Debt

Cracking Down on Abusive Debt Collectors

vickielrock

The Consumer Financial Protection Bureau must stop this national crisis.
— by

LeeAnn Hall

Have you ever picked up your phone to find an aggressive voice on the other end demanding payments on a debt you know nothing about? You’re far from alone.

Once you’re in the sights of a debt collector, the impact on your life can be devastating: Your wages can be garnished and your credit ruined. You might lose your driver’s license, or even your job.

And it could happen over a debt you don’t even owe.

In a recent analysis of 75,000 complaints about debt collection practices submitted to the Consumer Financial Protection Bureau (CFPB) — just a sample of the total number — this was the most common complaint by far. Over 40 percent of people being harassed by collectors said they didn’t owe the debt in the first place.

Other complaints charged that the collectors made false statements or threats to coerce people to pay.

Man_speaking_mobile_phone_debt_collectors
Wikipedia

The government created the Consumer Financial Protection Bureau, as part of the Dodd-Frank financial reform to address abusive financial practices after the 2008 financial crash and while the Congress was still in Democratic hands.  Since Republicans have taken over both Houses, they’ve tried to hobble or repealThis year, the bureau is considering strengthening rules to protect consumers from deceptive and aggressive collection practices.

Abusive collection tactics impact people with all kinds of debt — including credit card debt, medical debt, payday loans, student loans, mortgages, and automobile loans. Collectors often strike when people are most vulnerable, such as when they’re recovering from illness or desperately seeking work. They aggressively target the poor, immigrants, and people of color.

About 77 million people — or 35 percent of adults in the United States with a credit file — have a report of debt in collections. That alone makes a compelling case for the bureau to crack down on abusive tactics.

When my organization, the Alliance for a Just Society, analyzed the complaints for our new report — Unfair, Deceptive, & Abusive: Debt Collectors Profit from Aggressive Tactics — we tallied the complaints in the database and built a list of the 15 companies with the most complaints.

The list is topped by heavy-hitting debt buyers like Encore Capital Group and PRA Group, whose business models hinge on buying portfolios of consumer debts for pennies on the dollar and then wringing payments out of alleged debtors. Both of these companies more than doubled their profits from 2010 to 2014.

Major student loan servicer Navient (formerly Sallie Mae) also makes the top 15 list for complaints about its debt collection tactics.

But it’s particularly worth noting that six out of the top 15 offenders on this list are original creditors, not third-party collectors. They include Citibank, JPMorgan Chase, Capital One, Wells Fargo, Bank of America, and Synchrony Financial (the largest issuer of private label credit cards).

This is important, because the primary protection most consumers have against unfair collection tactics — the federal Fair Debt Collection Practices Act — applies only to third parties, not original creditors. This is a troubling double standard.

The new rules must also to apply to the original creditors — including payday lenders, credit card companies, and big banks — along with third-party collectors and debt buyers.

The rules should limit phone calls to prevent harassment and require collectors to have complete documentation before attempting to collect. The rules should prohibit selling, purchasing, and attempting to collect old, paid, or expired “zombie” debt.

Finally, the bureau should toughen the penalties for collectors breaking the rules.

Living with debt isn’t a personal failing — it’s a national crisis. The bureau needs to stand up for everyday people and put a stop to abusive collection tactics.

LeeAnn Hall is the executive director of Alliance for a Just Society, a national research, policy, and organizing network working for economic, racial, and social justice. AllianceForAJustSociety.org Distributed by OtherWords.org. 

If You’re Going to Rant About the Federal Budget—Tell the Truth

vickielrock

Before you start believing the drivel Republicans are spreading about rising deficits, maybe you need to understand the difference between two terms that are frequently used in error: overall National Debt and the Federal Budget Deficit.  Republicans are counting on 93% of the population apparently not understanding that there’s a difference between the two.

Let me start by explaining both terms from a family budget perspective.  If you have a monthly income of $1000.oo, but you have bills and expenses of $1,200.00, you have a $200.00 “budget deficit” that most folks will have to carry on a credit card, hoping to pay it off during the upcoming month.  If on the other hand, you continue having $200.00 deficits for months on end, the deficit remains at $200, but your household debt begins to rise on that credit card by $200.00 (plus interest) each month. So, in 12 months, the budget deficit is $200, but the household debt is $2400 (plus interest).

Well, the Federal Budget Deficit and the National Debt work the same way, but the Federal Budget Deficit is NOT rising as the Republicans would have you believe.  It’s dropping dramatically.  Yes, the National Debt is still rising because we still have a budgetary deficit, but the Federal Budget Deficits have dropped dramatically since the end of the 2009 fiscal year:

Now that you better understand the difference between the two terms, the next time your crazy wingnut friend tries to echo the Republican mantra that deficits are rising, please take the time to educate them.  If all else fails, please tell them they deserve a lengthy time-out in some dank corner.

What Makes Our Economy Grow?

NVRDC

Well, it’s certainly NOT what deadbeats Sen. Dean Heller and Rep. Mark Amodei have to offer. Both voted yesterday to let the U.S. default on it’s debts, wreak havoc on the world economy and put the world reserve currency status of the U.S. dollar at risk.  But, despite their NAY votes, the bill passed and the government is once again open to conduct the people’s business, albeit temporarily yet again.  And while yet another committee works on trying to get the GOP to compromise on a workable budget, it’s time that we focus on Immigration Reform and begin to grow our economy.

