Earlier this year, the Consumer Financial Protection Bureau (CFPB) made changes regarding debt collection. The changes are in line with the CFPB’s agenda to pursue regulatory action and include further measures affecting debt collection practices. |
One of the bulletins issued by the CFPB issued warnings to debt buyers, collectors and creditors regarding promises to consumers that if they pay their debt, they can enhance their credit score. Making assurances that paying that specific debt will have any direct impact on a consumers credit report is considered deceptive.
An example of how this could be deceptive is that some debts are so old that they’re not on the consumer’s credit report. Some debts are never actually reported to a credit-reporting agency. There are many factors that influence a consumer’s credit score. Informing someone that paying a debt will definitely factor in to the improvement of their score is thereby deceptive because the agent has no way of knowing what impact the payment will have.
Debt recovery companies also must also refrain from advising consumers that paying a debt will affect their creditworthiness. For the same reason that informing someone that their credit score will improve, the same goes for creditworthiness – there are varying factors that lead to a consumer’s creditworthiness being restored.
Another bulletin released by the CFPB further backs previous provisions set by the Fair Debt Collection and Practices Act. The CFPB said that debt recovery companies and others attempting to collect debt must not use unfair, deceptive, abusive acts or practices (UDAAPs) in attempts to collect debt.
Debt recovery companies that attempt to collect amounts that are not expressly authorized by law are now considered part of the UDAAPs. Some companies will not post payments on time, which means the consumer is charged a late fee. These fees often go unnoticed and provide the company with an illegal and certainly unethical way to make profits.
Also included in the UDAAP is false representation on the part of the debt recovery company – whether it’s the amount of the debt or who the person is collecting the debt. Some agencies have been caught saying they were part of a law enforcement group. Agencies are also banned from threatening any legal action when that person has no authority to make such threats.
Companies like Omega RMS, llc., have stayed on top of the regulations and go beyond them to ensure that debtors are treated with respect. Reputable debt recovery companies will always act in an ethical and professional manner in an effort to represent their clients in the best light possible.
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