Advocates: Bill Requiring IRS to Use Private Debt Collectors Would Harm Consumers

May 7, 2014
Consumerist 
debt settlement news
Language in the proposed Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 requires the Secretary of Treasury to contract private debt collection agencies to pursue delinquent taxes. Consumer advocates, however, oppose the proposal due to accusations of abusive practices by debt collectors and the failure of similar programs.

In a letter to members of the Senate, at least 15 consumer advocacy and civil rights groups have called to strike this provision from legislation. While the Treasury Secretary already has the authority to contract with private collectors, the letter warns that making it a mandate would hurt consumers "by exposing them to potential abuses that are unfortunately common with that industry."

Both the Federal Trade Commission and the Consumer Financial Protection Bureau this year named debt collection as the top issue for consumers who filed complaints. Common problems include aggressive and abusive collection tactics, failure to inform borrowers of their rights, and use of misleading information about borrowers’ options.

Consumer advocates also point out two unsuccessful programs used in the past: a 1996-1997 effort that resulted in a $17 million net loss to the government and a mid-2000s program that created a net loss of nearly $4.5 million for the government, but more than $16 million in commissions for the private collectors. The mid-2000s program also yielded many complaints, such as one collector who called the elderly parents of a taxpayer more than 150 times.









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