A new survey reveals that debt collection calls have become more aggressive, and collectors are abusing laws that protect debtors.
Families facing mounting debt and uncertain economic futures often also face increasing calls and letters from debt collectors. Now, consumer debt attorneys say those contacts have become more aggressive, and a new survey finds abuses of the laws that protect debtors are common.
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Forty percent of respondents in a national Scripps Howard survey answered yes to at least one of the following questions:
- Has a debt collection agency ever threatened you with violence?
- Have you or your family ever received multiple calls from a debt collection agency, so many that it seemed to you to be harassment?
- Has a debt collection agency telephoned you or your family at inappropriate times of the day, such as before 8 a.m. or after 9 p.m.?
All of these practices are against the law under the 1977 federal Fair Debt Collection Practices Act (FDCPA) — the law that covers communications and abuses in the collection of personal and household debts, including debt from credit cards, a car loan, a medical bill or mortgage.
Some consumer advocates had reported in recent years that many debt collectors were taking a kinder, gentler approach to dealing with consumers in the wake of the recent economic crisis. This survey of 1,001 respondents, conducted by the Scripps Survey Research Center at Ohio University from Sept. 27 to Oct. 21, 2009, shows that many collectors have not opted to make nice.
Legal experts also say the law is regularly violated, and this is reflected in the volume of complaints about debt collection to the Federal Trade Commission and the National Association of Attorneys General. Consider these statistics:
- Debt collection was the No. 1 consumer complaint listed by the NAAG in 2008, above auto sales and home repair/reconstruction.
- The FTC gets more complaints about the debt collection industry than any other industry it regulates. In the first six months of 2009, consumers filed 45,050 complaints with the FTC about third-party debt collectors — collectors who buy up the debt from the original lender. Those complaints are up 19 percent from the same period in 2008.
Contact becoming more frequent, aggressive
Houston-based consumer debt attorney Dana Karni said she is seeing an escalation in aggressiveness of the calls.
“I just recently filed a lawsuit on behalf of a consumer who was threatened with arrest. She and her four minor daughters were home at the end of August, and she got a phone call from the collector,” she said. Karni says the collector, who earlier had told her client there was a warrant out for her arrest, left this message on her client’s answering machine: “I am making my way toward your area now. I do need a signature here on the summons. I’m over here by a truck stop finishing up my coffee, and then I’ll be stopping by. If you have any questions or concerns, I advise you contact this number immediately.”Sometimes it’s the number of calls — not the aggressiveness of the calls — that constitutes harassment, says Timothy G. McFarlin, an Irvine, Calif.-based attorney. This has become a bigger problem over the years, thanks to innovations such as auto-dialing. “What’s really shocking to me is the frequency of the calls,” he says. “Collectors have always been very abrasive and angry and try to scare and intimidate people on the phone. But what’s new is how frequently. They’ll call every hour whether they pick up their phone or not.”
David Cherner, director of state government affairs for the largest trade group for debt collectors, ACA International, says he agrees that the number of contacts is increasing. He says, however, that the jump is a natural byproduct of more accounts going into collections over the last two years because of the economy. The Government Accountability Office reports that about 6.6 percent of credit card accounts were 30 or more days past due in the first quarter of 2009 — the highest rate in 18 years. But Cherner disagrees that collectors are crossing legal lines.
“The debt collection industry understands that, although volume of accounts has increased, the ability of consumers to pay has declined,” Cherner says. “I don’t believe aggressiveness is going to mean illegal practices, but I think the collection industry is trying to help consumers out by communicating with them about their financial obligations and trying to work toward an amicable resolution.”
He said while there are more contacts with consumers, collectors are also increasingly willing to make deals, particularly in working out payment plans. McFarlin says his clients also have seen collectors more willing to deal: “The collection agencies are in desperate times as well. They demonstrate their desperation in being super-aggressive in collecting and then taking anything they can get,” he says.
Mistaken identity a common complaint
Among consumers’ complaints about collectors is that they have the wrong information when they call. In the Scripps Howard survey, 39 percent of respondents said they were contacted by a debt collection agency about a bill they did not think they owed. Thirty-four percent said they were asked by a debt collection agency to pay an amount they believed was incorrect. This is the kind of complaint that has the FTC and the GAO asking for changes in the law. In its Feb. 26, 2009, report to Congress, the FTC recommended requiring collectors to have more accurate information on the amount of debt and the actual debtor, saying it could boost the prospects for collection and avert collection calls to the wrong person.
The GAO echoed those concerns in September 2009 and noted that delinquent accounts are frequently sold and resold, which can make verification more difficult as the owner of the debt becomes further removed from the original creditor. The office recommended that Congress modify the FDCPA to help ensure that debt collectors and debt buyers have adequate documentation about the debts transferred.
The good news for consumers, McFarlin says, is that if consumers are informed “they can very easily get collection agencies to stop calling them and stop harassing them by sending a cease-and-desist letter. It just has to be worded properly and sent certified mail. It’s easy to get them to stop or to make it very illegal for them to continue.”
Karni adds this caution about cease-and-desist letters, however.”The fact that you’ve asked them to stop communicating with you does not mean they cannot sue you, so you may be bringing on a lawsuit or bringing one on sooner than you would have without the letter,” she says.
See related:Debt collection sample letters, Consumer credit woes mean boom in debt collection, 11 tips for dealing with debt collection and collectors, A look at the Fair Debt Collection Practices Act, Collectors to debtors: Let’s make a deal