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The Consumer Complaint Database of the Consumer Financial Protection Bureau (CFPB) is a “canary in the coalmine” for problems in the financial marketplace. Launched in 2012, the database lists the thousands of complaints that consumers submit each month to the nation’s chief watchdog for consumers in the financial marketplace, providing a valuable picture in near real-time of problems as they develop, either with specific companies or with the market as a whole.
As might be expected, the effects of the economic dislocation created by the COVID-19 crisis are beginning to show up in the complaints made by consumers to the financial watchdog agency. Since March 1 — around the time the COVID-19 crisis began to affect American lives — consumers have submitted more than 4,000 complaints about issues with debt collection.
COVID-19 is a stressful time, with health concerns, concerns about taking care of loved ones, lost jobs and home stresses. Harassment from debt collectors is one more stress people don’t need during a “pause” in the national economy. Yet, according to the narratives, that’s just what is happening.
For example, on March 19, one consumer described how they received a court summons from a debt collection company: “Late this evening, I was quite shocked when someone came to my door unannounced to serve these papers — especially considering the current [coronavirus] pandemic we are experiencing.” On March 25, a consumer wrote about his or her repeated phone calls from another company: “I have also told them that due to the coronavirus I am out of work. They call all day every two hours and when I ask to speak to a supervisor they hang up on me.”
Some policymakers have begun to take action to protect consumers. States including New York, Maryland and Massachusetts have put limits on debt collection. The U.S. Department of Education and Department of Veterans Affairs have both announced that they will suspend certain debt collection activities. One U.S. Senate bill would even require that, during any national disaster or emergency, “a debt collector shall only communicate in writing in connection with the collection of any debt.” Some consumer advocates have recommended going even further and suspending all debt collection activities, including referrals to debt collectors, sales to debt buyers, and garnishment of wages.[pdf]
State-by-state and agency-by-agency efforts to protect consumers are great, but they will inevitably leave gaps. Enter the CFPB — the agency created with the specific mission of protecting consumers in the financial marketplace. The CFPB has authority to take powerful steps to stop debt collection harassment and abuse. As we covered in our 2018 report, the CFPB penalized some of the biggest debt collection companies in the U.S., including Encore Capital and Portfolio Recovery Associates, for deceptive practices, including making false statements to consumers. And former director Richard Cordray has suggested that the CFPB should respond to the COVID-19 crisis by issuing new guidance and cracking down on any collectors that ignore newly issued forbearance or loan modification policies designed to give consumers a break.
Yet thus far during the crisis, the CFPB has chosen to sit on the sidelines, on both debt collection and other areas of concern to consumers. According to an article in American Banker, the bureau’s “most specific public action to date in response to the coronavirus outbreak” has been relaxing regulations for financial firms, a move that will give the CFPB less, not more, ability to protect consumers.
The need for action is urgent. A Forbes article warns that debt collectors could be readying to jump in and garnish the stimulus checks that will soon be showing up in many of our bank accounts. And The Intercept describes how the lobbying arm of the debt collection industry, the Association of Credit and Collection Professionals, is making a push to ensure they can keep on collecting throughout the crisis.
Consumers right now face unprecedented vulnerability – and they need an unprecedented level of protection, including from the top cop on the financial beat, the CFPB.