July 29, 2016

Brown Statement on CFPB Efforts to Rein in Debt Collectors

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – today released the following statement on the Consumer Financial Protection Bureau’s initial outline of proposed rules to rein in debt collectors. In 2015, the CFPB handled more than 85,200 complaints about debt collection, making it the largest source of consumer grievances among the industries the bureau oversees.

“Families who are struggling to make ends meet shouldn’t be harassed to make payments on debts they’ve already paid off or never owed in the first place,” said Brown. “The CFPB’s proposal is an important first step to protecting consumers from predatory debt collectors and making sure this industry operates with clear rules of the road and strong oversight.”

About a third of American adults with a credit report, or 77 million people, have debt in collections, according to the Urban Institute. Nationwide, millions of Americans are haunted by debts they have already paid or discharged yet continue to appear on their credit reports. The CFPB said these so-called “zombie debts” are the leading reason for consumers’ debt collection complaints. Many individuals have also reported to the CFPB that debt collectors frequently harass them, calling at their workplaces and multiples times per week.

Brown has long pushed for strong rules to protect consumers from abusive debt collection practices. In a 2013 letter to CFPB Director Richard Cordray, Brown called on the bureau to examine practices of both creditors and third-party actors in the industry and suggested a number of rules that would reform the debt collection industry. Brown also led a 2013 Senate Banking Committee hearing on the issue. Last year, he sent a letter to the banking regulators urging them to better monitor debt sales to debt collectors and ensure that debt sold to collectors is valid.

Brown is the sponsor of the Consumer Reporting Fairness Act, which would require banks and debt buyers to notify credit reporting agencies when a consumer’s debt has been extinguished through bankruptcy. In Ohio alone, there were more than 40,000 bankruptcies in 2014. The bill would amend bankruptcy law to require creditors to ensure that a debt discharged in bankruptcy shows a zero balance on the consumer’s credit report in an accurate and timely manner. The legislation also would permit consumers to take legal action against creditors that fail to report a discharged debt that is no longer owed.

The CFPB’s proposal would mark the first comprehensive federal rules covering debt collection. It would impact a broad range of industries, including payday and auto lenders, credit cards, mortgages, and cellphone companies. The proposal also would require collection companies to verify debts before contacting consumers, improve the dispute process, and limit the number of times a collector can call or email consumers.