If you have a complaint against a collection agency, we recommend you file it with the Consumer Financial Protection Bureau.
Debt collection complaints are on the rise, and the Fair Debt Collection Practices Act offers vital debt collection help for thousands of consumers struggling to pay their bills. While most debt collectors simply have a job to do, and are trying to get by just like everyone else, there are some bad apples in this particular barrel. Some debt collectors trying to boost their commissions or bonuses go so far in their efforts as to run afoul of the federal Fair Debt Collection Practices Act.
There has been a sharp increase in the number of debt collection complaints filed by consumers in recent years, with over 78,000 debt collection complaints being filed in 2008, or 18.9% of all complaints received by the Federal Trade Commission. Clearly, the zeal of some debt collectors, combined with the economic woes faced by many consumers at present, is fueling the fire.
Every year, the FTC presents a report to Congress summarizing debt collection complaints. Following is a list of the most common complaints received by the FTC in regards to the debt collection industry in 2008.
1. DEMANDING A LARGER PAYMENT THAN LEGALLY PERMISSABLE
One consumer contacted us after a debt he owed doubled in a single year! The FDCPA bars debt collectors from trying to collect more than the amount of the original debt, except where allowed under state law. Essentially, this means that debt collectors are not permitted to add fees or interest to the amount of a debt unless those charges are allowed by state law. They are also not allowed to misrepresent the amount of a debt in the effort to collect more money from the consumer than is actually owed. Additionally, the FDCPA prohibits debt collectors from pursuing a debt which is no longer owed, by the consumer or one which has been discharged through a bankruptcy proceeding.
There were 25,644 consumer complaints stemming from this type of conduct on the part of debt collectors in 2008.
Consumers should keep in mind that they have the right to demand that debt collectors provide written validation of any debt which they are pursuing. You must make this demand within 30 days of being contacted by the debt collector, so don’t delay in sending this request (which should be done in writing and sent by certified mail with a return receipt request).
The provisions of the FDCPA protect consumers from harassment by debt collectors, including repeated or incessant calls, threats or abusive language including profanity, or racially insensitive terms when attempting to collect a debt.
In 2008, there were 27,382 debt collection complaints filed by consumers relating to harassment, of which 10,610 were in regards to abusive or obscene language being used by debt collectors in their communications. There were also a large number of complaints about debt collection calls made before 8:00 am or after 9:0 pm, which are prohibited under the FDCPA.
Consumers should keep a written record of every call they receive from debt collectors. You’ll find a Collector Contact Worksheet on this site which you can download and use for this purpose. If you decide to take legal action against a debt collector, keeping these records is very important.
3. VERBAL THREATS
One of my friends was eight months pregnant when she was told she would spend the weekend in jail if she didn’t pay her debt. Fortunately, we don’t have debtors prison in America, and there are few circumstances where you can go to jail for failing to pay your bills.
A debt collector is not allowed to make threats to take any action which is beyond their legal authority to take. Nor are they allowed to threaten to take action they do not intend to take. In order to garnish wages or seize property in the effort to satisfy a debt, for example, a debt collector usually must first file a lawsuit and receive a judgment in their favor. Debt collectors also may not make threats to the effect that debtors will be imprisoned or lose their jobs if they fail to pay a debt. In some cases, even a threat to report the consumer to a credit bureau may be impermissible under law.
There were 11,787 debt collection complaints filed by consumers in 2008 relating to this type of conduct by debt collectors.
4. CALLING A CONSUMER AT THEIR PLACE OF EMPLOYMENT
One consumer told us that a debt collector kept calling her at work, even after she told them to stop. But debt collectors are barred from calling consumers in the workplace if the collector has been informed or otherwise has reason to believe that the employer does not allow this. And even if they do call debtors at work, collectors cannot reveal to coworkers that they are calling to collect a debt. This has historically been a common complaint received by the FTC and 2008 was no exception; 8,092 were filed about unwanted calls by debt collectors to consumer’s places of employment.
Debt collectors must immediately cease calling you at work once you have told them to do so. You should send a written demand to the debt collector as well and if they persist in this behavior, contact a consumer law attorney to discuss what legal actions may be appropriate.
5. DISCUSSING A DEBT WITH THIRD PARTIES
While debt collectors are permitted to call third parties under the provisions of the FDCPA, they may do so only in the effort to find your contact information and only if they do not already possess this information. Otherwise, this practice violates the law; and discussing your dent with anyone other than yourself, your attorney, your spouse and any co-signers to the debt is illegal.
There were 6,949 debt collection complaints of this type of illegal behavior by debt collectors in 2008. This is a particularly serious breach of the FDCPA, since this can place a consumer’s professional and personal life in jeopardy.
5. FAILURE TO PROVIDE A WRITTEN VERIFICATION OF DISPUTED DEBT
Within 30 days of initial contact from a debt collector, you may demand a written verification of the debt they are trying to collect. You may dispute this debt in writing, at which they must cease collection activities until you have been provided with written verification of the debt.
In many cases, debt collectors ignored this legal requirement entirely, with 6,340 consumer complaints being filed with the FTC in regards to this conduct.
6. CONTINUING TO CONTACT A CONSUMER AFTER RECEIVING NOTICE TO CEASE CONTACT
Consumers have the right to demand that a debt collector cease contacting you. They are required by law to comply with this request unless they are filing suit against you, in which case they are permitted (and required) to provide you with written notification of this.
The FTC received 4,992 debt collection complaints in 2008 about collectors ignoring this demand from consumers.
Be careful, though. Sending a cease communication letter is not always the right approach. If you do that, you may leave them with no choice than to sue you for the debt.