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New Regulations Encouraging Bad Behavior By Creditors?

On behalf of Cohn Lifland Pearlman Herrmann & Knopf LLP | Aug 26, 2019 |

Efforts over the last several years have attempted to reign in the increasingly unethical tactics and outright bullying behavior employed by debt collectors. Debtors breathed a sigh of relief as collection agencies were forced to work within more strict parameters.

Newly installed Consumer Financial Protection Bureau chief Kathy Kraninger recently proposed new regulations. However, the suggestions did not add restrictions but loosened them. While changes are typical when a new regime takes control, many consumer advocates feel that the “tweaks” only bolsters bad behavior that usually falls into two categories: Collection attempts to the wrong people and engaging in abusive actions against debtors.

The possibility of the following proposed changes becoming reality could provide even more power to unethical collection agencies and less protection to consumers.

  • Debt collectors can call consumers every day for an indefinite time for each debt owed
  • Debtors with past-due medical bills may receive more than 40 calls in a week
  • Collections via text and emails have no limit in communications
  • Immunity for filing abusive, Robo-signed lawsuits against their targets who do not owe money

More alarmingly, the proposed changes provide debt collectors more room to contact loved ones and demand that they pay the debts of a deceased family member, whether or not they are a cosigner.

Debt collectors cite the barrage of frivolous lawsuits filed against them by lawyers allegedly less than interested in the consumers’ best interests. Regardless of the claim’s merit, the assertion that limits to phone call volume only impedes their ability to suggest benefits for debtors would be laughable if they were not serious about it.

More than 70 million Americans receive calls from debt collectors annually. Should the new changes become formalized, they can expect their phones to ring even more.