Chris Koster calls some debt collection ‘unfair and deceptive’
Missouri’s attorney general proposed reforms Thursday to curb what he calls abusive debt collection practices that target low-income and minority residents, a concern raised by the commission that examined racial disparities following the 2014 fatal shooting of Michael Brown in Ferguson.
Attorney General Chris Koster said he sent a letter to the Missouri Supreme Court’s Commission on Racial and Ethnic Fairness requesting changes in court rules that he said would help prevent unscrupulous collection practices.
“These proposed regulations would expose these types of debt-collection practices for what they truly are — unfair and deceptive,” Koster said at a news conference in St. Louis. “The problem needs to be fixed.”
The treatment of black and other minority residents in the St. Louis region has come under scrutiny in the 16 months since the fatal shooting of Brown, 18, who was black and unarmed. The white officer who shot Brown, Darren Wilson, was not charged, but the shooting led to an examination of the way the area’s courts, police and others interact with minority residents.
The Ferguson Commission, convened by Gov. Jay Nixon to address those concerns, cited overzealous debt collection as among the issues that needed to be addressed.
Koster said Missouri and the rest of the nation has seen a dramatic trend over the last decade in debt-collection litigation. He said companies purchase debt that has been deemed uncollectable by a creditor — paying an average of 3.1 cents on the dollar — then take a “no-holds-barred” approach to collecting that debt, including lawsuits.
Legal Services of Eastern Missouri, which provides legal aid for the poor, sees countless cases of debt collectors pursuing minorities and the poor, often for collections that are beyond the statute of limitations and for debts they have no right to collect, executive director Dan Glazier said.
“We see firsthand that our clients have been trapped in a cycle of poverty because of abusive debt collection practices designed to maximize debt collectors’ profits and to put vulnerable, impoverished individuals in a worse circumstance,” Glazier said.
Koster said his office received 1,217 complaints about debt collection issues last year alone.
He wants the court commission, which was established in October, to require debt collectors to prove at the outset of litigation their right to pursue the debt. He wants to stop the practice of collectors repeatedly asking consumers to appear in court, since frequent court dates can be costly and make it difficult to maintain a job. And, he wants tougher guidelines on what creditors can recover for attorneys’ fees.
Koster, a Democrat, is running for governor in 2016. Asked why he was proposing the changes now after seven years as attorney general, he said, “I think the experiences of the last year have changed all of our attitudes and understanding and is putting the pressure on all of us to step up and do better.”