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Summarizing New Comments From Consumer Groups, Union Over Proposed Rule

A handful of consumer advocacy groups and unions filed their comments criticizing the Consumer Financial Protection Bureau’s proposed debt collection rule yesterday, and one hand-written note from a consumer illustrated how advocacy groups are raising awareness to get consumers to file comments opposing the proposed rule.

The Service Employees International Union, which represents two million members, along with Green America, Virginia Poverty Law Center, Consumer Advocacy and Protection Society, Justice and Accountability Center of Louisiana, and Demand Progress each submitted separate comments.

The SEIU’s comments focused mainly on racial issues related to debt collection, including statistics that African-Americans are more exposed to collection actions than other races and more likely to have a judgment entered against them. Calling the permission to contact consumers via text and email and providing attorneys with a safe harbor an “easing” of “legal and ethical standards,” the union said the provisions of the proposed rule are “likely to exacerbate the incidence of abuse in the Black community.”

Rather than submit individual comments, Green America chose to submit a letter, which included the names of more than 7,600 individuals, which included some comments that made it appear as though the group didn’t fully read through the proposed rule. For example, the group expressed a concern that “Allowing debt collectors to call people seven times every week for each individual bill,” was excessive, adding that “one conversation each week per consumer is sufficient.” But one conversation per week is what is being proposed by the CFPB.

The Virginia Poverty Law Center specializes in helping individuals with unpaid medical debts, so that was the focus of their comments, which had little to do with the provisions of the proposed rule. Among the abusive practices that the group thinks should be addressed were:

  1. Requiring collectors and health care providers to wait 180 days after issuing a bill before reporting a debt to a credit reporting agency.
  2. Preventing unpaid medical bills from harming patients’ credit reports and scores if the unpaid bills are due to billing errors or insurance disputes.
  3. Requiring collectors to provide a warning notice before placing negative information about a medical bill on a patient’s credit report.

The CFPB’s limited content message will give “scammers a playbook for how to scam consumers with limited-content messages,” CAPS said in its comment, and will dupe sophisticated and unsophisticated consumers alike. Consumers should also be required to opt-in to receiving electronic communications instead of only being allowed to opt out, the group said.

“The problems associated with only being able to opt-out of, rather than opt-in to, electronic communication is exacerbated when the debts are sold and transferred. Companies often buy debt for pennies on the dollar and will transfer and assign them to other collection companies after they have exhausted their resources.26 Based on the proposed rule, it is unclear whether or not the rule requires consumers to opt-out for each individual debt any time it is transferred to a new debt collection agency. The CFPB should state that once a consumer opts out of electronic communication for an individual debt that person has opted out of electronic communication for that debt no matter who owns it.”

JAC Louisiana’s comments were framed in the context of working with individuals who are either incarcerated or who were recently incarcerated and have been released. Again, the comments called for a smaller call cap and opt-in requirements to receive electronic communications.

Finally, I wanted to call attention to a comment filed by Charles Clary, the first one that I have seen that was hand-written. What made the comment interesting is that it was written on a flyer from an unnamed consumer group, and spelled out the issues this particular group has with the proposed rule. The bullet points on the flyer — a call cap that is too high, the ability to contact individuals via electronic channels “without your permission,” filing suit without making “sure you are the right person,” and collecting “debt that is so old that the deadline for a lawsuit has passed and records of who owes the debt and for how much may be lost.”

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