It’s getting harder and harder to help people in trouble, especially when it comes to protecting consumers. Most states have some form of laws generally called Unfair Deceptive Acts and Practices laws, but unfortunately all states are not equal. There are many other states that have better laws than New Jersey when it comes to consumers. California, for example, has several outstanding statutes making it harder for creditors to use unfair means to collect debts.

In contrast, New Jersey’s Consumer Fraud Act is largely a defanged tiger. Creditors know this and take advantage.

The Federal government does provide some statutory protection, at least for the moment.  There is the Fair Debt Collection Practices Act (FDCPA) which applies to third party collectors.  The FDCPA provides for mandatory statutory damages, and even for attorney fees. However, lately, to get around FDCPA counterclaims, original creditors are keeping their collection efforts in-house.

 

In the process of developing a new Federal consumer protection agency, it appears once again that appearances can be deceiving. The new agency, the Consumer Financial Protection Bureau (CFPB), although it is supposed to be independent and headed by Elizabeth Warren, a known consumer advocate, will be under the auspices of the Federal Reserve, which in the past has been slow to act to protect consumers despite laws passed by Congress. Further new Republican proposals want to make the new agency fight for appropriations every year, which in effect could result in a defunding of the agency. I’ve also heard that once the agency is formed, they will eliminate the FDCPA and other laws, so that no private right to sue will exist. Only the agency can act - but with no budget, they won’t go very far.

Likewise, although the Federal Trade Commission has initiated rules to protect consumers, most of them do not give consumers a private right to sue, so all you can do is complain to them and hope that eventually they will act. Enforcement is slow, even without budget cutbacks. The CFPB might suffer a similar fate.

This year, a Republican Congress is also going after mortgage assistance programs such as HAMP. It was already a weak program because it was totally voluntary, which meant that the Department of Housing and Urban Development was given no power to enforce it. If the bank gave false HAMP promises, who cared? In the meantime, homeowners stopped fighting foreclosures and let them go forward, wrongly induced into thinking they will receive a modification - a modification that never comes. Once the house is sold at sheriff’s sale, then they wake up. Too late. The main function of the loan modification programs is to let foreclosures proceed in an orderly fashion - in other words, it’s a way to control inventory flow so prices don’t drop too fast or too low, while the banks wait for a recovery that may never happen. Any help for the consumer is purely accidental.

Creditors are getting sneakier about how they go after debtors too. One or two payday loan companies have set up shop on Indian reservations in an attempt to get around state and federal law. One claims they don’t need a court order to garnish wages because they put a voluntary wage assignment clause in their loan documents.

When Congress passed a credit card reform act, credit card companies immediately jacked up their rates before the new law went into effect.

Remember helpful California? They are now trying to pass a law that would prevent consumer bankruptcy attorneys from doing any debt settlement work. If they get away with it, look for it to spread East.

So what’s the good news? I don’t know, what’s the good news?

 

Marvin Wolf is a Newark consumer and bankruptcy law attorney, federal debt relief agent and a regular contributor to Local Talk. This article provides legal information, news, satire, and individual overstated and under-researched opinion, but not legal advice. Mr. Wolf can be contacted through his office at (973) 735-2740 or his website www.wolfprotect.com.