FTC Continues Its Fight Against Abusive Debt Collectors

The government's efforts to police debt collectors -- an ongoing battle that has drawn in countless ranks of cash-strapped consumers in recent years -- continued Monday, when the Federal Trade Commission announced that a Michigan-based debt collection company would pay $2.5 million to settle charges of misconduct.

That company, Asset Acceptance, faced a number of accusations, including charges that even after their statute of limitations had run out, therefore letting the borrower off the hook, employees continued to try and collect certain debts. The company was also accused of failing to verify whether some debts were valid, as well as pressing forward with collection efforts even when borrowers raised objections, according to The New York Times.

The debt collection industry has been the object of growing scrutiny lately, as law enforcement agencies respond to an increasing volume of complaints. Debt collectors have been accused of harassing borrowers, using vulgar language and threatening physical harm. With millions of Americans living paycheck to paycheck, household wealth still bruised by the recession, and consumer debt creeping back up to levels seen before the financial crisis, authorities are taking a more active role in protecting the rights of ordinary people whom debt collectors say owe money.

In October, the FTC froze the assets of Rincon Debt Management, a collection company based in California that allegedly had its employees lie in order to intimidate borrowers. The agency additionally alleged that Rincon hounded some consumers who didn't owe any money at all. The month before, the FTC also filed a complaint against another California company, Rumson, Bolling & Associates, whose employees allegedly threatened to kill debtors' pets and desecrate the bodies of their dead family members.

Other debt collectors have been accused of calling at very early or very late hours, harassing the relatives and former romantic partners of people who supposedly owed money, and promising to visit borrowers in person to extract payment. In 2010, Allen Jones, a black man from Texas, was awarded a $1.5 million settlement after a debt collector allegedly left him racially incendiary messages, including one in which the collector told Jones to "go pick some [expletive] cotton fields."

Thus far, the FTC has taken some of the most aggressive regulatory action against debt collectors accused of crossing the line. The Consumer Financial Protection Bureau may also be eyeing debt collectors as part of its broad-based effort to regulate so-called "nonbank" lenders, although the Bureau's operations continue to face intermittent opposition from some conservative lawmakers in Washington.

Also on HuffPost:

Comments

[pantsmarty]

12:28 PM on 02/11/2012

This is a terribly written article, and the journalist, like most on the subject, has an extremely shallow understanding of the complicated FDCPA laws. It is not illegal to collect on debt that is past the statue of limitations. The outstanding debt is still affecting the consumer's credit. The consumer simply cannot be sued. Most likely the consumers in debt aren't even even thinking being sued is a possibility in the first place. In addition, the statute of limitations law varies from state to state.

I hope that the consumer financial protection bureau is able to clarify and expand upon the FDCPA laws. Currently the FTC interprets the word "deceptive" as it sees fit, slapping fines when it deems it appropriate. Meanwhile, debt buyers/collectors scramble to react to the latest fines because that's the only sort of guidance they're getting past FDCPA.

[jack9243]

07:23 PM on 02/10/2012

They need to fine N C O Financial Services also they are the worst out there with their deceptive ways.

[kamact]

10:16 PM on 02/01/2012

Run these debt collectors down,...or redirect them towards the TBTF banksters, who were bailed,....

[hotbarb2614]

07:46 PM on 02/01/2012

I was visiting my daughter at an army post in georgia about five years ago,I answered the phone and some guy was aqsking for some woman I never \heard of, he said I was lying and I was that woman,he was trying to collect a debt and was harassing mke, i asked for his supervisor and he hung up. Two days later my daughter answered the phone and told him she was reporting him. The tactics of these people is outrages.

[Mommiablo]

07:29 PM on 02/01/2012

why is huff post not posting my comments?

[Daydreamer1952]

05:42 PM on 02/01/2012

I have had a first hand experience with abusive debt collectors. My husband passed away on September 15. 2005, was buried on the 19th,on the 24th of September a collector called from Beneficial where we had a car loan,( We had never been late or skipped any payments) that was due on the 15th. He called at 7:30 a.m I had not slept well since my husband had died and was still asleep. I explained what had happened and that we had Credit Life it would be taken care of. He yelled at me saying I probably had just made that up to get out of the debt. I was completely devasted.

[Pakele]

04:19 PM on 02/01/2012

I contacted my phone service (land line) and explained what was going on with these debt collectors and found out that I had individual call rejection. Now whenever these people call and it's on my caller ID, I simply go to my #60 and add them to my individual call rejection. Guess what, it works. No more harassment calls.

[Ron Beicht]

05:07 PM on 02/01/2012

and how does this work and what do you do

[Pam512]

03:46 PM on 02/01/2012

Being unemployed for two years, you can only imagine what kind of condition my credit is in. I have caller ID on my phone, so I don't even answer it anymore if I don't recognize the number. I've told every single creditor that I don't have any money so calling me will not serve any useful purpose. Of course they want to know when I will have the money and I tell them when I win the lottery or find a job. They really don't like that "lottery" part! "Ma'am, you should not be playing the lottery. You should be giving us that money". Most of the calls are robocalls. They leave messages because there isn't a live person on for about a minute. So most of my messages are empty space or somebody going "hello, hello, hello". I hate that I owe that money, but it's not my fault I lost my job and can't find another one.

