Tag Archives: Government Accountability Office

Inadequate protection from debt collection law

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Carl Levin
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On October 21, the Government Accountability Office (GAO) released a new report on debt collection abuses and the current state of legal consumer protections against those abuses.

The GAO found that current legal protections for consumers facing abuses by the debt collection industry fall short of actually protecting those consumers. Problems such as excessive phone calls and unauthorized fees still exist. In addition, debt buyers often do not have sufficient information about a debt such that they try to collect the wrong amount or try to collect the debt from the wrong person. And enforcement of the existing Federal consumer protection law is lax.

Sen. Carl Levin is citing the GAO report in his call for the creation of a Consumer Financial Protection Agency. He wants such an agency to enforce the laws, modernize consumer protections to bring them up-to-date with current communications technology, and to monitor compliance with existing law.

The Federal law protecting consumers against debt collection abuses, the Fair Debt Collection Practices Act (FDCPA), was made law in 1977. That law prohibits the disclosure that a communication is being made in an attempt to collect a debt, which creates a problem with the use of answering machines, voice mail, email, faxes, mobile phones, and caller ID. If the Federal Trade Commission (FTC) had rulemaking authority, the report states, it would be easier for the law to keep up with technological changes and to regulate the debt collectors.

Also, the FDCPA does not clarify the account information that should be provided when debt buyer purchases a debt, which creates a problem when attempting to verify the debt. The likelihood of a wrongful lawsuit (on the wrong debt or suing the wrong party) increases.

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