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CFPB Wants Consumers, Debt Collectors, to be Educated

The federal Consumer Financial Protection Bureau this month has taken several actions in an effort to cut down on unfair business practices in the realm of debt collection.

Miami consumer rights lawyers understand that in addition to now welcoming reports of debt collection abuses to the agency’s complaint log, regulators also issued informational bulletins to warn collectors and banks of their legal responsibilities. Additionally, form letters were issued for consumers to use as a tool when going toe-to-toe with collectors.

When releasing this information, the CFPB underscored its regulatory authority over third-party debt collection firms.

The two bulletins released by the agency address common practices by debt collectors that the agency has found to be illegal, unfair, abusive or all of the above.

In the case of the first bulletin, the Consumer Financial Protection Act of 2010 is outlined. The agency bolded the 10 practices it intends to place a special focus on in the coming months and years. Those include:

  • Collecting or demanding any debt or associated interest or fees that is not expressly authorized by the original agreement.
  • Failing to post payments to a consumer’s credit account in a timely or proper fashion.
  • Seizure of property absent legal rights to do so.
  • Revealing the debt of the consumer, without his or her permission, to an employer or co-worker.
  • Falsely representing the amount, legal status or character of the debt.
  • Collection agency representatives fraudulently misrepresenting themselves as lawyers.
  • Threatening to take action that either isn’t intended or that the collection firm has no authorization to carry out.

Meanwhile, the second bulletinhammers home a specific warning to avoid deceptive statements regarding how paying a debt might impact one’s credit score or credit worthiness. What’s happening is that these firms tell consumers that by paying these debts, their credit scores will receive a boost, sometimes a significant one. Some collectors are erroneously telling borrowers that paying off this debt will make lenders more likely to allow them to borrow again. But in fact, that’s not always true.

Even in cases where it might be, these firms have no authorization to change a person’s credit score. Collection agencies that overstate their role in this could be violating the Fair Debt Collection Practices Act.

In addition to these bulletins, the CFPB released a series of five “action letters” for consumers to use when dealing with debt collectors. The first letter is for consumers who are trying to get more information about the debt. It’s a letter specifying that the consumer is disputing the debt and demands answers from the collection agency about what is owed. (A lot of times, this alone is enough to make a collection firm back off and move on to easier targets.)
The second letter is for consumers who wish to dispute the debt and also want the debt collector to either prove the debt or cease contact.

The third letter is an outline for debtors who want to limit how collection agencies can contact them. For example, there might be certain times that are off-limits or work numbers at which you are not permitted to receive calls regarding the matter.

The fourth letter is for when you wish to have the collection agency cease all contact with you.

Finally, the fifth letter is to notify the collection firm that you have hired an attorney. This letter simply states the most recent time(s) and date(s) on which you were contacted by the collection agency. The letter then states you have hired a lawyer to handle this matter, lists the attorney’s name and office contact information and instructs the agency to refer all inquiries regarding the matter to your lawyer.

If you’re battling foreclosure or credit card debt in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

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