If you feel threatened by debt collectors you would not be alone. A recent survey by the Consumer Financial Protection Bureau (“CFPB”) found that 1 in 4 consumers feel threatened by debt collectors. This is not surprising to me at all based on my experience in dealing with consumers who are facing debt collection combined with the amount of scams out there who make debt collectors look even worse.
I had the opportunity to talk about the recent survey by the CFPB on 1150AM KKNW on the New Urban Unlimited radio Show with James Gore this past weekend. Below you can hit play on the player and listen to our candid conversation.
The survey reported that 40% of consumers who were contacted asked the debt collector to stop calling them but to no avail. One pro tip is that if you really want a debt collector to stop calling you, you should send them a notice in writing telling them to stop calling you on the phone. Make sure the letter is signed and dated and provides your contact number and address. If the debt collector is a third party debt collector they would be bound by the fair debt collection practices act (FDCPA), and would be forbidden from contacting you by phone once the letter is received. It is important to note that they could still contact you via mail or potentially file a lawsuit against you to collect on the debt.
Debt collection is a multi-billion dollar industry affecting 70 million consumers who have or are contacted about a debt in collection. Banks and other original creditors may collect their own debts or hire third-party debt collectors. When they fail to collect debts on their own, they often sell these debts to debt buyers. The buyers may try to collect on these debts, or hire third-party debt collectors to do so. More than 6,000 debt collection firms are estimated to operate in the United States.
More consumers complain to the CFPB about debt collection than any other financial product or service. To date, the CFPB has taken several steps to improve the debt collection marketplace and study the industry. Since 2011, the Bureau has brought more than 25 debt collection cases against first- and third-party collectors. These cases allege violations of the Fair Debt Collection Practices Act, or unfair, deceptive, and abusive collection tactics that violate the Dodd-Frank Wall Street Reform and Consumer Protection Act. These cases have brought a total of $100 million in civil penalties against debt collectors, more than $300 million in restitution to consumers, and $4 billion in debt relief for consumers.
Here are the highlights of the CFPB survey:
According to the CFPB debt collection survey, about one-third of consumers – or more than 70 million Americans – were contacted by a creditor or debt collector about a debt in the previous 12 months. Consumers are most often contacted about medical and credit card debt. The CFPB survey also found that:
- Over one-in-four consumers report threatening contact: Twenty-seven percent of consumers approached about debt said they felt threatened by the conduct of the creditor or collector who most recently contacted them. Debt collectors are generally prohibited from tactics that tend to harass, abuse, or oppress consumers.
- Three-in-four consumers report that debt collectors did not honor a request to cease contact: About 40 percent of consumers contacted about a debt in collection said they asked at least one debt collector or creditor to stop contacting them. Of these consumers, three-in-four said the debt collector did not honor the request to cease contact attempts.
- More than half of consumers report incorrect contact for at least one debt: Fifty-three percent of consumers contacted about a debt in the year prior said at least one collection effort was mistaken in some way. These consumers reported that the creditor or collector sought the incorrect amount, that the debt was not owed, or that the person owing the debt was a family member.
- Over one-third of consumers report being contacted at inconvenient times: Thirty six percent of consumers contacted about a debt in collection said that the creditor or collector who most recently contacted them called between 9 p.m. and 8 a.m. Debt collectors generally cannot call at times they know to be inconvenient unless the consumer specifically agrees to it.
- Nearly 40 percent of consumers report that a debt collector attempted contact four or more times per week: Thirty seven percent of consumers contacted about a debt in collection report that the most recent creditor or collector to contact them usually did so four or more times in a week. About 20 percent of consumers approached by debt collectors reported contact attempts by debt collectors usually four to seven times per week. Another 17 percent said a creditor or debt collector tried contacting them eight or more times per week.
- One-in-seven consumers contacted about a debt report being sued: Fifteen percent of consumers contacted about a debt in collection over the prior year report being sued. The share ranges from 6 percent sued among those contacted about a single debt to 35 percent sued among consumers contacted about five or more debts. About 75 percent of those sued do not go to the court hearing, which generally makes them responsible for the debt.
In addition to the debt collection survey, the CFBP also will publish a white paper which will shed light on the debt buying business, including online marketplaces which reveal that several accounts can be purchased for less than a $1. The new debt owner has legal rights to seek to collect the full amount of the original debt or to resell debts that are uncollected. Even more alarming is that these accounts contain personal information including social security numbers and put in the wrong hands can do serious damage to a consumer. The report indicates that payday loans and credit card debts are the most likely types of debts to be bought and sold.
If you live in Washington State and are dealing with a third party debt collector and have questions about it, give Symmes Law Group a call at 206-682-7975 to speak to a debt relief attorney and learn about your options.