Debt Collectors’ Harassment Tactics Are Put On Notice For First Time In 40 Years

Debt collectors, either in-house or third-party entities in the business of trying to get people to pay up debts that they owe for things like student loans or medical bills, have become notorious for their often harassing tactics. Consumers have complained of debt collectors calling them endlessly while threatening violence, lying, and using profane language in trying to cajole them into paying, sometimes for debts they don’t even owe.

But on Thursday, the Consumer Financial Protection Bureau (CFPB), the watchdog created by the Dodd-Frank financial reform act, released new proposed rules to rein in the industry, the first time a federal regulator is cracking down on the industry in nearly four decades. It wants to limit how many times a collector can contact a consumer, require them to have better information about the debts they try to collect, and make it easier for consumers to fight debts they say they don’t actually owe.

Congress passed a law in 1977 that was meant to get rid of abusive debt collection practices by imposing restrictions on their activities as well as disclosure requirements. But until the CFPB came along, there was no federal agency that could issue regulations to make sure that the law was being implemented.

In that time, the industry has grown such that a huge share of Americans are touched by it. As of 2014, about 77 million Americans, or about a third of people with a credit file, had a debt that was in collection. The CFPB found in a recent study that about a third of all consumers had been contacted by a collector in the last year.

Read on.

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