Are you being harassed by a debt collector? You now have a formidable advocate on your side: President Barack Obama.
Obama's consumer protection agency, angered by the tactics of some debt collectors, is on a mission to teach consumers how to battle abusive attempts at debt recovery.
From Home Loans to Credit Cards
Not so long ago, federal regulators began targeting the debt collection practices of some mortgage lenders. Unfortunately, some of those same, harassing tactics are now being used in the credit card business as they attempt to recoup delinquent debt.
It's been reported that national banks and large department stores sometimes relentlessly pursue consumers who are delinquent in their payments even though this debt collection method is restricted under the Fair Debt Collection Practices Act.
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits collection firms from committing deceptive or abusive acts or practices. The Consumer Financial Protection Bureau (CFPB) is using this regulation to curb the efforts of collection firms by teaching consumers how to protect themselves.
If you are being targeted by a collection firm and feel that its actions against you border on being abusive or deceptive, you can use a letter the CFPB created to send to your bank or other collection agency to stop the abusive tactics.
The CFPB also has letters to let collection firms know that you need additional information before proceeding with payment. In addition, there are templates for informing collection agencies that you dispute the collection amount and that it needs to stop contacting you until it can provide evidence proving that you're responsible for the subject debt.
The CFPB is also educating consumers about the little known fact that consumers have the right to tell collection agencies to stop harassing them with their incessant phone calls.
Banks Pay High Fines for Harassing Consumers
The Obama administration is serious about its crackdown on banks and other collection firms. Just last year, it issued a $210 million fine to Capital One for sales tactics it used to convince consumers to purchase add-on features to their credit cards. The Obama administration has also issued fines to American Express, Discover Financial, and JP Morgan.
When Does Collection Become Harassment?
Here is a list of tactics that the CFPB considers to be harassing and abusive:
- Collecting a debt with added fees or interest that weren't authorized by the consumer.
- Carelessly not posting payments on a consumer's account in a timely manner to avoid additional fees from being added.
- Taking possession of property when the entity has no legal right to do this.
- Revealing the debt to a prospective employer.
- Pretending that the debt collection letter is from an attorney or government source.
- Lying to consumers that their debts will be waived if they agree to a settlement figure