The New York Times reports that debt collectors are feeling victimized by consumers who are rude to them. Huh? While it goes without saying the people should be civil in their interactions with one another, it’s hard to conjure up a whole lot of sympathy for those who work in an industry notorious for abusing consumers. However, the Times story does delve into the lobbying efforts of ACA International, the debt collection industry trade group. The organization is advocating that its members lobby legislators and regulators. Next month, debt collection agencies will be regulated by the new Consumer Financial Protection Bureau. While the Federal Trade Commission will still have some enforcement duties, the new CFPB will be able to write rules and regulations governing the industry.
Debt Collectors’ Association Aims to Distance Itself from Debt Buyers
As reported in debt collection industry publication Inside ARM, the Association of Credit and Collection Professionals (ACA International) may be trying to erect a wall between third-party debt collectors and debt buyers. According to the report, in July the ACA Board will vote on a proposal to “rebrand” the organization, disbanding the organization’s Asset Buyers Division (debt buyers) and calling itself the Association of Collection Agencies. The proposal also contains provisions for shifting lobbying efforts toward differentiating between debt buyers, original creditors, and third-party debt collection agencies in state and federal legislation and regulations.
In our opinion, this rift within the debt collection industry is an implicit acknowledgment that debt buyers cross the line far too often, and tarnish the already questionable reputation of debt collection agencies. Not surprisingly, the debt buying contingent of ACA voiced objection to the proposal. A statement issued by the debt buyers said, in part, “If debt buyers and third-party collection agencies cannot work together, we will be overrun by the debtor advocates and we will all suffer.”
It seems that debt buyers feel compelled to hide behind the skirts of third-party debt collectors so that they don’t get called out for their bad behavior. It never ceases to amaze us that some in the debt collection industry portray themselves as victims, when more often than not, they’re the ones who routinely victimize consumers.
Debt Collector Association Offers Options for Reform
In the wake of a report by the National Association of Attorneys General that listed debt collection as the number one consumer complaint, the debt collection industry association, The Association of Credit and Collection Professionals (ACA) proffered two remedies to combat debt collector abuses.
A press release issued by the organization noted that ACA International’s board voted to “explore the development of a national debt collection dispute resolution program that would seek to resolve complaints consumers have against debt collectors in a timely, cost-effective and unbiased manner.”
The organization is also engaging in “further discussion on and research the concept of creating a national debt collector registry. In theory, the registry would require every individual debt collector as defined by the Fair Debt Collection Practices Act or applicable state law to be registered and pass an examination based on critical job benchmarks. Also, the registry would increase accountability by enabling industry employers to track complaints filed against individual collectors.”
It seems apparent that both moves are preemptive actions designed to head off further debt collection industry regulation by the federal government, namely through the Consumer Financial Protection Agency. Such self-regulatory organizations are a bit like the fox guarding the henhouse.
While a national debt collector registry would be a step in the right direction, we’re leery of a binding dispute resolution program. From our extensive experience in vehicle lemon law complaints, we’ve seen that state-run arbitration boards give auto manufacturers, with their teams of legal experts, an unfair advantage over self-represented consumers. It’s not unreasonable to assume that consumers who have been victimized by debt collection agencies would find themselves in a similar situation. As it stands, the Fair Debt Collection Practices Act provides consumers with remedies, in that debt collectors who violate the FDCPA can be required to pay fines of $1,000 for each violation, and pay the consumer’s attorney fees.
