The debt-collection industry has launched a push to modernize the laws that govern how they do business and what they’re allowed to do, and new legislation under consideration in Congress would give them the right to do so if passed. But consumer advocates worry that collection agencies will overstep their bounds and harass people. Would you want a debt collector calling your cell phone?
The Baltimore Sun reports that the Obama administration wants to let collectors of unpaid government debt contact the borrowers who default on things like federally backed student loans or mortgages, as well as taxes, via cell phone. Meanwhile, the House of Representatives has introduced a bill that would give collection agencies who handle all types of debts permission to use automatic dialing tools (standard in the debt-collection trade) and even robocalls to contact borrowers on their cell phones.
“Modernization for new communications is something we’re interested in,” says Adam Peterman, director of federal government affairs for ACA International, The Association of Credit and Collections Professionals. “We’d like some guidance as to properly use modern technology. We think there are ways to communicate with consumers in the way they see fit the best.” What this means is that right now, a debt collector can’t call your cell phone or email you to try and chase down an unpaid debt. The industry would like to change that.
(MORE: How to Outsmart a Debt Collector)
On one hand, these technologies are increasingly the way people stay connected. But watchdog groups warn that collection firms could take advantage of their new power. “You give them any opportunity to call cellphones, they will not do what is allowed but what is not allowed. … This is one of the most abusive industries in the country,” Lauren Saunders, managing attorney for the National Consumer Law Center, tells the Sun.
“I think the debt collectors need to be reined in, and I think their ideas are self-serving,” says Ed Mierzwinski, consumer advocate for watchdog group US-PIRG. “Modernization should be not in the image of ACA but in the image of consumer groups.”
ACA International’s Peterman says his group has been talking with the new Consumer Finance Protection Bureau and has provided them with a 20-page report including its proposals. The CFPB is in a much better position than Congress to figure out what’s in Americans’ best interest. What it needs is time — and a director, which would give it rulemaking authority — to consider the association’s proposals and weigh them against its mission to protect consumers from abusive or unscrupulous business practices.