Problem With Debt Collectors? Report Them to the Consumer Financial Protection Bureau

    People being harassed by debt collectors have reason to rejoice: The Consumer Financial Protection Bureau (CFPB) is on the case!

    The CFPB, which has been an aggressive advocate for consumers in less than two years of existence, issued a report in March that details complaints against debt collection agencies. The report included a message from Director Richard Cordray that the agency will “protect consumers and promote a level playing field for all law-abiding debt collectors.”

    Note that protecting consumers came first in that statement, as well it should. That will be a tall order given that debt collectors have moved ahead of banks and lenders to rank No. 1 in complaints made to the Federal Trade Commission (FTC). There were 199,721 complaints against them in 2012 (as compared with 132,340 for banks and lenders), and many of the objections had a familiar ring.

    Long List of Harassment

    Among other things, people complained that debt collectors:

    • Repeatedly called late at night or early in the morning and constantly harassed them.
    • Pretended to be law enforcement or other government authorities, and threatened to arrest and jail consumers if they did not agree to make payments.
    • Threatened to garnish wages or file lawsuits against consumers.
    • Threatened people with physical harm and claimed they would kill the person’s pet.
    • Claimed they would reveal the person’s debt to third parties.

    All of these obviously violate the rules governing debt collection, but only the most egregious situations were pursued and few resulted in criminal prosecution. That is about to change.

    “Above all, we are concerned about the system-wide problems in the debt collection market that pose risks to consumers,” Cordray said in the annual report. “We want to see good practices come to dominate the market, including improved data integrity.”

    Agency Has Been Successful

    The CFPB began operations in July 2011. It was created out of the real estate meltdown that sent many people into foreclosure because they took on bank loans they couldn’t possibly afford. The CFPB successfully battled for consumer protection regulations with mortgage lenders. It has since taken on the problem of student loans and will soon issue regulations on that issue.

    Now, the bureau has its sights set on debt collection agencies and the broad spectrum of possibilities and problems involved there. Officially, the CFPB has supervisory authority over any firm that takes in more than $10 million in annual receipts from debt collection. That accounts for 175 firms, which control 60 percent of the market.

    There are many more that operate their business legitimately, including giving the company name when they call or send consumers mail. That should be a given, but it’s not.

    A large number of companies won’t provide their names or make one up and go on the offensive as soon as you pick up the phone. They’re after money that the consumer may or may not actually owe and are willing to take whatever steps needed to collect.

    The FTC publishes a page on its website describing what debt collectors can and can’t do. The page includes examples of what consumers should do if they feel they are being harassed.

    Still, it’s good to know there is one government agency that will keep its eye trained on the trouble these guys cause … and back it up with some authority to hold them responsible.


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    Bill Fay
    Staff Writer

    Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at

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