Yesterday, in conjunction with the Consumer Financial Protection Bureau (CFPB) announcement regarding the action against EZCORP, Inc., the Bureau issued a bulletin warning the financial services industry, and in particular lenders and debt collectors, about potentially unlawful conduct during in-person collections. (Editor’s note: See companion story for complete details on the CFPB action against EZCORP.)
The Bulletin can be found here.
In the bulletin the CFPB warns lenders and debt collectors risk engaging in unfair or deceptive acts and practices that violate the Dodd-Frank Act and the Fair Debt Collection Practices Act when going to consumers’ homes and workplaces to collect debt.
The bulletin highlights that in-person collection visits may be harassment and may result in third parties — such as consumers’ co-workers, supervisors, roommates, landlords, or neighbors — learning that the consumer has debts in collection. Revealing such information to third parties could harm the consumer’s reputation and result in negative employment consequences.
The bulletin also highlights that it is illegal for those subject to the law to engage in practices such as contacting consumers to collect on debt at times or places known to be inconvenient to the consumer, except in very limited circumstances.
Perhaps I am naïve. I have been in this industry for over 25 years. I do not know a single ARM entity that makes in-person collection efforts on consumer accounts in the United States. I have heard that years ago the practice was common in some Latin American or European countries, but I had no personal experience with it.