Consumer Financial Protection Bureau to Supervise Debt Collection Firms

The Consumer Financial Protection Bureau created new rules in order to supervise large debt collection firms. Beginning January 2, the government agency will regulate debt collection firms that have over $10 million in annual receipts. The rules ensure that the debt collectors are providing consumers with disclosures and accurate information and not harassing or deceiving consumers in their attempts to collect on a debt.

The Consumer Financial Protection Bureau has authority over three types of debt collection companies – companies that buy debt and collect the proceeds (which may be a portion of what is actually owed), firms that recover the debt owed on behalf of another company (and charge a fee for their service) and lawyers who collect through litigation.

For more information, read the article in the Washington Post. http://www.washingtonpost.com/business/economy/cfpb-issues-rules-for-governing-debt-collectors/2012/10/23/5d53b656-1d2d-11e2-b647-bb1668e64058_story.html

People are losing their jobs as a result of debt collectors.

People are losing their jobs as a result of debt collectors. Debt collectors are calling consumers at their place of work and harassing them.

The New York Better Business Bureau and Attorney General’s office haver received numerous complaints about a debt collector known to harass consumers - Eltman, Eltman and Cooper. Fred Lembeck, a freelance writer, who is also on disability, claims Eltman, Eltman and Cooper began harassing him when he fell behind on his credit card payments. The firm went as far as to freeze his bank account, so that he did not have access to his only form of income, his social security check.

Harassing consumers at work and interfering with your social security payments are not allowed under the Fair Debt Collection Practices Act.

Watch a recent report by New York City Local News Channel CW11 on debt collector harassment. http://www.youtube.com/watch?v=wao6wv1Fqe4

Debt Collectors’ Automated Calls Violate the Telephone Consumer Protection Act

The U.S. Court of Appeals for the Seventh Circuit ruled that if a debt collector’s automated system continues to call a reassigned telephone number without the prior express consent of the new recipient, then the debt collector is liable for statutory damages even if the previous subscriber with that telephone number had consented to the automated calls. The actions of the debt collector were found to violate the Telephone Consumer Protection Act.


In Soppet v. Enhanced Recovery Co., two consumers with overdue bills had consented to receive automated calls on their cell phones, but then changed their phone numbers. As a result, when a debt collector’s automated system tried to contact the consumers at the provided numbers, the calls instead were received by the new subscribers to whom those cell phone numbers had been reassigned. The recipients of the calls then filed a class action against the debt collector.

The Seventh Circuit reasoned that its ruling follows the Telephone Consumer Protection Act, which consistently uses the phrase “called party” to refer to the actual rather than the intended recipient of the call.

The Seventh Circuit’s decision will require debt collectors who use automated systems to ensure that the actual recipients of automated calls have consented to receiving them, and take steps to update their records when telephone numbers have been reassigned to new subscribers.

Debt collector to pay $10 million for abusive debt collection practices

A West Virginia woman was awarded a $10 million settlement against a debt collector. Reliant Financial Associates (RFA) left a message saying that her house was in jeopardy if she didn’t pay the debt. The debt collector threatened her with action against her property and it wasn’t even her debt. She was a victim of mistaken debtor identity.

This type of harassment is more common partially due to debt buyers, a form of debt collectors. They purchase old debts that the original creditors have given up on, and then try to collect the money in order to make a large profit.

The West Virginia woman followed the correct procedure and wrote a cease and desist letter and sent it via certified mail. She received the confirmation showing RFA received the letter and then the calls began. She received several calls when answered, the caller would hang up. The caller ID showed the calls were coming from her local county government. She returned the call and found it went to the sheriff’s department and they informed her that no one was calling her from their office. The caller ID had been manipulated to look like it came from the sheriff’s office, a practice called “spoofing”.

One call she received, the caller began yelling at her using vulgar terms. The verbal assault went on for nearly two minutes before the man hung up. She immediately called 911 stating someone had threatened to assault her. At first, she didn’t correlate the obscene telephone call with the debt collector, until she did some research on the internet and found other women had been subjected to the same abuse.

Last May, the woman sued RFA for harassment and illegal debt collection practices. The RFA’s lawyer failed to appear in court. The judge called RFA’s actions “malicious” and awarded the record $10,860,000 judgment.

RFA is a fictitious name for a company called Global AG, LLC. RFA is just one of the collection companies run by the same people. This is common practice for debt collection agencies to change their names often to make it more difficult to file suits against them.