ABSTRACT
The 2008 financial crisis and the Covid-19 pandemic have generated extremely high levels of consumer credit debt. The resulting consumer credit defaults have caused high ratios of non-performing loans (NPLs), leading, in turn, to a spike in informal debt collection practices (IDCPs). IDCPs often become abusive, harming both consumers and the economy by (a) threatening consumers’ physical, psychological, and economic wellbeing, (b) exposing law-abiding debt collectors to unfair competition, (c) undermining the financial system and the economy, and (d) resorting, in some cases, to criminal activity.
Despite the serious harms of abusive IDCPs, they remain largely unregulated in the European Union (E.U.), and efforts to regulate them have stalled or proved ineffective. This situation has changed with the recent adoption of the Directive on Credit Servicers and Debt Purchasers (CSD) in November 2021. The CSD enables banks to deal more efficiently with NPLs, mainly by selling the credit to third parties or outsourcing loan servicing to a specialized debt collector. Most importantly, it harmonizes the rules by which credit servicers must abide to operate across borders within the EU and enables Member States to tackle the issue of abusive informal debt collection.
The Introduction serves first as a theoretical stepping-stone for the monograph by presenting the background of the CSD’s adoption and introducing the topic and terminology used in the book. Subsequently, it analyzes the common themes identified by the country reports: the scope of informal debt-collection laws and the use of the Unfair Commercial Practices Directive (UCPD) in tackling abusive debt collection; license and authorization systems; the most common informal abusive debt-collection practices detected; and enforcement and institutional approaches. Finally, it provides the reader with an overview of the book’s chapters and conclusions.