The Wreckless, Heavy Toll of the Iraq War

HumboldtDems
— Mar 19, 2013 | By ThinkProgress War Room

imageToday is one anniversary that is definitely not cause for celebration. Ten years ago today, President George W. Bush made the fateful decision to launch the unnecessary Iraq War.

The consequences of this decision have been overwhelming. A new report estimates that the Iraq War will end up costing American taxpayers at least $2.2 TRILLION, but perhaps as much as $4 TRILLION with interest since Bush put the war on the national credit card at the same he slashed taxes on the wealthy.

(Incidentally, $4 TRILLION is the total amount of deficit reduction that President Obama is seeking, including about $2 TRILLION in the current round of negotiations in order to replace the sequester and stabilize our long-term debt.)

The bill for the war may be large, but the human cost of the Iraq War is even more staggering. It’s estimated that 200,000 people, civilians and soldiers alike, were killed as a result of the war. A million other Iraqis were displaced by the conflict.

These topline figures are just the beginning. Our ThinkProgress colleagues outline five ways the U.S. is worse off because of the Iraq War:

1. The debt

At the start of the war, the Bush administration predicted that it would cost around $50-60 billion in total. They were wrong by more than a factor of ten, sending the U.S.’ debt soaring, a condition that has yet to be rectified. According to a recent study, the war is set to have cost the U.S $2.2 trillion, though that number may reach up to $4 trillion thanks to interest payments on the loans taken out to finance the conflict. Of that staggering amount, at least $10 billion of it was completely wasted in rebuilding efforts.

2. The physical and psychological strain on U.S. troops.

The soldiers charged with fighting the war were stretched to their limits, put through multiple tours, with increasing length of time overseas as the war stretched on and shrinking downtime in between each. All-told, over 4,000 U.S. troops died during the country’s time in Iraq, with another 31,000 wounded in action. In the aftermath, the cost of providing medical care to veterans has doubled, adding to the difficulties faced by those who served. Up to 35 percent of Iraq War veterans will suffer from PTSD according to a 2009 study, while the suicide rate among veterans has jumped to 22 per day.

3. The forgotten war in Afghanistan.

Even worse, the war in Iraq caused the U.S. to take its eye off the ball in Afghanistan. Rather than following through, the Bush administration allowed the country to stagnate, prompting a Taliban resurgence beginning in 2004. As the West focused almost exclusively on Iraq, Taliban fighters imported tactics seen in Iraq to great effect, keeping the Afghan government weak and U.S.-led NATO forces on their heels. The result: the United States is still attempting to tamp down on Taliban momentum today.

4. The opportunity costs.

Aside from missed opportunities in Afghanistan, the Iraq War-effort was all-consuming, pulling resources from all other areas of U.S. defense policy. Relationships with key allies were allowed to grow stale and U.S. prestige around the world plummeted. Fighting in Iraq was realized to be a diversion from combating al Qaeda, drawing funding that could have gone towards a litany of other efforts to effectively counter terrorism.

5. The strengthening of Iran and al Qaeda.

The power vacuum left after the fall of Saddam and the lack of adequate U.S. forces left room for U.S. adversaries to fill the void. Counter to what some still believe, Al Qaeda had no presence in Iraq prior to 2003. Instead, it was only in the post-Saddam climate that they gained a foothold in the form of Al Qaeda in Iraq. The group continues to carry out attacks against civilians to this day, keeping the Iraqi government on edge.

In the end, it was not the United States that gained the most strategically from invading Iraq, but the Shiite-dominated Islamic Republic of Iran. In removing Saddam Hussein’s predominantly Sunni regime from power, the U.S. opened the door to a greater Iranian influence in the region. That influence has been seen playing out counter to U.S. interests in situations such as allowing Iranian planes bearing weapons for Syria to cross Iraqi airspace.

Given that we know now that the war was launched on false premises and have witnessed what has happened since, you’d think the architects of the war would at least admit they wrong or express some regret. You’d be wrong.

Former Secretary of Defense Donald Rumsfeld took to Twitter today to pat himself on back:

“10 yrs ago began the long, difficult work of liberating 25 mil Iraqis. All who played a role in history deserve our respect & appreciation.”

Richard Perle argued in an opinion piece earlier this week that it was still right to have removed Saddam Hussein, even though he had no Weapons of Mass Destruction. Top war architect Paul Wolfowitz acknowledged that things “spiraled out of control,” but blamed others and argued that things would’ve been different if the war had been prosecuted his way (it was, incidentally).

Astonishingly, the American Enterprise Institute’s Danielle Pletka even went so far this week as to argue that the mess in Iraq is really President Obama’s fault. This view was echoed yesterday by Fouad Ajami, a conservative intellectual close to Wolfowitz and former Secretary of State Condoleezza Rice, who also criticized Obama for ending “an honorable war.”

It appears that the American people are smarter, or at least more honest, than the neocons who led us into perhaps the worst foreign policy blunder in American history. Polls out this week show that a majority of Americans believe the Iraq War was not worth fighting.

Check out our complete timeline of the Iraq War. For more on the true costs of the Iraq War, please see our updated Iraq War Ledger.

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This material [the article above] was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.