Before coming to KEJC, I regularly confronted unfair debt collection practices as an attorney at AppalReD Legal Aid in Eastern Kentucky. Many of my clients were elderly and struggling to pay their bills on fixed incomes. Most of them were also terrified of debt collectors. Some chose to file for bankruptcy, and others simply paid whichever debt collector clamored the loudest and/or most often, often at the expense of their rent, mortgage, or utility bills.
Meanwhile, our courts are flooded with unopposed debt collection lawsuits. Debt collectors would often dismiss cases as soon as I entered them. Simply put, it was easier to cut loose the defendant with that pesky attorney and move on to unrepresented defendants.
Enter the Fair Debt Collection Practices Act (FDCPA), a federal Act that makes a lot of bad debt collection practices illegal. Unlike most laws, the FDCPA is incredibly simple, not too long, and easy for creditors and consumers alike to understand.
But recently, the Consumer Financial Protection Bureau (CFPB) proposed regulations that are so long and complex that consumers, collectors, attorneys, and the courts will find them more difficult to navigate than the FDCPA itself.
Even more troublesome, the new regulations are primarily aimed at widening the defenses available to debt collectors. The proposed regulations protect attorneys who file claims or paperwork based on whatever information their client decides to provide. Kentucky and federal court rules require a reasonable inquiry into the facts. In other words, this new standard is really no standard at all, protecting attorneys from FDCPA liability even for conduct that would violate Court rules.
Collection attorneys frequently receive very little information from collectors beyond a computer screenshot showing the consumer’s personal information, an amount, and maybe an account number. Usually, a collection attorney is unable to show that the collector purchased the specific debt at issue. This practice explains why collection attorneys are quick to offer dismissal as soon as an FDCPA claim is filed.
The new regulations would also protect collection attorneys who file debts that are too old to collect in court. Many courts have said that the FDCPA requires more.
The stated purpose of the FDCPA is to eliminate abusive debt collection practices and protect debt collectors who don’t use abusive practices. The CFPB should review these new regulations with those guiding principles in mind. Do these regulations protect collectors who are trying to comply with the law? Or do they protect collectors and their attorneys who conceal or turn a blind eye to abusive practices?
We like that the CFPB wants to limit phone conversations and prohibit communication via social media platforms. That said, the regulations allow collectors to call a consumer seven times per debt per week. We think that’s overkill. I’ve listened to my fair share of recorded debt collection phone calls. After reviewing a week’s worth of phone calls, one wonders what the purpose of so many calls could be other than to harass or annoy the consumer.
We want the CFPB to limit phone call attempts to no more than three times per week.
While the proposed regulations limit phone conversations, they put zero limits on the number of allowable electronic communications, particularly problematic when so many of us get more texts and emails every day than we can read. Many consumers will likely feel just as overwhelmed by unlimited texts and emails as they would be by unlimited phone calls.
The proposed regulations require collectors to let consumers opt-out of electronic communications, but an opt-in requirement would better protect consumers. Just because a consumer emails or texts a collector one time does not mean that they want to be contacted by email or text later. Particularly in rural areas, many consumers have limited internet access. In any location, the poorest consumers are the least likely to have reliable phone access and unlimited text message plans.
Additionally, many of my elderly clients were not particularly tech-savvy. The regulations would allow many disclosures to be emailed or texted using hyperlinks, which will make it almost impossible for attorneys like me to determine what the consumer actually saw. Opening the floodgates of electronic communication will make it much harder to enforce the Act. Moreover, hyperlink disclosures will make it much less likely that clients will actually read the disclosures.
The FDCPA is an incredibly important consumer safeguard against corporate debt collectors, and we urge the CFPB to amplify, rather than reduce, consumer protections.