Imagine this: You’re facing a sudden emergency that you can’t afford to pay for out of pocket. Maybe a dental crown needs replacing, or you contract appendicitis – both common medical emergencies that can be incredibly expensive.
You take out a loan to pay for treatment, and diligently work to pay it off. Years later, you get an email from a debt collector saying you still owe that money. Then you get another email, and a text message. Then it’s a phone call and multiple text messages and emails per day – all threatening you with a lawsuit if you don’t pay a debt that you know is already settled. It sounds illegal and improbable, but it happens all the time across the country.
Nearly one-third of Maine adults have a debt in collection, with most of that coming from unforeseen medical expenses. Debt collection generates more complaints to the Consumer Financial Protection Bureau than any other financial service. The No. 1 complaint is collectors pursuing debts that aren’t actually owed.
Collection companies will buy up debt for pennies on the dollar. Then, armed with little more than out-of-date spreadsheets, they’ll flood courts with lawsuits based on debts they may not even have a legal standing to collect. Even if these debts are already settled, discharged in bankruptcy or too old to collect, they may be resurrected by default judgment – called “zombie debt” – if consumers don’t show up in court to defend themselves.
Two years ago, I was proud to sponsor and pass into law protections for Maine consumers. Without these legal protections on the books, collection companies could buy up piles of loans from other companies, and harass hardworking Mainers into paying money that they didn’t owe.
According to testimony from Pine Tree Legal, these companies would mislead consumers about their legal rights, threaten consumers with jail time and fail to mention that they frequently didn’t have enough documentation to prove that they could collect the debt in the first place. These predatory practices were frankly outrageous. I was proud to fight against such tactics to help protect Mainers.
While Maine has been a leader in protecting consumers’ rights, the federal government has dropped the ball in the past few years.
The Consumer Financial Protection Bureau has proposed new rules that would let debt collection companies use the kind of coercive, unethical practices Maine banned two years ago. The bureau’s own website says in big, bold letters that its mission is to make sure “banks, lenders, and other financial companies treat you fairly.”
Make no mistake: Collection companies rely on consumers not being fully aware of their legal rights, or of how debt collectors acquire loan information in the first place. They know that for many people, consulting a lawyer or trying to fight claims in court is just not feasible. These kinds of practices disproportionately hurt low-income households, seniors and veterans. The bureau knows this, and it should be working to stop this kind of unfair, predatory action.
Instead, the bureau is considering changes that would protect debt collectors and move responsibility to prove whether a debt is collectible onto consumers. These changes also would allow companies to call consumers seven times per week, per debt, and send unlimited texts, emails and social media messages, even if a consumer hasn’t consented to any of that contact. The bureau says these changes are meant to clarify rules and update regulations to include modern communication. But the reality is they’ll leave consumers at a disadvantage, and will hurt already vulnerable people.
There is some good news: The Consumer Financial Protection Bureau is accepting written comments from the public about its proposed rule changes. You can send comments via email to 2019-NPRM-DebtCollection@cfpb.gov – make sure to include “Docket No. CFPB-2019-0022” or “RIN 3170-AA41” in the subject line. You can also mail comments to Comment Intake – Debt Collection, Bureau of Consumer Financial Protection, 1700 G St. NW, Washington, DC 20552; again, make sure to mention “Docket No. CFPB-2019-0022” in your letter. Comments are due by Sept. 18.
I’m going to keep standing up for consumers in Maine. I hope the federal government will follow our state’s example and make sure its rules protect everyday people, not big companies.
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