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Comment Period for CFPB Debt Collection Rule Closes with Consumer, Civil Rights Leaders Urging Major Changes

Thursday, September 19, 2019

“Without significant changes, we believe the proposed rule will perpetuate abusive practices, harm already economically distressed families, and widen the racial wealth gap.”

WASHINGTON, D.C. – As the time for the public to weigh in on a proposed rule governing debt collection practices comes to a close, a coalition of national consumer advocates and civil rights organizations sent a comment letter to Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger urging her to make substantial changes to the agency’s proposal. The letter was submitted by the Center for Responsible Lending (CRL), Leadership Conference for Civil and Human Rights, NAACP, National Coalition for Asian Pacific American Community Development (National CAPACD), National Fair Housing Alliance, National Urban League, and UnidosUS.

As written, the current proposed rule--which was released in May--authorizes continued consumer harassment by allowing debt collectors for medical, student loan, and other debts to: call consumers seven times per debt, per week; send unlimited emails, texts, and social media messages without consumer consent; allow debt collectors to collect very old "zombie debts" where the time to sue has expired; and file baseless lawsuits by making it easier to sue the wrong consumer, for the wrong amount.

Among the list of recommendations, the coalition is urging Director Kraninger to: ban the collection of time-barred debt in and out of court; eliminate any “safe harbor” for collection attorneys who make false, deceptive or misleading representations; ban unlimited electronic communication via email, text messaging, and private social media messages and require debt collectors to obtain consumer consent before contacting consumers through those electronic channels; and limit the number of times a debt collector may attempt to call a consumer to three attempts per week per consumer.

In its letter, the coalition states that: “…the proposed rule fails to address common and well-documented abusive practices in debt collection and instead authorizes a landscape of continued harassment for already struggling families. “Revising the proposed rule will move the needle towards ending unfair and abusive practices in the debt collection market and protecting consumers who are struggling financially, particularly communities of color and low- to moderate-income consumers.”

In a recent CRL and Americans for Financial Reform poll, 71 percent of voters are concerned that debt collectors will be permitted to collect very old debts enabling debt collectors to collect payments in order to restart their ability to sue on those “zombie debts” after the time to sue has expired; 70 percent of voters are concerned that debt collectors will be allowed to send an unlimited number of emails to collect debts; and, Sixty-nine percent of voters are concerned that debt collectors will be allowed to send text messages to people without the person’s permission.

Since the creation of the CFPB, abusive debt collection complaints have been at the top of consumer complaints filed with CFPB and the Federal Trade Commission. Debt collection abuses are harmful no matter where they occur, but disproportionately burden communities of color due to systemic discrimination in housing, employment and financial services. Yet, the CFPB, under Director Kraninger, has proposed a debt collection rule that would favor these financial predators instead of consumers.

In its early years, the CFPB held debt collectors to account and won key important consumer victories. Under CFPB's first director, Richard Cordray, the agency filed more than 25 federal enforcement actions against debt collectors and creditors for engaging in deceptive and abusive debt collection activities. Collectively, the cases have brought more than $300 million in restitution and another $100 million in civil penalties have resulted from these filings.

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Press Contact: ricardo.quinto@responsiblelending.org