June 25, 2020

Senators Warren and Brown Call for Capital One & Major Debt Collectors to Immediately Suspend Lawsuits and Wage Garnishment Practices During the COVID-19 Pandemic

Text of Letter to Capital One (PDF) | Text of Letter to Encore Capital (PDF) | Text of Letter to PRA Group (PDF) | Text of Letter to Alorica Inc. (PDF)

 

Washington, DC - United States Senators Elizabeth Warren (D-Mass.), a member of the Senate Banking Committee, and Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking Committee sent letters to Capital One Financial Corp. and to Encore Capital Group, PRA Group, Alorica Inc., three of the nation's largest debt collectors, following reports of the industry's predatory and aggressive debt collection practices in the midst of the economic collapse caused by the coronavirus disease 2019 (COVID-19) pandemic. 

"Nobody should lose their home, their car, their utilities, or access to basic needs during a global pandemic," wrote the lawmakers. "Filing collection lawsuits and garnishing the wages of consumers already struggling to pay for basic necessities will only exacerbate the economic and public health crisis."

According to a report by ProPublica, Capital One and Encore Capital Group have been collecting on consumer debt through wage garnishment during the pandemic and have filed thousands of suits against customers in anticipation of courts reopening around the country in the coming weeks. Capital One also has a record of aggressive debt collection practices. Following the 2008 financial crisis the bank's debt collection lawsuits eclipsed all other banks "reaching levels never matched by any company before or since," according to ProPublica reporting. In their letter to Capital One's Chairman and CEO Richard Fairbank, the senators also note that "over the last seven years, Capital One has been the subject of close to 4,000 complaints related to credit card debt collection [according to a cursory review of the Consumer Financial Protection Bureau's Consumer Complaint Database] - 228 of which were filed after March 13, 2020, when the United States declared a national emergency."

More than 42 million workers have filed for unemployment benefits in the last 11 weeks, and according to a U.S. Census Bureau survey, almost half of all households in the United States have experienced loss in employment income in the last several weeks, with Black Americans being hit the hardest. Families are increasingly turning to credit cards to afford their basic necessities. A study by the National Multifamily Housing Council found that the "the number of tenants paying rent with a credit card during the first week of April rose 30% compared with the same period in March." 

In their letters, Senators Warren and Brown asked each company a series of questions to better understand each of their debt collection practices. They also urged any company engaged in wage garnishment and aggressive collection lawsuits to suspend these practices immediately. 

Senator Warren is a life-long consumer advocate who has led efforts to protect consumers and rein in abusive corporate behavior since the beginning of the COVID-19 pandemic 

  • In April, she and Senator Brown called for a range of consumer debt protections, including a national prohibition on certain debt collection practices during the pandemic and a halt to all proceedings against debtors during the crisis. 
  • On April 2nd, Senators Warren, Brown and Ron Wyden (D-Ore.) called for Treasury Sec. Mnuchin to protect stimulus payments from being garnished by debt collectors; Warren and Brown then called on the banks directly to end the seizure of stimulus checks. 
  • In late April, Senator Warren also urged the major credit reporting agencies (CRAs)to ensure consumers' credit scores are not affected if they take advantage of relief to which they are entitled under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

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