Debt has transformed our society. It can be a useful financial tool, or an anchor around your neck. It seeps into every aspect of our life and can be complicated. Easy credit, the desire to keep up with the latest in consumer goods, or the habit of living beyond one’s means can certainly be to blame. However, it is not always a case of overspending. Medical emergencies, the loss of employment, or any unexpected change in income or expenses can cause financial distress. Inevitably, when bills go unpaid, debt collectors come calling. When they do, you should know what is considered acceptable collection conduct.
Over the past decade, complaints to the Better Business Bureau (BBB) about the debt collection industry have risen by 58%. According to the Federal Trade Commission (FTC) debt collectors are one of the single most-complained-about industries. While the industry has done an admirable job in establishing a code of conduct and encouraging compliance with acceptable practices, those efforts are only as good as the intent of the collector to follow the rules. As is evident by a number of recent FTC court cases, some debt collectors blatantly ignore the laws.
In one case, working out of offices on the east coast, a consortium of rogue collectors threatened consumers that if they did not pay, their bank accounts would be closed, their wages garnished, they would face felony fraud charges, would have to appear in court thousands of miles away from their home, or would be arrested at their workplace. The FTC case showed that many consumers ended up paying the collector for debts they did not owe because they were fearful of the threats and wanted the harassment to stop. As it turns out the collectors often tried to collect on debts that were not even real. Such substandard marketplace practices are not news to the BBB as the various collectors associated with the scheme had F ratings with the BBB. Recently, scammers have latched on to debt collection as a means to separate consumers from their money. Con artists are now posing as police officers, or members of the Sheriff’s Office to collect on fake debts, tickets and fines.
The primary consumer protection law related to debt is the Fair Debt Collection Practices Act. The act prohibits deceptive, unfair and abusive collection practices. The Act does not allow collectors to use obscene or profane language, threats of violence, harassment, misrepresentation of a consumer’s rights, or disclosure of personal affairs to third parties. Reforms to consumer protection laws are currently being explored by the Consumer Financial Protection Bureau in an effort to modernize the legal framework surrounding debt collection.
In the meantime, the BBB continues to remind consumers of their rights. Collectors cannot:
The BBB also reminds consumers that collectors, when asked, are required to provide written documentation that substantiates the debt.
While consumers should accept responsibility for their debt and use credit wisely, they should never accept harsh or abusive behavior.