect the sales of debt.

“Sellers would be required to be more careful in what they sell and would have to provide more information as a part of each sale. That’s a positive proposal,” Lund said.

The new rules probably won’t be final for at least a year, and there’s criticism from consumers and the collection industry.

Some consumer groups say while the rules are a good start, portions may confuse consumers. If a collector calls and says, “this debt is too old to take to court, but you still have to pay it,” the debtor might wonder just how much clout the caller has.

Collectors say the rules apply only to third-party collection efforts. Groups including the American Financial Services Association and Consumer Bankers Association are first-party collectors, whom the CFPB may address separately.

Richard Hunt, president and CEO of the bankers group, said in a statement that CFPB recognizes that “consumers have very different experiences when dealing with banks as opposed to debt collectors.”

CFPB said it recognizes that “debt collection serves an important role in the proper functioning of consumer credit markets.” It is also trying to avoid any tightening of credit that over-regulation might trigger.

“If creditors are not able to collect rightfully owed debts, they will be less likely to extend credit to consumers,” Cindy Sebrell, a spokeswoman for the Association of Credit and Collection Professionals, said.

Lund said the CFPB proposals apply only to the “larger participants,” the 175 companies that recover about more than $10 million per year, or about 60 percent of outstanding debt. Lund said depending on the wording of the final rules, Maine might adopt them and “fill in the gap” by having them apply to companies of all sizes.

You can find a list of licensed debt collectors at BCCP’s website at maine.gov/pfr/consumercredit/index.shtml. There’s also a link to the Downeaster Common Sense Guide to Debt Collection under the heading “consumer tools.”

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Recording scam calls a defense against fraud

CONSUMER FORUM

By Russ Van Arsdale, Executive Director Northeast CONTACT

Posted Sept. 15, 2013, at 1:22 p.m.

If you want to turn the tables on someone who calls on the phone who you suspect is a scam artist, tell the caller that you are recording the conversation. Better yet, wait until after the pitch is complete before making your announcement.

That’s a suggestion we received last week from William Lund, superintendent of Maine’s Bureau of Consumer Credit Protection. He suggested that, at the very least, it would bring the call to a rapid end. At best, it might provide incriminating information that could help authorities track down and prosecute telephone fraud artists.

“Recordings are the only things that make these collectors nervous,” Lund told us. He said a recording negates charges of “my word against yours.” Also, it is far more reliable than one’s memory which could be clouded by a less-than-friendly discussion.

Lund said recording could be useful in cases where a caller threatens legal action to force a Maine consumer to hand over money, claiming the consumer has not paid an outstanding debt. He said a threat of legal action is almost always an empty one, since authorities will not act on complaints from unlicensed, out-of-state payday lenders. In civil court, such firms must be represented by a local company employee (there are none) or an attorney. Not many lawyers will stand up to represent unlicensed, out-of-state payday lenders.

On that point, Lund says Maine law is clear. If a lender is not licensed to do business in Maine, that lender cannot collect interest on a loan. While that provision of the law is not a loophole to avoid paying back a legitimate debt, Lund said, “Neither should Maine residents be scared by illegal phone calls.”

Superintendent Lund is not a fan of internet-based lenders. He said they collect too much personal information when making loans, including data on a borrower’s workplace and family members. “All this information is used — and misused — in the collection process,” he said, adding that a borrower’s stress level can soar through threats of disrupting a workplace or pestering elderly parents.

Lund suggested turning the process around on unlicensed collectors. As soon as they state their business, tell them you’re recording the call. Maine law states that recording calls is legal, as long as one party knows the recording is taking place, so you don’t have to tell the caller right away. If you catch the caller violating the law and he or she slams down the phone, you can stay on long enough to identify yourself for the recording and note the time and date; you’ll have a piece of evidence that speaks for itself.

Scammers often use automated calls to generate lists of working phone numbers. You might be urged to press a number to prevent further calls, but that’s just part of the scam; pressing a button just verifies that the scammer has reached a working number. If you don’t want to record the call, don’t press anything; just hang up.

Recording calls won’t make them stop all at once. You can help by reporting the number you see on caller ID. Even though many of those numbers are “spoofed,” Federal Trade Commission regulators say that if they get enough reports they can trace certain calls. File complaints at http://www.ftc.gov/complaint. See who’s licensed to make collections in Maine and get other information about your credit at the Maine Bureau of Consumer Credit Protection (www.credit.maine.gov).

