The use of illegal harassment techniques to collect debt from consumers is a common practice within the debt collection industry. These techniques are used to scare the uninformed in to making payments in ignorance of their rights under the Fair Debt Collection Practices Act or FDCPA. The Federal Trade Commission receives more complaints about debt collectors, including debt buyers than any other single industry. It appears that the basis of these complaints surround the inaccurate and insufficient information that debt collectors have on the consumers they are attempting to collect from. This has resulted in collectors seeking to recover from the wrong consumer or recover the wrong amounts.
The Fair Debt Collections Practices Act
Approved on September 20, 1977, The Fair Debt Collections Practices Act is a consumer protection amendment that establishes legal rights against abusive debt collection practices identified in the Consumer Protection Act, Title VIII. According to the National Credit Federation, “The purpose of the Act is to eliminate abusive debt collection practices, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt in order to ensure the accuracy of the debt.“
What you should know about debt
According to the Federal Trade commissions study on Debt buying in the United States. “The practice of creditors selling consumer debts on a large scale has its origins in the savings and loans crisis of the late 1980’s and early 1990’s. During this crisis, the Resolution Trust Corporation, the federal entity assigned to sell off failed thrifts, auctioned off nearly 500 billion in unpaid loans that creditors had owned. It was the success of these sales in producing revenue that persuaded other creditors to begin selling debt.”
Two trends moved the selling and purchasing of debt even further forward per CMS.
Trend 1. “Consumers took on increasing amounts of revolving debt, especially credit card debt, as well as other non-revolving personal debts, such as student loans.”
Trend 2. “Most major credit card issuers (most of which are large banks) changed their overall accounts receivable management strategies to incorporate the routine sale of debt to others.”
Most consumers are being contacted by debt buyers. This is one of the reasons that consumers are subject to these aggressive collection techniques, many of which in violation of the FDCPA. According to FTC’S study on debt collection practices, debt buyers typically received the information required for validation notices from the sellers of debt, but did not provide that information to the consumer that they are attempting to collect from.
According to the Federal Trade Commission, “This information if disclosed to the consumer, might help consumers determine whether they are the correct debtor and whether the amount of the debt is correct. This information included the name of the original creditor, the original creditors account number and the debtors social security number, the date of last payment, and the date of last charge off.” In the FTC’s research, debt buyers and collectors do not include this information in their validation notices.
The evidence seems to show that the debt collection industry is being purposely deceptive. They do not want the consumer to know or understand the debt collection process because it may keep them from closing debt contracts on consumers. The debt collection industry appears to be unconcerned about the fact that the debt may be incorrect, beyond the statute of limitations or that it does not belong to the person that they are attempting to collect from.
The problem with the debt collection industry is we are consistently not seeing fact specific inquiries being completed. This has been the reason that the “FTC has brought more than 80 law enforcement actions against this industry in the last 30 years.” The most egregious violator of the FDCPA has been West Asset Management from Omaha, Nebraska, forced to pay a 2.8 million penalty settlement for its use of belligerent collection tactics. The largest the FTC has collected within the industry.
According to the FTC’s complaint, “debt collectors working for West Asset Management violated the FDCPA by repeatedly contact consumers on a daily basis, regularly calling wrong numbers, and regularly subjecting consumers to rude and abusive treatment”. “West Asset Management was also accused of withdrawing funds from consumers bank accounts, and charging their credit cards without authorization”. “West Asset Management also made false threats to consumers, claiming they would sued or arrested, or have their property seized for non-payment of debt”. “West Asset management whose website describes it as one of the nations largest account receivables management companies, employs 1,500 agents in 13 states.”
The violations that West Asset management was accused of and penalized for is just a small example of what consumers must deal with on a daily basis in this country. Easy consumer credit, the monetization of debt and downward economic trends have created a toxic environment for consumers who may need more than a hostile debt collector to solve their financial issues.
Don’t pay debt collectors you have not verified
This is critical! You should not pay a debt that you have not validated. It does not matter if you know that you are responsible for the debt. Go through the validation process with the debt collector! This is for your own protection. The validation process must be done in writing and should be sent by certified return receipt mail. During the validation process, you can no longer be contacted concerning that debt. By law they have 30 days to validate and verify the debt and to get back to you. If they do not contact you concerning the validation of the debt, then you can ask them to cease all collection activity and remove any negative activity they placed in your credit file.
Validation Process
According to the Fair Debt collection Practices Act, the first communication received from a debt collector must inform the consumer of his/her right of verification of the debt if made within 30 days. The debt collector cannot take any further action until the debt is verified.
Responding back to you completes the verification process.
1. Write and state that you want to dispute the debt. No special language is needed or required. No special delivery methods are required to delivery the debt validation letter. However, for your own record keeping. You should send it return receipt- registered mail.
2. By law the FDCPA states that phone collectors are required within five days of first contact to send you in writing a notice of your right to dispute. That is the first thing you should ask for when contacted by a debt collector on the telephone.
Establish a paper trail
Establishing a paper trail helps identify the process of if and when debt collectors are in violation of the Fair Debt collection Practices Act. You will need to record and take notes on every telephone contact made by the debt collector(s) to you. This is something that many people do not enjoy doing because when they are overwhelmed by debt collectors, they may seek to practice avoidance behavior such as not opening debt collection letters, or answering the phone. This is the worse thing that you can do, the problem will not go away until you turn and face it.