Consumers struggling with debt will soon have a new place to turn. The Consumer Financial Protection Bureau announced it will begin supervising debt collection agencies Jan. 2.
“Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,” Richard Cordray, the director of the CFPB, said in a statement. “We want all companies to realize that the better business choice is to follow the law — not break it.”
Debt collection agencies that have annual receipts of more than $10 million will be required properly identify themselves to the consumers they contact, properly disclose the amount of the debt and create a dispute resolution process for consumers with grievances. Companies with annual receipts of more than $10 million account for approximately 63 percent of the 4,500 debt collection agencies in the United States, according to the New York Times.
Nationally, BBB has received almost 20,000 complaints this year against collection agencies.
Consumer complaints allege debt collectors used threats to force consumers into paying their alleged debt, did not provide adequate proof of the debt when requested and continuously harassed consumers after they were asked not to or told the debt was incorrect.
Under the Fair Debt Collection Practices Act debt collectors are required to treat consumers fairly and are prohibited from certain methods of debt collection. For example, debt collectors are prohibited from harassing consumers or using false or misleading statements. Collectors may not state that a consumer will be arrested for failing to pay, that their property or wages will be seized, or that they are attorneys or government representatives.
Additionally under the Fair Debt Collection Practices Act, debt collectors:
- may only contact you in person, by mail, telephone or fax. However, a debt collector may not contact you before 8 a.m. or after 9 p.m.
- must stop contacting you if you write a letter to the collector telling the company to stop.
- must send you a written notice telling you the amount of money you owe, the name of the creditor to whom you owe the money and what action to take if you believe you do not owe the money, within five days of initial contact.
- may not contact you if you send the collection agency a letter stating you do not owe the money within 30 days after you receive the written notice.
If you receive a call from a debt collector, BBB advises you to follow these steps:
- Request written proof. By law, an agency should send a validation notice within five days of initially contacting you about the debt. Do not provide personal or financial information unless the validity of the debt and the debt collector has been confirmed.
- Research the collector and/or agency. Get the debt collector’s name and contact information. Check the company’s BBB Business Review on bbb.org, and verify that the representative who called is affiliated with the agency.
- Don’t ignore errors. If you have no outstanding debts in your name, contact any involved parties to clear up inaccuracies on your credit report. Write a detailed letter and include supporting documents to prove your case.
- Check for identity theft. If contacted by a collection agency regarding erroneous bills or debts, it could be an indication of identity theft. You can review your credit report for free once a year at annualcreditreport.com.
- Know where to turn. Report any problems with debt collectors to your Better Business Bureau, the Texas Attorney General or the Federal Trade Commission.