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Debt Collectors Face Lawsuit from U.S. Government
In a continued effort to provide consumers with a fair way to borrow money, the Consumer Financial Protection Bureau (CFPB) has issued lawsuits against several debt collectors, claiming they've used unfair practices to leverage money out of consumers who aren't actually in debt. This lawsuit could require other debt collections merchants to change their business model completely in order to avoid future legal action.
Why the CFPB is Suing Debt CollectorsThe CFPB has established a number of provisions to counteract predatory lending and zombie debt collections, such as the Consumer Financial Protection Act and the Fair Debt Collection Practice Act. According to the Daily Report Online, the CFPB is targeting a dozen debt collectors who seem to have violated these acts in various lawsuits. Tactics such as harassment of consumers, deception, and threats were described by the CFPB as violations of the above legislation. In some cases, individual debt collectors even managed to collect debt from consumers who didn't even owe money in the first place.
What This Means for the Debt Collection IndustryThe legal action taken by the CFPB really only affects merchants who break the law and try to illegally take money from consumers. This most recent story affirms that the CFPB actively monitors the illegal, predatory tactics taken by some debt collection merchants. Any merchant who hasn't been sued yet might see a similar reaction by the CFPB in the future. This latest action by the federal government is just another step in the changing landscape of small-time loans and debt collection agencies. Merchants will need to find a way to adjust their business model and comply fully with the law.
Debt Collection Merchant AccountsECS World helps debt collectors find high-quality payment processing solutions for their business. While we are not afraid to work with high risk businesses, we only work with merchants who operate within the boundaries of the law and provide a fully legal product or service. If you run a debt collection company, and are in need of debt collection merchant accounts, simply get in touch with one of our representatives today by calling 1-800-318-2713.
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