New agency will crack down on debt collectors
Being in debt is stressful. Not only is there the impending threat of repossession, foreclosure, and ruined credit, but debtors also have to deal with the constant telephone calls from creditors and collection agencies. Many debtors simply stop answering their phones or opening their mail, scared of what will be on the other end. And when the calls and letters get to be too much, debtors seek relief through bankruptcy or a similar measure.
However, with a new addition to the government agency that investigates and stops abusive debt collection practices, debtors may no longer have to resort to bankruptcy or other such severe measures to stop collection calls.
The federal Fair Debt Collection Practices Act was enacted over 30 years ago, with the purpose of protecting consumers from abusive debt collection practices, such as harassment, intimidation, or lying. The law is enforced by the Federal Trade Commission, which reported a 17 percent increase in consumer complaints about debt collectors last year. The agency says that such complaints have tripled since 2002.
In response to the increase, a new federal law will soon create a watchdog agency called the Consumer Financial Protection Bureau, which will join the FTC in investigating consumer complaints about improper debt collection methods.
In addition, the new agency will have the ability to fill a gap in the protection against abusive debt collection practices. Currently, the FTC does not have the ability to write new rules regarding abuse that takes place over new technology such as e-mail, text messages, voice mail and even social networking. The Consumer Financial Protection Bureau will be able to write new rules addressing these situations, in addition to investigating and resolving consumer complaints.
Source: Atlanta Journal-Constitution, “Debt collection rules tighten”, Russell Grantham, 4 May 2011