[abbadabba]

12:56 PM on 02/01/2012

The number of people harassed numbers of times a day by these firms simply because the firms have incorrect contact data is alarming. I have been harassed for YEARS by these firms who claim they delete that bad data but more likely pass it on when they sell the bundle of bad bets to another firm to attempt to collect on. It is a willfull fraud.

So, now, they hang up immediately after my phone machine answers so they may log that call as another attempt to collect a debt. But by refusing to speak with anyone or leave a message, they obviously know I am not connected with it and are simply maintaining the fraudulent appearance that that debt is collectable so they may sell that bundle on to the next collection firm from hell.

But with all the OTHER frauds these folks are pulling, this one is flying under the radar like a drug cartel.

[Razorsharp1234]

12:19 PM on 02/01/2012

I always hang up, pretend I am the maid.

[Solitaire727]

11:50 AM on 02/01/2012

My phone at the office is the "press zero to talk to a human being" point. I come in every Monday morning find my voice mail box cluttered with robo-calls generated throughout the weekend, attempting debt collection on individuals who have not, in most cases, worked here in years. The automated messages are carefully couched to state that 'by listening to this message, you agree that you are (the debtor's name).' Then, of course, I am subjected to further harassment when the debt collectors call again during the week, trying to reach the former employee. I'm fortunate in one respect, though: I merely explain to the callers that they have reached a State agency, that I am not the person they are attempting to locate, and that if they call again I will merely walk up one flight of stairs and deliver their number as taken from my caller ID to the State Attorney General's office. Works like a charm every time.

[Diasamax]

11:47 AM on 02/01/2012

Most of those companies buy the debt for pennies on the dollar and they are moved from one company to the other. Usually the first collection agency has the documentation (or access to it) to back up the debt. Once they close the file, the company you owe writes off the debt, unless it is large enough to merit sending to second agency or obtaining a judgement. When it has bounced to multiple agencies, it is a sure bet they cannot prove the debt. The original company owed will only keep the documenation that proves what you owe for only so long before the documentation is destroyed. You have to check the state rules for where they operate to determine the timeframe allowed.

Most of these companies perform "skip tracing" they are looking for anyone with the same name and will randomly call. They do not care if it was you or not, hoping the person on the other end of the phone will pay the debt even if it is not theirs. This is another reason why you should limit your digital footprint on the internet. They will use Facebook, Twitter, Linked In, etc and pretend to be someone else to track you down. They will use cell phones to call you instead of the phone on their desk in order to get you to pick up. Learn your rights and know the law. Here is the website: http://www.ftc.gov/os/statutes/fdcpajump.shtm

[iworshipthedoggod]

01:38 PM on 02/01/2012

oh yes,skip tracing,i moved into a new house two years ago,i moved from one county to another,which required an area code change and i like to keep a land line,i would say after about 2 weeks i started to receive phone calls from debt collectors looking for random people with my last name,and the callers would throw around several first names,but because i had the same last name of the person they were looking for it is assumed i am or know that person somehow and the calls continued for some time,some were nice and some were just awful,i thought this was odd because i had never had phone calls like this before i moved or ever for that matter,when i did investigate it i found that these companies were nothing more than fly by night cons trying to bully people into paying something they did not owe.

[hgoodguy]

11:44 AM on 02/01/2012

There is a much better way! Just call your phone service provider and put them on a "Block All Calls" list.

[aaacs1]

02:34 PM on 02/01/2012

They have a good way around that too. They call you from different numbers. Each line they have in their agency has a different number.

[hgoodguy]

02:44 PM on 02/01/2012

Try blocking all 800 #s.

[Jeff McConnell]

11:07 AM on 02/01/2012

One has no legal responsibility to deal with bill collection agencies. Simply tell them that the Fair Debt Collection act prohibits them from calling you once you have told them to stop, and that you are telling them now. If they keep calling, hang up. Bill collectors DO NOT make the decision on whether you are sued or not, the debtor does. The bill collector has no legal standing to sue you, unless they have purchased the debt. Then, with all of those bad debts, how would they even have the time or resource to sue everyone? Try to work out payments with your creditor, but do not be bullied by the collection agencies. They are paper tigers.

[jtbelala]

10:05 AM on 02/01/2012

This has been going on for years ..... The USFTC and the U.S. Congress has to step in and do something, pass a LAW, which would stop this kind of kind of abuse ..... There has been cases where this collectors will go after the wrong person and they get aways with it -- You can not suit them, they can do what they want .....

[vinyl1]

10:29 AM on 02/01/2012

Laws do not stop abuses. Police officers with pistols and handcuffs are what does it.

You probably could sue them, but I think 'hands up' would be a lot more effective.

[Kristin Talbott]

10:58 AM on 02/01/2012

There is a law. It's called the Fair Debt Collection Practices Act. It prohibits a good amount of the type of behavior detailed in the article.

Unfortunately, many people don't know about what is legal and what isn't, and even if they do, they often lack the resources to bring a lawsuit.

[Torinir]

05:13 PM on 02/01/2012

As well, each state has its own collection laws. Where there's a conflict between the state and federal laws, the most restrictive applies.