Hickenlooper, Klobuchar push Biden to crack down on predatory debt collection practices
WASHINGTON, D.C. (KRDO) -- U.S. Senators John Hickenlooper and Amy Klobuchar sent a letter urging the Consumer Financial Protection Bureau (CFPB) to protect consumers from deceptive and illegal debt collection practices. The letter takes specific issue with abusive tactics in the telemarketing of debt relief services:
“These predatory practices disproportionately affect already vulnerable consumers, worsening their financial and credit situation. By intensifying its enforcement efforts, the CFPB can effectively address these uncertainties, thus safeguarding both consumers and businesses…”
Quote from Senators' letter to Biden
When a consumer defaults on a debt, the lender will often hire a third-party debt collector to recoup the loss. However, debt collectors will sometimes use illegal “quick fix” credit repair schemes that promise unrealistic credit score improvements or require consumers to pay fees before they can pay off their debt. These abusive schemes target vulnerable consumers, including students and economically disadvantaged Americans, worsening their financial situation.
In their letter, the senators urge the bureau to strengthen enforcement of the Federal Trade Commission’s Telemarketing Sales Rule (TSR), which makes it illegal to collect advanced fees from people who sign up for debt collection services. The senators note that bad actors have continued to violate the TSR even after recent lawsuits cracking down on the practice. The senators argue that the CFPB must double down on its efforts to enforce the prohibition.
Full text of the letter is available here.
