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New ways to combat harmful debt collection practices

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Today, in addition to two bulletins putting companies on notice about harmful debt collection practices, we’re also releasing new tools for consumers: Action letters for consumers to consider using in corresponding with debt collectors and debt collection complaints.

Many collection firms play by the rules and treat consumers fairly, but those that do not can cause financial harm to consumers and undermine the financial marketplace. Banks and other creditors may collect their own debt. They also may sell off debt to third parties. Those third-party debt buyers may collect the debt themselves or sell it off again for collection. Any entity that is subject to the Consumer Financial Protection Act of 2010 is legally required to refrain from committing unfair, deceptive, or abusive acts or practices that would violate the Act.

Action letters

We’ve published five action letters that consumers can consider using when replying to debt collectors. These letters can help consumers get valuable information about claims being made against them or protect themselves from inappropriate or unwanted collection activities. The letters address the following situations when the consumer:

  • Needs more information on the debt:

    The first letter is for consumers who need more information about a debt the collector has told them that they owe. The letter states that the consumer is disputing the charges until the debt collector answers specific questions about what is owed. This letter may be useful, for example, for a consumer who may not immediately recognize the debt as their own or for those who want to find out more about the debt before they pay it.
    Download the “more information” letter

  • Wants to dispute the debt and for the debt collector to prove responsibility or stop communication:

    This letter tells the collector that the consumer is disputing the debt and instructs the debt collector to stop contacting the consumer until they provide evidence that the consumer is responsible for that debt. For example, consumers who do not want to discuss the debt until they have additional information verifying the debt might use this template.
    Download the “dispute and proof” letter

  • Wants to restrict how and when a debt collector can contact them:

    The Fair Debt Collection Practices Act prohibits debt collectors from contacting a consumer about a debt at a time or place they should know is inconvenient. With this letter, the consumer is able to tell the debt collector how they would like to be contacted. This may be a useful option for a consumer who wants to work with a collector to resolve their debt.
    Download the “contact restriction” letter

  • Has hired a lawyer:

    If a consumer has hired a lawyer, generally, the debt collector should be contacting the lawyer instead of the consumer. This letter template provides a way for the consumer to give the debt collector the lawyer’s information and instruct the collector to contact only the lawyer.
    Download the “hired a lawyer” letter

  • Wants the debt collector to stop any and all contact:

    Consumers have the right to tell a debt collector to stop all communication. It is important, however, to note that stopping contact from a debt collector does not cancel the debt or prohibit the collector from potentially pursuing other remedies, such as filing a lawsuit. This letter template could be beneficial for those consumers who feel they are being harassed by a collector’s communications.
    Download the “stop contact” letter

Debt collection complaints

Today we’ll also start taking complaints about debt collection problems related to any consumer debt, including credit card debt, mortgages, auto loans, medical bills, and student loans. You can submit a complaint to us against any company collecting a consumer debt. You can also file a second, separate complaint against the company with which you had the original account.

We’ve been taking consumer complaints since launching on July 21, 2011, beginning with credit card complaints, and also accept complaints about mortgages, bank accounts and services, private student loans, consumer loans, credit reporting, and money transfers. We ask the companies to respond to complaints within 15 days with the steps they have taken or plan to take, and expect all but the most complicated complaints to be closed in 60 days.

You get a tracking number after submitting a complaint and can check the status of your complaint on consumerfinance.gov/complaint.

  • EMMA

    With the exception of the “more information” letter, I think these letters are great! The “stop contact”, “hired a lawyer”, “contract restriction” and “dispute and proof” letters are all concise. I believe these letters will be very effective tools for consumers to achieve their goals.

    CFPB staff: Please consider re-doing the “more information” letter. As it stands, it is similar to the practice of disputing every item on a credit report. Consider a separate letter for situations where the consumer does not recognize the creditor. Also consider a separate letter for situations where the consumer thinks the account balance may be incorrect. The people responding to these letters are real human beings. They are not lawyers, compliance experts or business owners. Consumers absolutely have the right to question every aspect, but do they need to in every situation?

    • http://www.debtsuspensionrights.blogspot.com/ Debt Suspension Rights

      Why not have a discussion about strategic credit card defaults versus INVOLUNTARY credit card defaults. Verified involuntary credit card defaults would allow a judge to freeze the debt where it stood at the time the involuntary default occurred with no more interest rate charges, penalties or fee being assessed. What a huge difference this would make for millions of americans.

