Consumer Bureau to Banks: Be Nice When Collecting Debts

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The Consumer Financial Protection Bureau is warning banks that try to collect debts that consumer protection laws apply to them, too — not just the debt collectors they hire or sell debt to.

“The new policy, which follows efforts to rein in abusive credit card and lending policies, will plug a gap in federal anti-harassment law that generally excluded creditors who collected debt themselves, rather than hiring third parties,” Bloomberg says.

The agency wrote a letter to banks to “clarify the contours” of their legal obligations, and spell out a host of abusive and deceptive practices that are all pretty obviously wrong, such as lying about the status of a debt or who is collecting it, delayed processing of payments so late charges are applied, and revealing a debt to a consumer’s family or co-workers to embarrass him.

Along with that release, the agency posted five template letters to help consumers challenge debts. There are letters for requesting information about a debt or disputing it, telling a debt collector when it can contact you or to stop altogether, or to notify a collector you have hired a lawyer.

The agency is also now accepting complaints about debt collection practices. Its complaint system has received about 123,000 complaints on subjects including credit cards and mortgages since July 2011, Bloomberg says. You can file a complaint here.

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  • Sue Sosa-Vega

    I see all kinds of articles concerning consumer protection and their rights but one area that I don’t see is regarding the policies that govern credit bureaus. It seems to me that these agencies Experian, Transunion and Equifax use practices that mostly favor the financial institutions or credit agencies. The fact that negative credit remains in your file for 7 years is one thing but there are some other things that need to be addressed. It doesn’t make any sense to me to have my score lowered because I happen to use my whole allowable credit line once in a while even when I make the minimum or more payments on time every month. At the same token if I don’t use my cards at all my score might take a hit. I don’t understand if I have a score of 740 yet I might have made a late payment 5 years ago finance companies go crazy and I have to have a notarized statement (I’m exaggerating) to explain it (as if I can remember that far back). I don’t understand why credit bureaus have made themselves inaccessible by human traffic (I remember years ago if I had a question or problem I could go in person and get things cleared right away). As it is it takes months and months to clear up something that could take two seconds. I don’t understand why having 2 much credit or 2 little credit affects my score especially when my payments are on time. My understanding is that the credit agencies job is to report late or non-payment of debt why are they using assumed practices to compile my score. In other words they say that having too many cards might mean that I don’t have money so I have to use credit and therefore I am a risk and my score is lowered to protect the financial institution. If I have too little debt it is assumed that I can’t get credit so my score is lowered to protect the financial institution. I won’t keep going on and on. All you need to do is read the suggestion to improve credit. In my opinion it’s mostly based on assumption. I feel that what should be reported is fact meaning that if you make payments on time period that your score should reflect that and leave the other assumptions up to the lenders to discuss with the customers during the lending process. Another area is the increments of scores from bad to excellent. Totally biased against consumers to favor financial institutions and to make it harder for consumer to improve their scores. I think everyone will agree that these bureaus basically hold a person’s life in their hands. Credit scores are used to approve credit for mortgages, autos, credit cards, financial loans. Scores are also used to hire employees, issue insurance, rental properties and god only knows what else. I feel that something should be done to scrutinize these credit bureau’s policies to bring them more in keeping with fair policies for assisting consumers not just policies that favor lenders .

    • Guest 2

      Their practices entirely favor the credit agencies. They are the clients not the consumer. Financial institutions assimilate the data and use it for their purposes, it is not designed to be consumer friendly and that’s the way the banks/credit companies want it.