new-federal-agency-promises-to-crack-down-on-rogue ... - Bankruptcy

By John Clark

Traditionally, debt collection agencies, the folks behind the late night calls demanding your late debt payments, have been regulated by a patchwork of state agencies.

This loose system of regulations did have some effect on debt collectors, but it was not as powerful as it could have been.

Starting at the beginning of 2013, however, a new federal agency will begin supervising debt collectors in the United States, and many believe that this will help thwart aggressive collection tactics, according to a report from the New York Times.

Debt Collectors Often Harass Consumers Without Punishment

High amounts of personal debt, particularly credit card debt, have been plaguing American consumers for years. To add insult to financial injury, consumers are often hassled by aggressive collection agencies.

Debt collectors must follow certain rules, but many firms break the rules with ease. Illegal tactics such as harassing calls, threats to tell employers about a consumer?s debt, and even hollow threats of jail time have become common.

And the problem is getting worse. In 2011, the Federal Trade Commission received more than 180,000 complaints about collection agencies, which amounted to 13,950 more complaints than the agency had received in 2000.

According to one local debt attorney for Consumers Union, there has recently been ?an explosion of shady debt collection tactics in recent years.? In her view, businesses ?have a right to collect what they are owed but not to harass consumers for debt that has been already paid off or doesn?t belong to them.?

Consumer Financial Protection Bureau Targets Debt Collectors

In order to stem the tide of aggressive debt collection tactics, the new Consumer Financial Protection Bureau will assume regulatory control over all agencies that have annual receipts worth more than $10 million.

Sources say that this distinction will bring about 175 companies under the supervision of the new agency. These companies account for roughly 63 percent of all debt collection actions, so the agency will have control over a broad range of the debt spectrum.

According to Richard Cordray, the director of the bureau, ?[m]illions of consumers are affected by debt collection, and we want to make sure they are treated fairly.?

The bureau?s new responsibility is a direct result of the Dodd-Frank Act, which was a response to the financial crisis that saw many companies shirk laws in order to gain short-term profits.

Among the laws the new agency will enforce are those requiring debt collectors to properly identify themselves and the debt owed. In addition, debt collectors will be held accountable for their duty to speak ?civilly and honestly? with American consumers.

Source: http://www.clearbankruptcy.com/blog/new-federal-agency-promises-to-crack-down-on-rogue-debt-collectors/

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