Sunday, January 10, 2010

Top 8 Complaints and Violations of 3rd Party Collectors

Every year the FTC publishes an annual report of complaints they have received from consumers about 3rd party collectors. The FTC oversees FDCPA, FCRA, FCBA, FACTA and State Statutes compliance. Here are the top complaints. It doesn't necessarily mean that they are the top violations, exactly, it means the ones that have annoyed consumers enough to complain to them about. These facts are from the 2008 annual report.

  1. DEMANDING A LARGER PAYMENT THAN IS PERMITTED BY LAW : The FDCPA does not allow debt collectors to misrepresent the character, amount, or legal status of a debt. They cannot tack on extra fees for collecting, report the wrong type of debt or claim to be lawyers when they are not, not state the original creditor, calling it one type of debt when it is another, like saying it is a revolving when it is an installment, or calling it a factoring account when it is not. They are not allowed to collect any amount that is not expressly authorized by the original contract that created the debt or that is unlawful.
  2. HARASSMENT: Debt collectors are not allowed to harass you by calling outside of inconvenient times, repeatedly calling you or your work or someone who may know you. They may not use profane or abusive language, they may not threaten you with harm or the use of violence. Amazing that such behavior has to have laws created against it, isn't it?
  3. USE OF THREATS: They are not allowed to threaten certain actions will be taken against you if you don't pay. This includes saying they are going to sue you, when they are not, saying they are going to garnish your wages, repo your property, ruin your credit, throw you in jail or make you lose your job. One thing I've learned over the years, is that the more they threaten you, the more desperate they become, they are exposing that they have no legal standing to collect from you if you claim and use your rights against them.
  4. IMPERMISSIBLE CALLS AT A PLACE OF EMPLOYMENT: They are allowed to call you at your work. However, if they are told they may not call there, then they legally are required to knock it off. I would like to take this a bit further and say that the law says they can't make that phone call to your work if they have reasonable knowledge that they should not. My thinking on this is that if they have tried to collect from someone else at that workplace, and have been told already not to call at that location, then they should have reasonable knowledge that they should not call you either.
  5. REVEALING ALLEGED DEBT TO THIRD PARTIES: The only reason they are allowed to contact someone other than you about your alleged debt is to get your location information. They are not allowed to contact them unless they have reason to believe that the 3rd party knows your location. But, they are not allowed to reveal that they are attempting to collect an alleged debt. Once the 3rd party tells them they don't have any information to give them, they are supposed to never call them or contact them again. They do this to embarrass and intimidate you and it is a violation. They also have many complaints against them for harassing and threatening 3rd parties, another violation that falls in this category and the harassment category. Third party contacts include employers, relatives, children, neighbors, and friends.
  6. FAILING TO SEND REQUIRED CONSUMER NOTICE: When collectors get a hold of an account they allege is yours, they are required by law to notify you in writing the amount of the debt, the name of the creditor to whom the debt is owed, and a statement that, if within thirty days of receiving the notice the consumer disputes the debt in writing, the collector will obtain verification of the debt and mail it to the consumer. The reason they don't always do this is because they don't want you disputing something that they can't verify or validate.
  7. FAILING TO VERIFY DISPUTED DEBTS: This one I believe, is under reported. They are not allowed to resume collection activity until after they verify your dispute. This includes sending back a letter saying, "yep, you owe us, here's the amount, now pay up". That is not verification. That is not validation. What it is, is a violation! They just keep collecting because they can't provide the actual validation that proves you legally owe the alleged debt. What they commonly do, is ignore your dispute and sell the account to another collector, sometimes a sister company of theirs, and then keep attempting to collect.
  8. CONTINUING TO CONTACT CONSUMER AFTER RECEIVING “CEASE COMMUNICATION ” NOTICE : If you in writing, tell them to stop contacting you, by law, they must. But, they like to claim they never got the notice. This is why your communication needs to be in writing to them and sent certified, return receipt. That way, you have a copy of the notice to them and the proof that they received it, should you have to go to court against them.
So, now that you know many of the common violations that collectors commit, what is your plan of action? Here's what it should be. Dispute, document consistently all communications, keep an accounting of the responses, keep all your proofs of service and copies of letters you send or receive and a phone log of every phone call you or someone else received, along with the company name, employee's name, date and time, if possible. Each violation, and since they usually violate in several ways at one time, because they violate the FCRA and FDCPA many times at the same time, can add up to big bucks for you. They are usually worth $1000 each. You need to document consistently and accurately. That way, it can be a huge bargaining tool for you or great supporting evidence if you end up suing them or counter suing them in a court of law! Repairing your credit can give you a nice fico and good credit report, and make you money at the same time! Sweet!

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