You probably know that identity theft is a huge problem nationwide, but did you also know that mistaken identity can be a big headache for consumers as well?
It appears that sloppy work and lazy debt collection practices have led to a huge problem for consumers. According to the U.S. PIRG Education Fund the top reason for the complaints filed with the Consumer Financial Protection Bureau have to do with debt collectors trying to collect debts from the wrong people. Even though debt collection is the newest category in the CFPB’s data base, complaints to the CFPB regarding debt collection have already surpassed complaints against credit card companies and banks.
The CFPB is a government agency that helps consumers find relief from poor-quality debt collection practices. The Report from the U.S. PIRG Education Fund on CFPB stats shows that 25 percent of complaints were about debt collectors trying to collect a debt from the wrong person. Other items from the report showed that Encore Capital Group received the most total complaints nationwide and that companies varied greatly in how frequently they offered relief to complainants and that several companies never provided relief at all.
One glaring example of mistaken identity is Amrit Singh. Mr. Singh is an adjunct community college professor who received a wage garnishment notice based on a $10,000 judgment for a debt he had never heard of. After doing his due diligence Mr. Singh found that the original creditor for the debt was a bank in which he had never done business with and that no evidence of this debt appeared on his credit reports. Although Mr. Singh should prevail in his fight against having his wages garnished for this non-existent debt, he will have to take time off of work and hire an attorney to correct the mistake. While mistakes will always be made, no one should have to deal with something like this.
Because of the increased number of these kinds of mistakes the CFPB is now taking steps to change some of their rules regarding debt collection. One change in particular should help reduce the number of cases of mistaken identity. The change would require debt collectors to “stringently verify that they are collecting accurately-owed debts from the correct consumers”, before they start the collection process.
Another proposed change would clarify that the debt collection law DOES give consumers the right to sue to stop unfair debt collection practices as well as their right to collect multiple penalties for multiple violations.
U.S. service members will also see increased protection under the proposed changes. The new changes would severely limit the contact collection agencies have with their commanders.
The CFPB is working to make their database more user-friendly as well as analyzing the complaints they receive more often. Their goal is to use these complaints to create stronger consumer protections.