The Consumer Financial Protection Bureau (CFPB)will convene a field hearing this afternoon in Northern California, on the topic of debt collection. Just after midnight this morning, the agency released an outline of a proposed rule that will regulate the debt collections industry.
The CFPB has announced a panel of speakers for tomorrow’s hearing, including a number of industry representatives. But it will also allow a number of individuals to make two-minute statements, for the official record, and for comment from the CFPB. Prior to the release of the outline, AccountsRecovery.net asked a number of industry representatives what they planned to say, if they are going to the meeting and requested the chance to make a statement, or what they would say if they were going to the meeting. Here are some excerpts of the responses:
JOANN NEEDLEMAN, CLARK HILL
The industry has been waiting for debt collection rules since 1977 and we thank the CFPB for taking the first step in providing clarity for the industry. However, I urge the Bureau to ensure that any proposed rules do not otherwise hinder important and necessary opportunities for consumers and debt collectors to communicate. Open communication allows consumers to provide the necessary information debt collectors need to respond to disputes, to assist consumers in the event they are not the proper party as well as identify instances of identity theft. I also hope the CFPB recognizes the importance technology can play to bring debt collection into the 21st century.
MICHAEL LAMM, CORPORATE ADVISORY SOLUTIONS
The CFPB has been heavily involved in many of the growth sectors within the ARM market, including student loans, payday lending and automobile origination. The key growth area that is relatively absent is healthcare and medical collections. The CFPB previously detailed medical collections in a December 2014 report. The report illustrated that the medical collections process was seen to consumers as complex and confusing. The CFPB felt as if credit scores unfairly depicted consumers with delinquent medical bills as less dependable borrowers because credit scores weigh all debt at the same levels, regardless of type of debt, amount owed, or unpaid vs paid. ARM firms within the medical collections industry have realized sizable growth with the increased popularity of high deductible insurance plans and the continued rise in healthcare spending. It is only a matter of time before healthcare collections becomes a main focus of the CFPB, when will that take place and what impact will it have on agencies?
SERGEI LEMBERG, LEMBERG LAW GROUP
The CFPB needs to adopt a balanced approach that eliminates the worst abuses with respect to frequency of contact, while at the same time allowing collectors leeway to collect. Shutting off communications would lead to more suits being filed, clogging courts and hurting consumers most of whom will default and have judgments entered against them. So I would argue for balance.
HARRY STRAUSSER, REMIT CORP.
Do you genuinely feel you have a true understanding of the life and culture of an average collection firm? After your examination of the industry’s largest players, what research have you conducted to formulate a clear picture of the 95% of the industry that has not fallen into this examination category?
HOWARD WEBER, ATTORNEY
Debt collection complaints are falling. Debt collection education is increasing. The industry is well aware of its regulatory restrictions and there is constant updating from all sectors. One of the biggest needs, however, is to educate the public. Every citizen needs to know credit basics—what are the ramifications of incurring debt and how to structure your finances to meet your responsibilities. Very often, as a collection attorney, I encounter debtors who have never been presented with the idea, the offer, to work out a flexible repayment schedule. Often debtors have no idea as to how accruing interest works or the various charges they signed off on in their credit agreements. With help from government sources, our industry should conduct public seminars and symposiums to educate, counsel and advise the public on how they should approach the idea of taking on debt.
From a public relations viewpoint, our industry also needs to stress that our clients are not impersonal corporations that only care about profit. We need to stress that many of our clients are among the largest providers of employment, and that the debt industry salaries allow our workers to pay their bills as well. Forgiving of student loan debt, for example, while a nice concept, often results in the loan company cutting jobs when they lose the cash flow from repayment. In a nutshell, everything must be looked at in balance, with a touch of compassion and understanding but with a plan to get money flowing through our economy so everyone can benefit.
JEFFERY HARTMAN, FITZGERALD EQUITY PARTNERS
Unfortunately, since the CFPB intervention in the debt space, debtors have developed a sense of entitlement and invincibility from fulfilling their financial obligations. The CFPB needs to launch an accountability campaign to educate debtors on the importance of paying their debts and being held accountable. “If you owe it, pay it.” If you can’t pay it, be honest and work out a plan.
ED SALEH, ACER CAPITAL RECOVERY
What more do you want the industry to do? When we comply and jump through hoops it’s not enough. When we ask for clarification we’re met with silence.
You are creating an environment where actions have no consequence, and small businesses across this nation are suffering.