So it wasn’t necessarily a big enough black mark on the industry when HBO’s “Last Week Tonight” spent 20 minutes eviscerating the debt-buying and collection industry last week. No, apparently, that did not do enough to paint a stark enough picture of what individuals, and the mainstream media, think of the industry.
Because now we have a “war” on debt collectors being compared to the country’s war on drugs.
Right now, the CFPB’s war is a bit akin to the war on drugs, attacking the supply side. That’s well and good, but if it doesn’t solve the demand side of the equation, there will be no long-term fix. Without a long-term fix, the predators and their products simply change their identities.
Clearly, this was an article – published by a large mainstream media company – that was written by an expert. How can I make such a claim? Because look at this example:
The debt collection industry, virtually unregulated, has more problems than just Oliver. As the jobs recovery sputters along, even those who do business within the letter of the law have found it harder to get cash-strapped Americans to cough up.
The collection industry is “virtually unregulated.” Well, collection agencies will be delighted to know that they can let go everyone working in compliance and auditing and all those other pesky compliance-related departments because of how unregulated this industry is.
While we’re painting the industry with the same black brush, let’s throw in some golden oldies like:
In the worst cases, collectors pursue people who don’t even owe money, or insist people who already settled a debt still owe.
Then, about midway through the article, the tone changes, from one that originally bashed the collections industry, to one that takes consumers out to the woodshed for being unable to live without needing credit.
The crusaders are right to try to change the system, but let’s not fool ourselves about what comes next. When an established author can’t find $400 in an emergency and needs “to juggle creditors to make it through a week”, we’re in the midst of a debt crisis that isn’t just about abuse.
The problem runs far deeper than noxious behaviors – to the debt burdens we carry, flat or declining incomes and the willingness of some financial firms to take advantage of our indebtedness.
The article then finally takes on the CFPB, saying it’s the agency’s responsibility to do something more than solve the problem in front of it’s face – abusive debt collections. The CFPB should look further ahead on the horizon and try to fix the larger problem – an over-reliance on credit.
The CFPB should combine its fight against predatory firms with something new and different – it could champion new lending models designed to help improve Americans’ debt and cash flow. At the very least, it could sponsor discussions and debates about what new models might look like, given that it’s unlikely that we’ll be living debt-free lives any time soon.