One of the most difficult things people have to endure when swamped by debt is the relentless badgering of debt collectors, and their tactics appear to be getting worse.
According to a recent report, the Federal Trade Commission fields more complaints regarding the debt collection industry than any other. In fact, the number of complaints the FTC took about debt collection increased by 17 percent from the year 2009 to 2010. The FTC reported that it received a record number of 140,036 complaints about debt collectors in 2010.
Consumers complained of debt collectors harassing them with repeated phone calls and threatening them with fake lawsuits and legal action. There were even more than 4,000 complaints that debt collectors had threatened violence if they did not pay.
While these are all things that were meant to be outlawed by 1978’s Fair Debt Collection Practices Act, the director of Consumers Union’s Defend Your Dollars program said the high number of complaints mean that there is not enough regulation and enforcement in the industry. “These things have been illegal for years and they are still taking place,” she said.
The associate director at the FTC said that many consumers are not aware of the regulations many debt collectors negate. For example, debt collectors are required to provide consumers with written notice of the amount of debt, the name of the creditor and to whom the debt is owed within 5 days of starting the collection process. Reportedly, 29.8 percent of people who complained to the FTC said they never received this notice.
Notably, it was only the complaints against third party creditors that went up, not complaints against creditors collecting their own debts, the FTC’s associate director said. This might make sense because third party debt collectors are hired by the original creditor and often receive a portion of the money they are able to collect.
A new government agency, the Consumer Financial Protection Bureau, is set to open this summer and consumer advocates say it should make a difference. Because it will have law-making abilities, which the FTC does not, it could help modify the Fair Debt Collection Practices Act.
Resource: ABC News, “FTC: Debt Collectors Provoke More Complaints Than Any Other Industry,” Ben Forer, 3/22/2011.