Schumer Will Investigate Posthumous Debt Collection

WASHINGTON — A senior senator is asking the Federal Trade Commission to investigate reported instances of debt collection firms asking people to pay their dead relatives' credit card bills or other debts.

Sen. Charles Schumer, D-N.Y., a member of the Senate Banking Committee, met Tuesday with the new chairman of the FTC, Jon Leibowitz, and requested that the agency look into a practice he said appears to violate the law.

"These companies call surviving relatives, often shortly after the death of a loved one, to coax or cajole them into making payments on the deceased relative's credit card," Schumer said in a letter sent to Leibowitz on Wednesday. "To say the least, this practice is distasteful and unethical. Moreover, this practice may very well violate the Fair Debt Collection Practices Act."

Schumer asked for an accounting of how many debt collection firms engage in the practice and which companies that issue credit cards retain debt collectors for that purpose. If the practice isn't declared illegal, the FTC could at least require debt collection firms to notify the relatives they contact that they have no legal obligation to pay the debts, Schumer suggested.

Debt collection firms "conveniently omit" telling relatives of deceased debtors that they aren't legally obligated to pay, Schumer said.

Amid tough economic times, his office has received complaints from New York state residents about the practice. A recent article in The New York Times said the business of collecting dead people's debts is expanding, helped by improvements in database technology that provide easy access to probate court records.

Comments

[HaileysMommy]

12:02 AM on 03/20/2009

I think there is a huge misunderstanding of the collections of deceased credit card accnts. I personally work for an agency which does exactly that. I can speak at least on behalf of my company that we never tell the family they are responsible for their loved ones accnts, bc theyre not. What we ask is if there are funds available in the estate of that person to pay a bill. I think it is good Schumer is looking into this, if it is true that other companies are saying that. I find it funny that sooo many ppl complain about credit card accnts. You have the choice to get a card and to use it. The interest and fees are explained when you open the accnts, if you dont like it dont use it. All these companies are asking is to get pd back for the $ they paid for these ppl if they had assets in their name. Interest and fees are stopped after someone has passed. Another thing is the amount of fraud I've seen. I tell you what, it is a very tough to lose a loved one, but then to take their card and use it for thousands is beyond me. Of course this isnt always the case but it does happen. I just think the way Schumer worded his letter makes us sound a lot worse than we are. I have actually had ppl thank me for helping them through such a tough time.

[randeg]

05:56 PM on 03/12/2009

It's good that the Federal Trade Commission is asked by a senator to investigate debt collectors asking people of dead relatives to pay for their debt. Apparently it is illegal and I am glad it is so because that will be another instance of people taking advantage of those who are vulnerable.

Evelyn Guzman
http://www.debtchallenges.com (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)

[Mike169]

02:00 PM on 03/12/2009

I think that credit card companies and debt collectors should collect the money from the dead and leave the rest of us alone.

[LeeCalif]

10:10 AM on 03/12/2009

Schumer is failing in so many respects lately and then he keeps a good official off Obama's team by whining about Israeli interests.

He didn't regard American interests as important.

[Mike169]

01:59 PM on 03/12/2009

This is another story.

[Dave27]

09:41 PM on 03/11/2009

Well, this is good but there is so much more that needs to be regulated in Banking and Credit. We need serious and thorough legislation and it needs to begin now.

[themodernleader]

08:55 PM on 03/11/2009

Schumer has been a spokesman for some of the worst practices of the financial community. He may probe a disgusting fringe fraud. But be assured, his heart and soul are with the elite bankers while he avers an egalitarian disposition in his campaign utterances.
He is not atypical. I write my Senators about outrageous actions and never even receive as much as a go to hell. Look at the hunks of money from the financial institutions in your senator and representative's campaign funds and you will learn who they represent.

[schatsie]

08:40 PM on 03/11/2009

When are we going to get the caps on interest rates, and don't for one minute try to tell me that they cannot fix the system for 18 months when they can raise rates in a NY MINUTE....

Do the real work, get Interest Caps and give us a real tax reduction for the working class....If Bill Gates gets 39% tax break for his charitable contributions, I want that for the people in the working class and working and collecting Social Security....PEOPLE ARE WORKING BECAUSE THEY HAVE TO and the exemptions and standard deductions are a joke.....They have never kept up with inflation....at all...

[enriquecaliente]

08:12 PM on 03/11/2009

The credit card industry is nothing more then big business given a license to steal. Everything they do is done to keep you in the hole. And they call people who pay off their debt "dead beats" understand that the whole industry is set up to make sure you never get out of debt.

[edwcorey]

03:21 PM on 03/11/2009

Just like Schumer to go after penny-ante stuff. How about investigating Bush? How about unraveling the "businessmen" and crooked deals that created all these phantom mortgage-backed securities, swaps, and other "too big to fail" criminal syndicates? Why would anyone want to invest when he and his fellow fat cats won't turn over all the rocks under which these lords of finance are hiding their loot? No. He and his brethren would rather hound fly-by-night debt collectors and the likes of Barry Bonds.

