September 19, 2019
ATTORNEY GENERAL RAOUL URGES CFPB TO PUT CONSUMERS BEFORE DEBT COLLECTORS
Chicago — Attorney General Kwame Raoul, as part of a bipartisan coalition of 28 attorneys general, filed comments with the Consumer Financial Protection Bureau (CFPB) urging the agency to revise its proposed debt collection rule and place the interests of consumers above those of debt collectors.
“Despite the prominence of its mission to protect consumers in its name, the Consumer Financial Protection Bureau has continued to introduce policies that prioritize the interests of businesses and debt collection agencies – at the expense of the consumers it is supposed to protect,” Raoul said. “In the absence of true consumer protection by the CFPB, I will continue to stand with my counterparts across the country to put our residents and families first.”
In 1977, Congress enacted the Fair Debt Collection Practices Act (FDCPA) after finding “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors… [that] contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” Importantly, Congress noted that “[e]xisting laws and procedures for redressing these injuries are inadequate to protect consumers.” Despite decades of public and private enforcement of the FDCPA, widespread deception and abuse have continued in the $11.5 billion debt collection industry.
Raoul and the coalition commend certain aspects of the CFPB’s proposed rule. For instance, they note in their comments that the rule, proposed in May 2019, would prohibit so-called “passive debt collection” — a particularly coercive practice in which debt collectors report debts to credit reporting agencies before even attempting to collect on them. The proposed rule also expressly acknowledges that it does not preempt state laws that are more protective of consumers than the FDCPA.
Raoul and the coalition argue that the proposed rule falls short by allowing debt collectors to:
Finally, a glaring omission of the proposed rule is that it does not cover first-party creditors. In the comments, Raoul and the coalition of attorneys general argue that there is no reason to treat those who originated a defaulted loan differently from third-party debt collectors. The CFPB has the statutory authority to extend the protections against unfair, deceptive, and abusive practices to all debt collectors, yet declined to do so.
Joining Raoul in submitting the letter are the attorneys general of California, Colorado, Connecticut, Delaware, Idaho, Hawaii, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.