  • Andrew D. Shafer, Esq.

    I practice law in Seattle, WA. A substantial part of my practice is defending collection agencies against TCPA, FDCPA and related actions. While I certainly appreciate the Bureau’s advocacy on behalf of consumers, since I am a consumer myself, I think the sample letters go well beyond the current case law in a number of areas. Most troubling are your proposed second and third letters. They both go well beyond case law in requiring collection agencies to validate a debt placed for collection. There is a substantial body of case law addressing the elements of debt validation. Without exception (at least to my knowledge), no court has held a debt collector to the rigorous due diligence standard contained in your second and third proposed letters. To the contrary, validation requires nothing more than verifying with the creditor that the debt has not been paid and that the amount claimed is accurate.
    By offering consumers this level of mis-information about the content of the law, the CFPB is really doing nothing more than fanning the flames of consumer litigation that is not based on any violation of law, assuming a collection agency responds, as I would, by validating the debt in accordance with case law and informing the consumer that the law does not require the agency “prove up” the debt. At least with respect to the agencies I represent, very few collection files become collection lawsuits. Those that do are vetted in advance for proof sufficiency to make sure the debt is provable.
    On behalf of my clients and collection agencies nationwide, I strongly urge the CFPB to self-examine its zeal and withdraw these letters. Assisting consumers by informing them accurately of their rights is laudable. Distorting the law to carry out this Bureau’s mission is inexcusable.

    • truth

      lol i love watching debt collectors like you squirm! is it scary watching the days where you could break the law and lie to consumers fall into history? :D Go CFPB! Private student loans are next!

    • SAM

      I strongly recommend that you familiarize yourself with the Law, Andrew.

      It would be a great opportunity to debate the language of the law in juxtaposition to other Laws against you in a courtroom in regards to the conduct of debt collection practices, credit reporting or any other relevant action “in an attempt to collect (a debt)”, even the original creditor actions would be under scrutiny.

      I would love to see attempt to, as commenter truth said, “squirm” out of. I am not even a lawyer and I can comprehend the ‘Gordian Knot’ Laws, the folly of the legal language, regarding debt collection et al.

    • gatlaw

      I agree with you Andrew. The entire industry is turned on its head. Protection for deadbeats is ridiculous. I am not promoting deceitful practices but the way this business is headed is simply crazy. New York State basically discriminates against creditors by protecting deadbeats bank accounts and charges collection attorneys a premium when they file complaints. It is so stupid a system as to defy explanation.

    • Redbird

      I agree with Andrew that the CFPB should re-examine the form letters and temper the zeal they display. That zeal is most on display in the letter designed to have the debt collector cease communication. It states:
      “Please stop all communication with me and with this address about this debt.”
      That concise language should achieve the stated goal, but the letter does not stop there. It adds the following, without regard to whether it actually applies:
      “Record that I dispute having any obligation for this debt. If you stop collection of this debt, and forward or return it to another company, please indicate to them that it is disputed. If you report it to a credit bureau (or have already done so), also report that the debt is disputed.”
      This form suggests that, in the eyes of CFPB, every unpaid debt is a disputed debt.

      • MZ

        No. This letter suggests that when a consumer disputes a debt and requests that a debt collector cease further communication (as required by §1692c), the consumer means it, no matter what antics creditors and collectors pull by transferring and reselling debt. Every unpaid debt is not a disputed debt. But once a consumer disputes a debt in writing and requests that a collector cease further communication, that dispute should stay on the record until the dispute is settled, whether by agreement with the debtor or in court.

    • John David Russell

      Dear Mr. Shafer:

      I studied all of these letters and don’t see anything that is out of order. I don’t think it is a distortion of the law because they state that creditors may not be required to furnish such information but the consumer can still ask? However we just have different opinions. The neat thing about this nation is that we have a procedure and process for determining if you are correct or not. Perhaps you might want to file suit against this bureau and resolve this matter conclusively rather than speculate what is a distortion of the law. I encourage you to do such so that we may put this matter to rest. This nation will be a much better place if this matter is settled. You should have no problems filing suit because you hopefully have confidence in your convictions. I look forward to seeing your progress in following the due process of the law through the court system. Please keep us up to date with frequent updates as you carry this burden for our Nation to make things right. I know it will be hard being as that the govt most likely has more resources than you and you will be filing suit against the govt which made the law to begin with. Perhaps you might want to just file suit against Elizabeth Warren individually since she is the creator of the CFPB. I am sure that a Harvard Law prof. is no match for you and your Seattle U (JD).
      On behalf of a grateful Nation, Keep on rockin in the Free World.

