In a recent comment letter to the CFPB, Linda Lacewell, superintendent of the state Department of Financial Services, called for increased consumer protections in the bureau’s proposed debt collection rule.
As previously reported, the CFPB announced back in August that it extended the comment period on its Notice of Proposed Rulemaking implementing the Fair Debt Collection Practices Act until this past Wednesday, Sept. 18.
The bureau said the proposal is intended to provide consumers with clear protections against harassment by debt collectors and straightforward options to address or dispute debts.
However, Lacewell argued in her letter that the proposed rule does not address the problems that everyday consumers face from debt collection companies.
“The current proposal would severely harm the financial futures and social well-being of millions of consumers in New York state and nationwide,” Lacewell wrote.
Notably, she took issue with the fact that the proposed regulation significantly expands the available methods of communication for debt collectors without limiting the quantity of those communications; permits debt collectors to use such new communication methods without seeking the consumer’s consent; and does not require debt collectors to verify in advance that the debt they are attempting to collect belongs to the person the debt collector contacted.
She also noted in the letter that of the approximate 81,500 complaints about debt collection in 2018, roughly 13% of complaints were about communication tactics, with many of them about phone communications, while 40% of all complaints, or approximately 32,600 complaints, referenced attempts to collect debt not owed.
She suggested the agency could require debt collectors to obtain verification of the debt or a copy of the judgment and review it before reaching out to consumers.
Lacewell explained that another part of the proposal could be used by debt collectors to continue “harassing” consumers, just in a different way. She noted that debt collectors would be allowed to contact consumers through email, text or social media without a limit on the number of attempts.
“While the FDCPA should be updated for new methods of communication not available in 1977, it should do so in a way that accounts for risks that new technologies entail,” Lacewell wrote. “For example, the proposal would allow sending required documents via hyperlink, thus blessing and normalizing a delivery method frequently used by scammers and hackers.”