The following column is the opinion and analysis of the writer
The Consumer Financial Protection Bureau, the watchdog agency created to protect consumers in the wake of the 2008 financial crisis, recently proposed a rule that does more to protect abusive debt collectors than to protect Arizonans from debt collector misconduct. If the bureau fails to heed advice to strengthen its final rule to rein in abusive debt collection tactics, then it should consider a re-branding. The public can weigh in through Aug. 19.
Debt collection is big business in Arizona. Thirty-six percent of Arizonans have one or more debts in collection, with an average balance of $1,787. In predominantly non-White communities, debt in collection skyrockets to 53 %. But as Attorney General Mark Brnovich could tell you, having a debt in collection doesn’t always mean you owe anyone; a debt collector may come calling whether you owe the money or not.
After being accused of unleashing collections cases based on information that was “just plain wrong or even false,” Chase Bank reached a settlement with Brnovich and 48 other state attorneys general. In Brnovich’s words, Chase pursued or sold to debt buyers debt that “was the wrong amount, was tied to the wrong person, was discharged, time barred or very old — what’s often called ‘zombie debt.’” He rightly called these practices “an affront to consumers, courts, our laws and fairness.”
If the CFPB’s proposed debt collection rule goes into effect as written, the practice of chasing erroneous or expired debts and harassing unsuspecting Arizonans could flourish.
Collection of time-barred debt, so old it’s beyond the statute of limitations to sue, is prohibited under the CFPB’s proposed rule, but only if the collector “knows or should know” the legal time limit to file a lawsuit has expired. This ambiguous caveat will encourage bogus collection lawsuits.
The rule also fails to stop collectors from tricking people into reopening the window to file a collections lawsuit by making a small payment on an old debt — and maybe one the consumer doesn’t even owe. In its final rule, the bureau should ban the collection of time-barred debt outright, both in and out of court, because old debts can’t be collected without mistakes and deception and records are often lost or incomplete.
Lawsuits aren’t the only issue. Debt collectors already aggressively pursue debt via phone — credit card companies, for example, authorize their collectors to call 3-15 times per account, per day. The bureau’s proposal still allows seven attempted calls per week, per debt, meaning collectors could still ring consumers with more than one debt dozens of times a week.
The proposed rule greenlights collections via text and email, with important account disclosures about your rights sent via a hyperlink, exposing consumers to potential fraud and malware—all without a consumer’s consent. The bureau should cap calls at three attempts and one conversation per consumer, not per debt, and require opt-in consent to receive information by text or email.
Arizona consumers are encouraged to share their debt collection stories and weigh in on the proposed rule in comments to the CFPB that can be submitted via web portal at https://www.regulations.gov, or by email at 2019-NPRM-DebtCollection@cfpb.gov.
Sens. Martha McSally and Kyrsten Sinema should also call on the bureau to protect the more than 1 in 3 Arizonans with a debt in collections by bolstering its final debt collection rule to weed out unlawful and inaccurate lawsuits as well as abusive debt collection tactics.