Consumer Complaints Soar As Debt Collectors Cross the Line

The Federal Trade Commission (FTC) and countless Better Business Bureaus across the country have seen a sharp uptick in allegations of illegal, harassing and unethical treatment at the hands of unscrupulous debt collectors. In 2010 alone, the FTC received more than 140,000 complaints - nearly 30 percent of all complaints lodged - about collection agents. That is a rise of nearly five percent from 2009, and almost half of the complaints alleged harassing behavior, with another 20 percent involving abusive or violent language.

Because there is the potential for abuse in the debt collection industry, there are numerous federal and state laws to regulate the practice. Debt collectors have a legitimate purpose - collecting valid debts - but many times they cross the line by stretching the truth, neglecting to tell consumers key facts about the collection process or threatening otherwise illegal actions. In some of the more egregious publicized cases, debt collectors have been known to threaten arrest, deportation or other serious criminal or civil legal action in order to collect as much money as soon as possible from vulnerable debtors. Some collection agents prey on the elderly, convincing them to accept responsibility for and pay debts they may not even owe.

How Are Debt Collectors Regulated?

A wide-reaching federal law - the Fair Debt Collection Practices Act (FDCPA) - regulates the process of debt collection and sets forth what sorts of actions and behaviors debt collectors can use when dealing with consumer debtors. The FDCPA does not cover commercial debts, but instead focuses on personal debt like:

  • Credit cards
  • Medical bills
  • Mortgage payments
  • Automobile lease or sale payments
  • Other revolving unsecured debt (like lines of credit)

The FDCPA sets forth both the types of debts that are regulated and the manner in which they can be collected. There are limitations on the manner in which a debt collector can act as well as the method in which collection contacts are carried out. For example, a debt collector can contact a debtor by phone, but may not use abusive or foul language, and calls must take place at a reasonable time of the day, loosely defined by the FDCPA as between eight in the morning and nine at night. Furthermore, if a consumer requests in writing that the telephone calls stop, the debt collector must honor that request or risk violating the law and facing civil penalties.

What Can Debt Collectors Do?

Most people are surprised to learn that debt collectors have the right to contact them at work unless told verbally or in writing that personal calls cannot be taken there. They are also shocked when they find out that collectors can contact others (typically relatives or friends) in order to find out the debtor's current address or phone number. They are prohibited under the law from discussing details of the debt with a third party; this prohibition doesn't stop some unscrupulous debt collectors, though.

Some debt collectors are in the business of buying up old debts at a discounted rate, then using their own resources to force payment. Oftentimes these debts are either falsely inflated by "finance charges," late fees and other expenses or have been written off or dismissed by the original creditor. A prime example of a debt that may have been written off is a medical bill; these are often considered uncollectable by medical providers after a certain time (usually a statutory period between three and ten years, depending upon the state) has passed and are eventually written off as a tax deduction. Unfortunately, the average consumer may not realize that and accept responsibility for what would otherwise have been an uncollectable debt. The statute of limitations running out on a debt doesn't automatically erase it, but it does prohibit some legal action from being taken after a distinct time has passed.

What Are Debt Collectors Prohibited From Doing?

Specifically, the FDCPA prohibits harassment, the making of false statements to a debtor, reporting factually incorrect information to a credit reporting agency or other source and using unfair practices to collect a debt. They cannot:

  • Threaten physical violence or harm
  • Use obscenities or profanity
  • Use the phone as a tool to annoy a debtor
  • Falsely represent themselves as attorneys, employees of a credit reporting agency or government agents
  • Threaten arrest or criminal consequences of not paying the debt
  • Threaten seizure or sale of assets or garnishment of wages where it otherwise wouldn't be permissible
  • Charge excessive interest or fees on top of the original debt unless allowed by law
  • Deposit post-dated checks early without the debtor's express approval

Debt collection is a complex process, even for those companies who are doing it legitimately. Debt collectors frequently cross the thin line between proper and improper behavior while trying to do their jobs. If you are mired in debt, facing aggressive creditors alone and need help, filing for bankruptcy protection might be a good choice for you. To learn more about bankruptcy and other debt management options, speak with an experienced bankruptcy attorney in your area to learn more about your legal rights and options.