American consumers are $11.23 trillion in debt, eight percent of which—or about $900 billion—is delinquent, while $678 billion is seriously delinquent at 90 or more days late.
FTC Commissioner Julie Brill said consumers dealing with the repercussions of the financial crisis have also had to deal with “bad actors—the debt collectors who engage in unscrupulous, if not illegal, practices.”
“The ones who call at all hours of the night, the ones who lie and make threats they cannot follow through on, the ones who sue without having any basis for doing so, the ones who use subterfuge to obtain monetary judgments and garnishment orders,” Brill said during the discussion. “These are below the belt punches aimed at consumers who have already been pummeled.”
Brill also pointed to the practice of “robo-signing,” in which some debt buyers employ the services of individuals who swear they have personally reviewed and verified debtors’ records when the full file has not actually been reviewed.
Additionally, Brill pointed to an FTC report that revealed that some debt buyers were only provided “with some, but not all, of the important information concerning debts.”
“For example, buyers did not receive information such as whether consumers previously disputed the debts or whether collectors previously verified the debts,” Brill said. “Creditors also imposed contractual limitations on the ability of debt buyers to come back to the creditors to obtain better information about consumers’ accounts. And creditors usually did not guaranty that the account information they provided to debt buyers about debts was accurate.”
CFPB Acting Deputy Director Steve Antonakes said the bureau is focused on ensuring the accuracy of data debt collectors use to pursue debtors, the extent to which the accuracy of the information changes as it is passed down to debt buyers and the ability of consumers to dispute debts they believe to be incorrect or inaccurate.
“Data accuracy and availability, and the maintenance of that accuracy across the different market participants, are critical for having collection processes that are fair and for having communications that consumers can trust,” Antonakes said.