A study by British industry groups and academics recently set out best practices for debt collectors dealing with so-call vulnerable consumers. InsideARM, a US debt collectors’ trade publication has taken interest and encourages senior management to read it. Among the studies’ key findings were:
- 1 in 4 frontline debt collectors spoke to at least one consumer they “seriously believed” might commit suicide.
- Debt collectors need training concerning addiction and terminal illness – areas they (understandably) find difficult to discuss with consumers.
- Debt collecting businesses need to provide their staff with more support in identifying vulnerable consumers
- Ad hoc approaches to vulnerable consumers – such as temporarily ceasing collection to give the customer “breathing space” are not enough.
Non-profit hospitals get big tax breaks for providing care for patients who can’t afford it. Under new IRS rules these hospitals must take extra steps to inform poor patients they may qualify for financial assistance.
Last month, ProPublica and NPR detailed how one nonprofit hospital in Missouri sued thousands of lower income workers who couldn’t pay their bills, then seized their wages, all while enjoying a big break on its taxes.
Private debt collectors are subject to a variety of laws policing their collection of private debts. The Fair Debt Collection Practice Act (FDCPA) imposes clear and strict requirements on debt collectors – such as preventing them from shaming consumers into payment by publishing the names or calling their parents, preventing them from lying to consumers or threatening them with illegal behavior.
However, FDCPA applies only to consumer transactions and does not cover matters such as tax debts. Boyd v. J.E. Robert Co., 765 F.3d 123 (2d Cir. 2014); Beggs v. Rossi, 145 F.3d 511 (2d Cir. 1998). Federal employees are also specially exempted from the FDCPA. 15 U.S.C. § 1692a(6)(C).
So, what’s left to protect taxpayers?
A proposed Consent Order has been filed in the CFPB’s enforcement action against Frederick J. Hanna Associates. This was the first enforcement action by the CFPB directly against a collection law firm and was the subject of a vigorous defense by Hanna and much comment in the trade press. Hanna lost its motion to dismiss in July 2015, made an unsuccessful motion for an interlocutory appeal and discovery was ordered to proceed.
The case attracted a lot of attention: from the Wall Street Journal to trade publication InsideARM which said that “[t]he case should be front and center for all law firms practicing in this space“. In light of the excitement about the case, the bottom line of the Consent Order is, rather disappointing: Hanna is to pay $3.1 million in penalties to the CFPB and agrees to injunctive relief(all without admitting any of the CFPB’s allegations). There is no relief for consumers targeted by Hanna – that is presumably left to private law suits.