Debt collection rules need to be modernized and reformed, the Federal Trade Commission says. But its recent proposals won’t do much to keep rogue collectors from harrassing debtors (or innocent bystanders, for that matter).
For example, the FTC wants to restrict debt collectors from calling cell phones and sending text messages to consumers without prior consent, noting that such communication often costs the receiver money.
But creditors are likely to respond to such a change with boilerplate agreements that force the consumer to agree to such contact if they want credit, thus allowing collectors to continue to use up minutes and text allotments.
Other changes to the Fair Debt Collection Practices Act that the FTC proposed include:
- Increasing the amount consumers can collect from collection agencies for FDCPA violations. (The amount, $1,000, has been unchanged since the Act was passed in 1977. The same amount would be about $3,600 in 2008 dollars.)
- Requiring debt collectors to provide better information to consumers about the name of the original creditor as well as a full account of the total principal/interest/fees and other charges that make up the debt.
- Granting the FTC regulatory authority to issue rules under the FDCPA
- Requiring collectors to better explain consumer rights under the FDCPA. For example, if a consumer sends a timely written dispute or request for verification, the debt collector must stop collection efforts until it has offered the verification in writing/
These changes are long overdue. But what we really need is beefed up enforcement to make sure fair debt collection laws aren’t a joke. It’s still too easy for collection agencies to flout the law and for rogue collectors to skip from one agency to another.
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Here are some of my related columns on debt collectors: