Regulating Debt Collection

Abstract

Debt collection. It often starts as a late night call carrying threats of being thrown in prison, ruin at the workplace, and trouble for the family unless you pay up. While the law actually prohibits some of these tactics, most consumers do not know their legal rights, which leave much to be desired, or fail to exercise them when faced with the harassing practices of some debt collectors. Moreover, the debt collection industry as a whole — both massive and sophisticated — lacks the incentives to self-police or internally punish bad actors. In July 2016 the Consumer Financial Protection Bureau released a proposal aimed at overhauling the entire debt collection industry — both as to how collectors interact with consumers and how debts are bought and sold. Consumer protection groups have lauded the proposal as a win for average Americans, while consumer credit firms caution that some of the provisions go too far and risk crippling the collection industry, which would have an adverse effect on the ability of people to obtain the type of everyday credit that makes the wheels of the economy turn. This Article explores the proposal and critiques the places where they fall short or go too far, as well as considers future developments and issues that will arise from their enactment.

Keywords: debt collection, debt, credit, consumer, bank, CFPB, regulation, consumer protection, lending, borrowing, creditor, debtor, Consumer Financial Protection Bureau, administrative law, financial institutions