[TeeLolly]

05:52 PM on 03/11/2009

It's not penny-ante stuff. It's part of a huge debt-collection enterprise that extends beyond collecting dead people's debts from their survivors, handled by the same law firms that specialize in compelling people to pay debts without regard to whether the debtor owes the debt, or whether the collector legally owns the debt. There are debt buyers who buy volumes of closed credit card accounts (many with artificially inflated balances from questionable fees imposed after default), and sue on the accounts often with insufficient documentation, sometimes after the statute of limitations has expired. Courts often assist creditors and debt buyers by failing to inform unrepresented debtors that the debt may be dischargeable in bankruptcy, instead encouraging them to enter enforceable agreements to pay otherwise unenforceable debts. In Ohio, some courts "host" creditors' law firms, allowing their respective attorneys to set up shop for one day or more per month (each) in the courtroom or elsewhere within the "inner sanctum," giving these attorneys an appearance of authority in addition to ethically questionable familiarity with the magistrates hearing the cases. Collecting dead people's debts is just the latest permutation of a growing practice that typically targets those least able to pay, who rarely have access to legal assistance in defending these claims. This is, as they say, just the tip of the proverbial iceberg.

[syryn22]

12:24 AM on 03/12/2009

Thanks TeeLolly, you took the words right out of my mouth. I used to work for a large bank call center and I am familiar with the law that says relatives do not have to pay deceased loved one's debts, but was appalled when I received a phone call from a credit card company after my grandmother died. My aunt did not believe me that the debts did not have to be paid and she paid them anyway. This problem is pervasive and we as the little people need to start taking small steps to reclaiming our financial freedom back.

[MCTSilverlakeCA]

02:56 PM on 03/11/2009

Credit Collection agencies "conveniently forget" a lot of things... they forget that we can't get re-employed, so we can't pay them -- because of the rules created by their own industry - the banking industry -which forces companies that borrow money from them - not to hire people with "bad credit reports"... so they are shooting themselves in the foot, and I have no sympathy... I have a degree, and over 20 years of experience - and I can't find a job... not because I can't do it, not because I'm not properly educated for it, and not because I don't have enough "experience" for it, I have all those... I also have "bad credit" thanks to being out of work ...so don't tell me "I have to pay you".. you pay me ..first.

[TeeLolly]

06:21 PM on 03/11/2009

Unfortunately, some people who can't afford it (and may not even owe the debt) can be forced to pay, such as a mentally challenged person whose mortgage-free house was foreclosed to satisfy a judgment on a credit card debt that was less than $3K when the debtor stopped paying (but went way up with fees etc.); people making minimum wage who can't afford an apartment but whose paltry wages are garnished every week to pay a credit card debt; or an elderly lady with no collectible income, but who owned a reliable paid-up car, who agreed to pay off an inflated credit card debt when the creditor threatened to take the car if she didn't pay. The collectors make out like bandits (which they are).

[gjohntheterrible]

02:30 PM on 03/11/2009

Hello

[mlaiuppa]

02:27 PM on 03/11/2009

This isn't going to be "fixed" until it is made illegal to contact families of the deceased. The debt collector's will still do it, but at least then familes have recourse to report them. Karma would be that the fine paid by the debt collector's for breaking the law would be given to the families they harass.

That's how *I'd* do it.

[christopherflynn]

02:36 PM on 03/11/2009

and a great idea you have!!! I HATE people that profit at other people's misery...

[Delphine]

02:18 PM on 03/11/2009

The saddest part is that consumers are really protected in large part, but the collection agencies know how to skirt the law.

Notice how all debt collectors are named "Ms. Hall" or "Mr. Brown" - i.e., they aren't telling you their actual names.

Even if you owe the debt, never acknowledge that you do, and NEVER offer to pay anything. If they haven't attempted to collect for a certain amount of time (4 years in California), they aren't allowed to collect it - unless you acknowledge it and agree to pay. They aren't allowed to tell you they'll sue you in this case, because they can't sue you according to the law.

They aren't allowed to lie to you about what they can do, but they always lie to you. Ask for proof of the debt. Read up on your state's laws regarding consumer debt. Don't let them fool you into paying stuff you don't owe. It's not your responsibility to make it worth their while to collect debts by paying more than you really owe.

[MCTSilverlakeCA]

03:13 PM on 03/11/2009

According to laws the credit companies they made themselves... collection agents may "utilize other names than their own" in order to collect money and be safe in their employment... I think I'll change my name..to ...Reganomics... or something.. maybe then some of these laws will "trickle down" and help me for a change..

[Sheeeeeit]

03:44 PM on 03/11/2009

This is true. A friend has been in collections for a long time and never uses her real name. Chase came after my mother after my pa died. She ended up contacting the local tv station and they backed off toot sweet!

[econ1]

02:06 PM on 03/11/2009

The estate is responsible for the debts so only if a distribution went improperly to an heir would they be able to go after relatives.

Of course Schumer probably has no issue with the government going after the dead person's assets.

It seems like more and more over the last twenty years, the government and the government people can do no wrong but the citizens are held to a high standard.

[gavrielle]

05:45 PM on 03/11/2009

If you don't like the law agitate to change it. Vote against representatives that don't represent you the way you want to be represented. And when you do vote against them, call their offices and tell them why you -- and everyone you can convince -- has or will vote against them. The reason our representatives are out of touch with reality is because we don't "reach out and touch" them.

[jeffp26]

01:35 PM on 03/11/2009

I'd rather know how much these debt collectors gave Schumer over the years.

[BarryS]

01:51 PM on 03/11/2009

simple solution: $1,000,000 fine and $1,000,000 given to callee for each illegal call. Failture to pay these fines within 10 days: 20 years in prison no parole for all owners, shareholders [>5%] all board members. I guarantee This will end it. It's time we really punish these creeps. If NYS can give someone life in prison no parole for selling a bit of marijuana, then they can do this too.