As Maine gripes, so gripes the nation.
That twist on an old saying means the top consumer complaint heard by the federal Consumer Financial Protection Bureau, or CFPB, deals with bill collection. Of the roughly 400 complaints filed yearly with Maine’s Bureau of Consumer Credit Protection, or BCCP, about 100 concern debt collectors.
In late July, the CFPB made public a proposal to strengthen the rules governing debt collection.
When the proposals take effect, they would limit the number of times companies can contact debtors to six per week, and they would require debt collectors to have better information about debts before they collect them.
While collecting, companies would have to limit communications, explain details of the debt clearly and make it easy for consumers to dispute the debt. Collectors also would have to explain if debts are too old for the collectors to take them to court.
The CFPB said it has reasons for its proposed changes. When old debts are sold, the information about those debts may not be complete. Anything consumers have submitted might not be passed along, and errors can result.
The new CFPB rules would require collectors to verify information they have before contacting debtors.
William Lund is superintendent of Maine’s BCCP, and he said a lot of work went into the 200 pages of rules and reports the CFPB has made available to his office. Lund said eliminating indiscriminate calling by collectors, including the limit of six calls per week, is a positive step.
He also supports moves to verify debtor information, make disputing debts easier and limit actions by a collector during a dispute.
Lund said another change would affect the sales of debt.
“Sellers would be required to be more careful in what they sell and would have to provide more information as a part of each sale. That’s a positive proposal,” Lund said.
The new rules probably won’t be final for at least a year, and there’s criticism from consumers and the collection industry.
Some consumer groups say while the rules are a good start, portions may confuse consumers. If a collector calls and says, “this debt is too old to take to court, but you still have to pay it,” the debtor might wonder just how much clout the caller has.
Collectors say the rules apply only to third-party collection efforts. Groups including the American Financial Services Association and Consumer Bankers Association are first-party collectors, whom the CFPB may address separately.
Richard Hunt, president and CEO of the bankers group, said in a statement that CFPB recognizes that “consumers have very different experiences when dealing with banks as opposed to debt collectors.”
CFPB said it recognizes that “debt collection serves an important role in the proper functioning of consumer credit markets.” It is also trying to avoid any tightening of credit that over-regulation might trigger.
“If creditors are not able to collect rightfully owed debts, they will be less likely to extend credit to consumers,” Cindy Sebrell, a spokeswoman for the Association of Credit and Collection Professionals, said.
Lund said the CFPB proposals apply only to the “larger participants,” the 175 companies that recover about more than $10 million per year, or about 60 percent of outstanding debt. Lund said depending on the wording of the final rules, Maine might adopt them and “fill in the gap” by having them apply to companies of all sizes.
You can find a list of licensed debt collectors at BCCP’s website at maine.gov/pfr/consumercredit/index.shtml. There’s also a link to the Downeaster Common Sense Guide to Debt Collection under the heading “consumer tools.”
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit http://necontact.wordpress.com or email firstname.lastname@example.org.