Published: April 2014

Debt collection abuse could get worse if lawyers are let off the hook

Lawyers and law firms have been at the forefront of some of the worst debt collection abuses in this nation. Rather than limiting protections, we need to increase them for consumers. The proposed Fair Debt Collection Practices Act (“FDCPA”) of 2013 (HR 2892) would effectively permit lawyers and law firms engaging in debt collection to evade essential requirements of the FDCPA which prohibit deceitful and unfair practices and prevent consumer harassment. Consumer Action joined coalition advocates in urging Congress to oppose HR 2892.

The Federal Trade Commission (FTC) regulates the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from consumers. All too often, debt collection attorneys engage in abusive, deceptive, and illegal collection activities. Some examples include:

   -  Sewer Service, or the failure to properly notify consumer defendants of lawsuits filed against them

   -  Making misrepresentations in legal pleadings

   -  Swearing to having personal knowledge of the factual basis for a debt collection lawsuit when they do not

    - Filing lawsuits for debts that are time-barred or which have been discharged in bankruptcy

    - Using false pretenses to induce a consumer to sign a consent judgment

In fact, consumers' complaints to the FTC regarding the debt collection industry continue to skyrocket: from 13,950 in 2000 to 199,721 in 2012 – more than a 900% increase in just over a decade. In January 2014 alone, consumers registered more than 30,000 complaints regarding debt collection with the Consumer Financial Protection Bureau (CFPB). The The CFPB is in the midst of an examination of the adequacy of current laws, including the FDCPA, and we urge Congress to allow them to regulate the debt collection industry with their current powers, if necessary.

If HR2892 passes, it will open the floodgates for abusive and harmful debt collection practices by attorneys who are no longer restricted under the Fair Debt Collection Practices Act.

 

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Americans for Financial Reform | Center for Responsible Lending | Consumer Action | Consumer Federation of America | Consumers Union | National Association of Consumer Advocates | National Consumer Law Center on behalf of its low-income clients National Fair Housing Alliance | U.S. PIRG

More Information

To read the full letter to Congress, please click here.

For more information, please visit the NCLC website.

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