Former Ombudsman Maya Manolova sharply criticized the proposals to expand the powers of private enforcement agents (PEAs), which, according to her, would harm citizens and would facilitate the collection of disputed and past-due debts.
“The private enforcement agents have long been trying to push through these bills that would expand their powers. I had cut off their efforts while I was the Ombudsman, and I am categorically against it now, as a civil defender“, Manolova said in the program "Face to Face" on BTV.
According to her, private enforcement agents currently have the right to collect debts that have already gone through a court procedure and have a writ of execution. However, the new proposals foresee that they will also be able to collect so-called voluntary debts to public service providers. “This means that millions of citizens' debts to water and sewerage companies, district heating companies, mobile operators and fast loan companies will be collected without going through court, through private bailiffs“, she said.
According to Manolova, such a change would be beneficial for private enforcement agencies, but dangerous for consumers. “This is a wonderful idea for private enforcement agencies, but it is a huge problem for citizens. The fact is that a huge part of these debts are repaid by statute of limitations“, she emphasized.
Manolova claims that in practice debtors often do not receive information about their rights. “There is not a single case in which a private enforcement agency has told the debtor: ‘Excuse me, you can make an objection to repayment by statute of limitations here.’ They just collect them“, she said. According to her, there is no reason to believe that, if their powers are expanded, private enforcement agents will actively start notifying people about their options to dispute old or non-existent debts. Manolova also criticized the current ombudsman for supporting the idea that some of the small debts to public service providers must necessarily go through a private enforcement agent. “It is absolutely disturbing to me that the ombudsman, who is supposed to protect citizens and consumers, is pushing the idea that all small debts to public service providers must go through a private enforcement agent“, she said.
According to her, the solution is different - service providers should first be obliged to notify their clients themselves and seek voluntary settlement of debts. “They should be obliged through legislative changes to first proceed with voluntary collection of debts“, Manolova pointed out. She gave an example of practices of mobile operators and collection companies, where minimal debts turn into significant amounts. “Last week, a saga ended with a woman, where a debt of 5 leva had turned into 1,205 leva. Moreover, the debt was from 2014“, said Manolova.
According to her, the sale of old debts between creditors and collection companies is often carried out at symbolic prices. “These sales from a public service provider to a collector usually occur at around 5 to 10 percent of the value of the debt“, she said. Manolova recalled that her team has prepared and submitted to several parliaments a draft law on collection companies. One of the proposals is that the debtor should have the right to be the first to buy out his own debt under the same conditions under which it is sold to a collector. “After the creditor has decided to sell this obligation at 5 percent of its value, first offer it to the debtor“, she said.
The former ombudsman also commented on the initiative “Basket with Care“, aimed at limiting the prices of food products. “This is a very good initiative, as long as it is really implemented, because at the moment ‘Basket with Care’ is rather virtual. Rather, it is a promise from the chains that has not yet happened“, said Manolova. She said that during an inspection in one of the large retail chains she found only about 30 products included in the initiative, out of a total of several thousand items.
“Thirty items against the background of over 3,000 products is really dust in people's eyes“, she said. According to Manolova, the real mechanism for limiting excessive markups will be the implementation of the Consumer Protection Act and the Competition Protection Act. “Announcing the fair price together with the wholesale price and the selling price will lead to a reputational disaster for those chains that sell with a 100 and 120 percent markup“, she said. In conclusion, Manolova stressed that the state must protect citizens from abuses by both collection companies and private enforcement agents.
“The Ombudsman must protect citizens, not private enforcement agents“, she said.