It’s not a business that would be attractive to a lot of people: Buy debt, credit card debt, for example, from companies that have given up trying to collect it, then try to collect it. The profit comes in that the buyer purchases the debt for pennies on the dollar. A collection can mean a big margin.
In North Carolina and elsewhere, some of those debt buyers got aggressive and deceptive in their collection techniques, including filing lawsuits that could keep consumers in court forever.
In response to such abuses, the North Carolina General Assembly in 2009 passed a consumer protection law that held the debt collectors to reasonable standards of behavior. For example, as of now those collectors have to present detailed information about the delinquent debt they’re trying to collect, including when and where it originated and the amount of fees and interest that were agreed upon by the consumer. The disclosure requirement and other consumer protections came in response to a surge in lawsuits from debt collectors targeting people who didn’t owe a debt or had resoved it.
Now a peculiar bill proposed by Sen. Mike Lee, R-New Hanover would do away with some of standards for collectors, making it easier for them to push ahead with suits. The collectors wouldn’t need to have that detailed information, for example. This seems to be just part of a pattern of anti-consumer attitudes among GOP legislators. Given the choice between helping consumers, in this case by simply leaving the law alone, they opt for sticking it to the average citizen.
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Current rules work
Kevin Anderson, in charge of the consumer protection division of the state Attorney General’s Office, supported letting the 2009 law stand, and he made his case better than any legislator did for the bill. Anderson said the 2009 law had prevented abuses, and since his office would be the first call many consumers who had been abused would make, he should know. Anderson cited some of the abuses: consumers facing lawsuits from companies even though they’d paid their bills in full or couldn’t figure, from the evidence presented against them, whether their bills had been paid in full or in part or, as sometimes happens, had been disputed successfully.
The collectors, Anderson said, seemed to file suits “predicated on the notion that consumers just won’t show up and contest the suits,” even if the debt collector didn’t have evidence supporting the legitimacy of the debt. Why is there any effort to roll back this basic consumer protection? Whether the current proposal passes into law or is delayed or modified, it’s still a sign that a special interest group has found favor with some lawmakers.)
Ellen Harnick of the Center for Responsible Lending, which backs consumer protections, said it would cost debt buyers “a little more” to get the documentation the current law requires. She recalled that the current law was “passed by a unanimous vote in the Senate because, on a bipartisan basis, people were troubled on behalf of taxpayers about what was happening in the courts.”
Frankly, given that a goodly number of people experience the embarrassment of a late bill or even a minor problem with debt, it’s astonishing that the Republicans in the General Assembly, in this case starting in the Senate, would carry their anti-consumer agenda this far. And GOP members know that many of their constituents are people of modest means who can’t go hire a lawyer to fight a suit filed for intimidation purposes by a debt collector.
The protections now in place are good ones. They help average people. They don’t change the obligation to pay true debts, or provide free passes away from legal action.
The rules simply require debt collectors to prove their demands are legitimate. That’s a fair standard and it should stay.