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

 

How to deal with debt collectors

CONSUMER FORUM

By Russ Van Arsdale, Executive Director, Northeast CONTACT

Posted July 20, 2013, at 12:48 p.m.

Debt collection is big business. It’s worth an estimated $12 billion in the U.S., with nearly 15 percent of all consumer credit reports showing something is “in collection.” How collectors go about getting creditors the money they’re owed is our topic today.

The federal Consumer Financial Protection Bureau, or CFPB, has authority over about 175 companies that do at least $10 million in collections annually. The bureau flexed a little muscle at the industry last week, and some in the industry flexed right back.

Earlier this month, CFPB issued two bulletins on the subject. The first reminds any entity covered by the Consumer Financial Protection Act of 2010 that it must not use unfair, deceptive or abusive means of collecting. That means no false threats of lawsuits, arrest or prosecution; not making false statements about the amount of the debt, who owns it or its legal status; not misrepresenting that a debt would be waived or forgiven if the debtor accepts a settlement offer; and not posting payments to a consumer’s account and then charging late fees.

The second bulletin cautions collectors against making promises that payment will automatically improve a debtor’s credit report, credit score or credit worthiness. CFPB says some of these statements may be deceptive, and the bulletin contains some examples.

The CFPB website also contains what are termed “action letters” that the bureau says consumers might use when dealing with debt collectors. The letters can be used depending on where consumers are in their particular debt process: to ask for more information about the debt, say that they want to dispute a debt, restrict how and when a debt collector can contact them, cut off all contact with a collector, or indicate that they have hired a lawyer.

Consumer advocates say such letters are a big step up from people simply calling a debt collector with a complaint and thinking that will resolve whatever situation they face. Putting things in writing is always a sound move in any dispute. At the very least, it helps organize your thoughts, facts, timelines, etc.

Other voices say that while the CFPB’s heart is in the right place, consumers may need some guidance before they can use the action letters responsibly. Attorney John Culhane Jr. from the national law firm Ballard Spahr LLP wrote in his firm’s blog that one of the letters asks whether a consumer thinks a debt might have outlived the statute of limitations. Culhane suggested the purpose of the letters “is simply to induce the collector to tell the debtor how long to stall to avoid litigation.” He also said requests in the letter for detailed information may or may not align with a particular consumer’s wishes.

Find the sample action letters at CFPB’s website, www.consumerfinance.gov. You can also visit our blog ( https://necontact.wordpress.com) and click on “self-help” to find the sample action letters. There you can also learn about protections afforded under Maine law and find information from the Maine Bureau of Consumer Credit Protection.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Stopping debt collectors after they cross the line – Bangor Daily News

Stopping debt collectors after they cross the line – Bangor Daily News.

11/7/10 10:23 pm  Updated: 11/7/10 10:26 pm

By James B. Maguire, Esquire

Q: A collection agency is bombarding me with calls at work, at home and even during my daughter’s soccer games. The caller has a voice like a Skilsaw cutting sheet metal; she makes insulting remarks, and when she’s done I feel “this” big. What can I do about this?

A: Since the onset of the recession, record numbers of people have been unable to pay their bills, and collection agencies are finding it harder to collect. They keep up the pressure hoping to make you rob Peter to pay a credit card.

Maine’s Fair Debt Collection Practices Act, or FDCPA, can be your sword and your shield when debt collectors go too far.

• Calling you dozens of times a day is illegal harassment.

• If your boss does not allow personal calls at work, tell the debt collector. Further calls to you at work are illegal.

• Calling before 8 a.m. or after 9 p.m. is illegal. The law still protects people who work at night because waking you during your hours of rest is harassment.

• Insulting remarks, obscene language or any words that a reasonable person would find abusive are illegal. A statement like, “Is this what you do all the time — charge something and then don’t pay?” is not obscene or even harshly worded, but it implies you are dishonest. That is abusive and therefore illegal.

If you have an attorney, you can make the calls stop by giving the caller the attorney’s name and number. Do this and the debt collector must stop. It is not just the abusive calls that must stop but also the polite and legal ones.