CFPB Should Modernize FTC Rule Addressing Abusive Creditor Collection Practices
The FTC’s Credit Practices Rule protects consumers from abusive contract provisions that are designed to give the creditor an upper hand in collections and to evade legal protections for the debtor. The rule prohibits confessions of judgment, exemption waivers, irrevocable wage assignments, non-purchase security interests in household goods, pyramiding late charges, and deceptive cosigner practices.
Unfortunately, the credit industry has created a new set of practices in consumer credit relationships that are just as abusive, unfair, and harmful to consumers as those made illegal by the FTC in 1984. As the new Consumer Financial Protection Bureau prepares to take over financial consumer protection from the FTC, it should address the practices of creditors in the 21st century.