“I will hunt you down like a dog”
is what one debt collector allegedly told Minnesota debtor. It’s those types of abuses that legislation sponsored by U.S. Senator Al Franken is trying to combat. Senator Franken talked about the “End Debtor Abuse Act” at a State Capitol press conference. Franken is working with Minnesota State Senator Ron Latz to end debtor abuse at the state and federal level.
Today, U.S. Sen. Al Franken (D-Minn.) announced that he would be introducing legislation to end abusive debt collection practices. The End Debt Collector Abuse Act includes several provisions designed to eliminate predatory practices, including prohibiting debt collectors from seeking arrest warrants to collect on debts and ensuring consumers are better protected themselves against abusive debt collectors. The rate of Minnesotans being jailed for debt is on the rise.
“This bill will protect Minnesota consumers from abusive debt collectors who often exploit the loopholes in the law to make an extra buck,” said Sen. Franken. “Debt collectors often use deceptive and aggressive tactics, sometimes going after debts that have already been paid or even targeting the wrong person. This bill will protect consumers, keep debt collectors honest, and stop the misuse of law enforcement resources for private profit.”
Abusive practices by debt collectors have been detailed extensively in recent news and reports by the Federal Trade Commission (FTC) and GAO. The Star Tribune has written a series of articles on the egregious practices debt collectors have been using in Minnesota. These practices have prompted the FTC and consumer groups to recommend changes to federal law. The End Debt Collector Abuse Act adopts many of these proposals to protect consumers, keep debt collectors honest, and stop the abuse of law enforcement and judicial resources for private profit.
The End Debt Collector Abuse Act does the following to ensure that Minnesotans’ rights are legally protected from the debt collection industry:
· Prohibit debt collectors from seeking arrest warrants to collect on debts.
· Give consumers the information they need to protect themselves from unscrupulous debt collectors.
· Require debt collectors to conduct thorough investigations when consumers dispute the debt.
· Increase penalties on debt collectors who break the law to discourage them from employing bad practices.
· Allow judges to provide injunctive relief to consumers when debt collectors continue to violate their rights as specified under the Fair Debt Collection Practices Act.
The End Debt Collector Abuse Act has been endorsed by Minnesota Attorney General Lori Swanson and the following Minnesota organizations:
· Legal Services Advocacy Project
· Family Partnership
· Minneapolis Urban League
· Minnesota Community Action Partnership
· Jewish Community Action
· Housing Preservation Project
· Lutheran Social Services of MN – Financial Counseling Services
· Catholic Charities’ Office for Social Justice
· Twin Cities Habitat for Humanity
· Downtown Congregations to End Homelessness
· Metropolitan Consortium of Community Developers
The End Debt Collector Abuse Act has been endorsed by the following national organizations:
· National Consumer Law Center
· Center for Responsible Lending
· The Leadership Conference on Civil and Human Rights
· National Association of Consumer Advocates
· National Council of La Raza
· Consumer Action
· Consumers Union
· National Consumers League
Press release from Senator Ron Latz and Representative Joe Mullery:
Latz, Mullery work to curb abuses in the debt collection industry
Responding to a recent Federal Trade Commission report that concluded the nation’s system for handling consumer debt collection is “broken,” State Sen. Ron Latz, DFL-St. Louis Park, and State Rep. Joe Mullery, DFL-Minneapolis, today announced they will introduce a package of debt-collection reforms designed to safeguard Minnesotans.
“Abuses in the debt collection industry have the potential to impact all Minnesotans, even those without outstanding debts,” said Sen. Latz. “We are seeing people hounded by collectors for debts they know nothing about, or precious tax dollars being spent to put people in jail for relatively small debts. It’s clear that the system is broken, and we need to fix it before these problems grow even worse.”
According to Sen. Latz and Rep. Mullery, many of the issues that have arisen in the debt collection industry are the result of the huge proliferation of debt-buying. A debt buyer will purchase consumer debt for a few cents on the dollar, after the creditor is no longer seeking to collect on the debt. Debts are often sold and re-sold numerous times, and by the time a consumer faces a lawsuit demanding payment, they can no longer recognize the original creditor or the amount really owed.
“In the last few years, there has been an explosion of ruthless and often fraudulent collection activities,” said Rep. Mullery. “It has been sparked by the new phenomenon of corporations who buy debt and don’t have to worry about their reputation because they have no customers. Their only purpose is to gouge money out of people.”
“As new more aggressive tactics to collect debt appeared, they spread like wildfire through much of the collection industry. It was like letting children loose in a candy store,” continued Rep. Mullery. “We have to rein them in.”
Now, spurred on by the debt-buying wave, and computer programs that spit out lawsuits as fast as lightning, debt collectors have undertaken new tactics which cause unfair burdens on the public:
· Collectors often go after the wrong person. They may sue the wrong person with a similar name, or the victim of identity theft.
· Collectors often claim the wrong amount is owed because the records the original creditor gave the debt buyer were wrong, interest or fees were improperly charged, payments or settlements weren’t recorded, or the debt is too old to sue on and accurate information is lost.
· Some consumers may ignore the collection action for any number of reasons, including: they don’t owe any debt, they know they don’t owe the new company that claims they are owed money, they can’t afford an attorney, they don’t understand what is happening, or they know the allegations are false.
· Some consumers pay untrue claims just to avoid harassment.
· Collectors often trick debtors into paying long after the time has expired for the collectors to sue on the debt, or they trick debtors into renewing the debt.
· Collectors are turning to public resources — courts and law enforcement — to do their work for them, including arrest and jail.
In response to the growing number of abuses, Rep. Mullery and Sen. Latz are proposing legislation to protect Minnesotans by ensuring that:
· The person pursued by the collector is the actual person who owes the money and the amount claimed is correct and still owed at this time.
· The debtor knows their rights, and isn’t tricked into paying a debt that is so old the creditor can’t sue to collect it, or tricked into creating a new debt.
· The necessary facts are proven to the debtor and the court before any collection can be done through a lawsuit.
· People who are wrongfully pursued by a creditor can recover all their costs from the creditor.
· People aren’t made destitute by a collector attaching their money before they realize what is happening and have a chance to take action to enforce their rights, and
· No one is arrested and jailed because they didn’t understand complicated legal proceedings, or because a collector took improper actions, or for other reasons related to collection of a debt.
Sen. Latz and Rep. Mullery said they have been working with consumer advocates throughout the summer and fall, and have reached out to debt buying companies to work together for solutions to protect consumers.
“I hope that in 2011 we can find the common ground we need to have a common sense law for Minnesota,” Sen. Latz said.
The full FTC report on the debt collection industry can be found here: http://www.ftc.gov/os/2010/07/debtcollectionreport.pdf.
For more information, contact Sen. Latz at 651-297-8065 or firstname.lastname@example.org, or Rep. Mullery at 651-296-4262 or email@example.com.