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CFPB introduces regulations to curb abusive debt collection tactics

The Consumer Financial Protection Bureau, the federal agency formed back in 2011 and tasked with safeguarding consumers from "unfair, deceptive, or abusive practices," has routinely encountered significant opposition to its proposed regulations.

Interestingly enough, however, its most recent set of proposed regulations, introduced just two weeks ago, have been met with virtually no resistance on the part of either federal lawmakers or key players in the debt collection sector -- the intended target of these rules.

The proposed regulations in question are designed to drastically curtail the harassing and often abusive tactics employed by debt collectors, particularly toward those consumers who don't actually owe any money.

To understand the scope of the problem, consider that the CFPB receives an average of 7,000 complaints per month about debt collection, the most of any issue. Even more shocking, the agency has indicated that roughly 40 percent of these complaints concern collection attempts for otherwise fictitious debts.

The problem, say experts, is twofold. Firstly, debt collectors are bound by a patchwork of state and federal laws, and this lack of uniformity creates legal loopholes and consumer confusion. Secondly, consumer debt is frequently resold several times and, as such, consumer disputes can be conveniently misplaced and other legal issues overlooked during the transfer.

The CFPB's proposed regulations, which will be subjected to a prolonged review process, call for the following:

  • Names, addresses, phone numbers and debt amounts must be confirmed by debt collectors prior to initiating contact with consumers
  • Communication attempts by debt collectors would be limited to six per week and, if a consumer dies, communication attempts could only resume after 30 days
  • Debt collectors would be required to disclose whether or not the statute of limitations bars a lawsuit and provide consumers with a "tear-off" notice to contest the debt
  • Written disputes sent back to a debt collector within 30 days of the initial collection effort necessitate the provision of a report substantiating the debt owed and the cessation of collection efforts until the report is sent to the consumer  
  • Collection efforts could not be undertaken by debt collectors that purchase debts until any outstanding consumer disputes were resolved      

Here's hoping these proposed regulations are adopted, and that Americans no longer have to endure abusive and unwarranted debt collection tactics.

Always remember that if you are contacted by debt collectors, you do have options, and that an experienced legal professional can help you explore all of these options.

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