    • cag

      eAndrew,

      I as a consumer have used the fdcpa and the fdra and have won all of the cases that I have brought as a pro se litigant. I have won several cases against collection agencies because they have come after me after names of companies have changed and the debts are from 1994. I always negotiate with these collection agencies that they never sell the debt again, they take of the inquiries if there are any current ones, they take all trade lines off for both the original creditor and their trade line. A consumer can get dinged up to 4 times for one debt. People fall on hard times like I did with a divorce. There was no means or way of starting over and I didn’t want to file bankruptcy. There is no debtors court in this country. I am sorry you don’t like the laws but before this agency many people didn’t know there were federal laws to protect them. You know as well as I do, that once a case is filed in court for the fdcpa or the fdra it never goes to trial it goes to a rule 52 hearing where its negotiated because who would the jury be but other consumers of which the likelihood of them having dealt with a collection agency. The collection agencies have nothing to do with the debt. It has to do with how you collected the debt and violated the law. Now that I learned how to fight these companies I do it for all collection agencies, especially the ones for the red light violations.

      You are upset because those letters were written by lawyers for consumers and now you don’t have as good of a chance at beating pro-se litigants that are educated like myself beating lawyers like yourself.

  • Guest

    I was honestly disappointed that all of these letters include language to dispute the debt. While there may be certain situations where a consumer absolutely should dispute the debt, regulators should be encouraging better information on why you should dispute a debt rather than encouraging all communication with the debt collection industry to contain a dispute. What a waste of resources and allows for further strain on our already bogged down court systems by making consumers think that the industry has to provide information other than what the law allows.

  • Lord Botetourt

    I agree with Andrew. The Bureau (Consumer, not FBI) is doing a poor job educating consumers on when it is appropriate to dispute a debt and when the consumer needs to realize they entered into a contract to repay the bank for the funds they borrowed. Sometimes consumers are just plain wrong and the banks are rightfully trying to recover what they are legally owed. CFPB gets a “needs improvement” on this one.

  • Patricia

    this is a much needed service! Why havent they done this along time ago, debt collection agencies break the law daily – thinking the people they are harassing cant afford to fight back with an attorney- there needs to be some form of regulation HOORAY for this wise move by the govt!

    • CARLOS LIZARRAGA

      There are attorneys out there that specialize in going after collection agencies that violate the Fair Debt Collection Practices Act.You are better served if you engage an attorney than to let a government agency try to do it.These attorneys will get paid by the collection agency once the case is settled.

  • JL

    I have gotten numerous phone calls for my ex-husband’s wife. My Parents have gotten calls too!!! We have been divorced 17 years!! At times I am told she used me as a reference and I highly doubt that. I have asked them not to call me, she has never and will never live with me and we are not related. I am always told that they will take me off of the file then after a few months someone else calls with the same thing. I do know that they are trying to find her about a fraudulent check or something and a finance company called about a purchase she made for her husband. I just want the calls to stop. Is it better to give them their information since they moved out of state or deal with the calls? I do not want my child to have to deal with this someday either! There has to be some way to protect myself and my parents from dealing with this. Its not our business and we want NO part of it.

  • http://www.debtsuspensionrights.blogspot.com/ Debt Suspension Rights

    and yet, no mention is made as to why judges make no distinction between strategic defaults and involuntary defaults.

  • Noel Faucett

    There needs to be another letter that disputes the debt on the basis that it was induced by fraudulent or deceptive methods. A case in point is a timeshare mortgage that was entered into because of false VERBAL promises accompanied by confusing and lengthy contracts to be signed. Timeshare fraud is real and it effects mainly the elderly.

  • Fred Snem

    These seem to be in a proprietary vendor-specific format usable only in a specific brand of word processor software that is only available from one vendor on one computing platform. These would be fr more accessible if they were (also) offered in a more open standards-based format such as PDF, or even as simple plain text (which could then be copy/pasted into *any* program).

  • D Ham

    Under action letters in the second sentence the word “can” is spelled wrong. Just thought Id mention that in case anyone who works on the website is reading these comments.

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