The report, titled “Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration,” noted that when it comes to lawsuits some companies engaged in practices that raised concerns about consumer protection. These included filing lawsuits based on insufficient evidence, not notifying consumers about the lawsuits, garnishing funds improperly - such as garnishing Social Security funds - and threatening to sue on debts that had expired.
Meanwhile, concerns related to arbitration include forcing arbitration on customers without providing a choice, potential bias in arbitration proceedings and forcing consumers to pay more for the arbitration process than they would for court proceedings.
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Regarding arbitration, the Commission recommended providing consumers with meaningful choice regarding arbitration and eliminating bias in arbitration forums, including making the process more transparent.
These recommendations do not focus on contact between the debt collector and the consumer. Legislation such as the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act set out how and when debt collectors can contact consumers. Unfortunately for consumers, debt collectors allegedly frequently violate those laws, resulting in consumers filing lawsuits of their own. The good news is that when debt collection companies have violated the law, consumers are able to recover damages.