This morning, Allison posted this informative piece on the FTC's new report on the debt buying industry. The Consumerist has done a nice overview of the report, explaining in some detail what it sees as the report's eight key takeaways: (1) Debt-Buyers Only Pay About $.04 Per Dollar On The Accounts They Buy; (2) Debt-Buyers Have Information That Alleged Debtors Might Need, But Tend Not To Share It; (3) Debt-Buyers Aren’t Being Told If Debt Has Been Challenged; (4) Debt-Sellers Rarely Provide Supporting Documents; (5) Sellers Make No Guarantees About The Accuracy Of The Info & Documents Provided; (6) No Guarantee On The Availability Of Documents [Showing the Legitimacy of the Debt]; (7) Debt-Buyers May Need To Spend Extra Money To Get Those Documents; and (last but certainly not least) (8) At least 500,000 Disputed Debts Go Unverified Each Year.
Consumers Union has responded to the report with specific ideas for reform of the industry. They are --
• End robo-signing and attempts to collect without proper documentation: Debt collectors should be required to document that they are attempting to collect from the right person, for the right amount, and on a debt that they can lawfully recover.
• Establish a sell by date for all debt: It should be illegal to sell or attempt to collect debt that is more than seven years old, which is too old to be reported on a credit report under the federal Fair Credit Reporting Act.
• Require debt collectors to provide more information to consumers: All debt collectors, including debt buyers, should be required to identify the name of the original creditor and to provide an itemized record of the total principal, interest, fees, and other charges that have been added to the debt, and to provide detailed records about the debt to consumers within five days after the first notification.
• Require debt collectors to submit more detailed information when filing suit: Debt collectors should be required to submit basic information about the debt, including the name of the original creditor and an itemized record of the total principal, interest, fees, and other charges that have been added to the debt, when they sue over a debt, so that the consumer can see if it is his or her debt, and in the right amount.
• Increase oversight to ensure consumers are properly notified of lawsuits: Courts should be required to provide supplemental notice of all filed debt collection lawsuits to debtors and default judgments should be prohibited if the notice is returned to the court as undeliverable.