Between mortgages, home equity loans, credit cards and hospital bills, millions of Americans are said to be living on the financial edge, deep in debt.
Companies and banks, frustrated with unpaid balances, often turn to debt collectors in an effort to lessen financial loss. But while some collection agencies may contact consumers using legitimate tactics, recent reports indicate a substantial increase in abusive collection procedures, often violating consumer rights.
The Federal Trade Commission (FTC), the nation’s consumer protection agency, received more than 180,000 complaints of abusive debt collection practices last year, nearly a 30 percent increase from the preceding year.
These numbers have continued to climb over the years. In 2009, for example, more than 67,550 harassment complaints regarding debt collectors were reported, a 50 percent increase from 2008.
According to the Consumer Financial Protection Bureau, consumers lodged a large number of complaints because of the sometimes-extreme and unsavory collection tactics utilized by some to collect on debt.
Recent debt collector horror stories range from name-calling and the use of obscenities to more extreme tactics such as threats of criminal prosecution, physical violence and stalking.
Phone Calls, Social Media and Fake Hospital Workers
An increasing number of collectors reportedly called certain consumers non-stop at all hours of the day. Some contacted the person’s family, friends and neighbors with threats while other collectors have gone so far as to contact the consumer’s co-workers and boss.
There have also been reports of debt collectors utilizing social media, such as Facebook and text messaging, in an attempt to further embarrass the consumer into making payment.
One Minnesota debt collector company reportedly went to extreme measures to collect debts from people during a vulnerable time: while they were being admitted to the hospital. This company had staff members disguise themselves as hospital workers and threaten people undergoing medical care — telling them their treatment would cease unless they paid their debt.
The Minnesota Attorney General’s office has filed a complaint against the company.
Consumers Have Rights, Laws to Protect Them
Consumer experts cite several possible explanations for such an increase in registered consumer complaints.
Some attribute the increase to an improved understanding of the laws designed to protect people and the fact they are strongly encouraged to report such instances. The FTC enforces the Fair Debt Collection Practices Act, a statute added in 1978 to Title VIII of the Consumer Credit Protection Act, which forbids debt collectors from using abusive, unfair or deceptive practices.
People also have a right to privacy which usually prohibits collectors from contacting third parties more than once and prevents them from disclosing personal information. The debt collector may, however, contact a spouse, parent of a minor, guardian, co-signer, executor or administrator as long as it is not deemed as harassment.
People are directed to contact the FTC as well as their local Attorney General’s office with questions or concerns regarding the violation of rights, as state laws vary.
Another possible explanation for the marked increase in complaints may be linked to the ever-challenging economy – there are more instances of debt collection. Not only are there significantly more people in debt, but debt collectors typically work on commission and may also be strapped for money, making them highly-motivated to collect.
Some Experts Dispute Uptick in Complaints
Some consumer experts dispute the latest reports saying the increase in abuse is not accurate because the statistics include calls from people who cannot prove they are being harassed, rather just inconvenienced by collectors. The FTC doesn’t differentiate these calls, they say, when creating its numbers.
If a true violation of rights can be proved, consumers can file a lawsuit against a debt collector as long as it is filed no more than a year after the law was broken. If the violation can be confirmed, the judge may demand the debt collector pay attorney fees, court costs as well as damages for suffering.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org 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].
- Johnson, A. True Debt Horror Tales (2012). Retrieved from: http://www.foxbusiness.com/personal-finance/2012/06/27/true-debt-collection-horror-tales/
- Bradford, H. Debt Collection Horror Stories: Asset Acceptance Goes After Dead Man's Phone Bill And 9 Others (2012). Retrieved from: http://www.huffingtonpost.com/2012/05/23/debt-collection-horror-stories-asset-acceptance_n_1540838.html
- Ellis, B. Debt Collectors Get Nasty (2010). Retrieved from: http://money.cnn.com/2010/07/09/news/economy/debt_collection_harassment/index.htm
- White, M. Enough to Make You Sick: Debt Collectors Hit Up Hospital Patients (2012). Retrieved from: http://moneyland.time.com/2012/04/25/enough-to-make-you-sick-debt-collectors-hit-up-hospital-patients/