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Aggressive Debt Collectors Face Crackdown

Long accused of using aggressive and unethical tactics, debt-collection agencies have stepped up their games recently to collect owed monies during these hard economic times. In response, lawmakers nationwide have turned the tables on some of the largest companies, demanding payback for the practices.

Already, some lawmakers in California approved a bill that protects consumers and holds debt collectors to a higher standard of ethical business practices. It is awaiting final approval. This is over and above the 1978 federal Fair Debt Collection Practices Act, which prohibits debt collectors from using unfair or abusive tactics to collect.

Since 2008, the Federal Trade Commission (FTC) has seen a 73 percent increase in complaints about debt collectors. Experts say  the problem has escalated for many reason. Of course, the sputtering economy has caused an increasing number of Americans to fall behind on bills. But also, debt collection businesses are known to buy past-due accounts at pennies on the dollar. They then turn around and try to recoup as much of the unpaid debt as possible, using powerful attorneys to help.

Complaints about Debt Collectors Grow

The Los Angeles Times recently reported that the largest debt-collection companies have faced an increasing number of complaints from state officials claiming improper behavior. In one case, Brachfeld Law Group, one of the country’s largest debt-collection firm, pursued California Sen. Lou Correa, D-Santa Ana, for an unpaid department store credit card bill. The problem was that Correa never owed such a debt. Despite repeated phone calls telling company representatives they had the wrong person, the company continued to pursue him. When he discovered his Senate paycheck was going to be garnished for the more than $4,000 debt, he was shocked. While the situation was eventually corrected without Correa’s wages being garnisheed, he decided to take action to stop such aggressive tactics and supported a bill by state Sen. Mark Leno, D-San Francisco. It was passed by the state Senate and is awaiting approval from the state Assembly.

Across the nation, state lawmakers are stepping in to clamp down. In 2012, Encore Capital Group Inc. agreed to pay $5.7 million in an Ohio class-action settlement after its subsidiary was accused of using false information to collect debt. But 38 state attorneys general opposed the settlement, saying it was not enough money to pay about 1.4 million people in the suit.

Know Your Rights

Today, consumers are cautioned to remember the laws that are aimed at quelling overzealous collection agencies:

  • A debt collector is not allowed to contact you at inconvenient times and places, such as before 8 a.m. or after 9 p.m.
  • Collectors may not contact you if you’ve told them (in writing) that you do not wish further contact.
  • A debt collector may contact family members, friends or business associates, but only to find out your address, phone number and where you work.
  • A debt collector may not use threats of violence or harm, obscene language or repeated phone calls to collect a debt.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].

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    1. Debt Collection FAQs: A Guide for Consumers. (n.d.) Federal Trade Commission. Retrieved August 21, 2012, from
    2. Leno, Mark. (2012, June 27). Leno Bills Pass Assembly Judiciary Committee [Press release].
    3. Puzzanghera, J. (2012, August 20). Aggressive debt collection tactics are drawing federal scrutiny. Los Angeles Times. Retrieved from,0,258717.story