By: Tiffany Sanders
The Federal Trade Commission (FTC) this week announced a settlement with one debt collection company, Whitewing Financial Group. Whitewing had been accused of using illegal practices to collect debts that were so old they were "time-barred" under applicable state and federal laws and debts which had been discharged in bankruptcy.
The company also allegedly pushed consumers who had requested validation to pay debts before validation was received, made false representations, and contacted consumers at their places of employment after being advised not to.
Whitewing's practices are far from unique. In 2005, the FTC received 66,627 complaints against third-party collectors. According to the FTC, the most frequent complaints received relate to:
1. Demanding larger payments than permitted by law: In 2005, the FTC received complaints from 28,470 consumers claiming that third-party collection companies had misrepresented the amount, character or legal status of a debt. This includes misrepresented amounts, debts too old to be legally collected, and debts discharged in bankruptcy, among others. An additional 3,013 consumers reported that debt collection agents had attempted to collect interest, fees and expenses not authorized by their original agreements.
2. Harassing the alleged debtor or others: Debtor harassment probably comes as no surprise. Despite federal regulations regarding the number of times a debt collector can contact a debtor, hours during which they may call, and restrictions on calling at work, 14,352 debtors reported receiving repeated calls, and another 8,018 complained that collectors had used obscene, profane or abusive language. What is perhaps more surprising is that 3,028 consumers reported that debt collectors had contacted employers, friends, relatives, neighbors and children and informed them of the debts. Disclosure of information to third parties is strictly prohibited under the Fair Debt Collection Practices Act (FDCPA). It is permissible to contact third parties to attempt to locate a debtor, but 7,337 consumers reported collectors repeatedly contacting the same friend or relative.
3. Threatening dire consequences for failure to pay: 6,410 consumers reported that debt collectors had misrepresented the consequences if the debt was unpaid. The threatened actions included civil suits, criminal prosecutions, arrest, wage garnishment, seizure of property, and job loss.
4. Impermissible calls to consumer's place of employment: The FDCPA expressly forbids contacting a consumer at work if the collector knows or has reason to know that such contacts are not permitted. Nonetheless, 4,193 consumers reported receiving calls at work after they or a colleague had advised the collector that the consumer's employer prohibited such calls at work.
5. Other violations: Consumers in significant numbers also reported collectors failing to send required consumer notices, failing or refusing to verify disputed debts, and continuing contact after a "cease communication" notice.
Not every trick used by debt collectors is covered here, but the bottom line is clear: don't assume that the information you receive from a collection agency is accurate, that they can or will take the action they threaten, or even that you actually owe the amount they claim. If you're being contacted by a collection agency and you're uncertain about whether you owe the debt, the amount of the debt, whether it's old enough that the law bars collection, or whether the collector is respecting your legal rights, visit the FTC website at www.ftc.gov for more information about your rights and how to enforce them.
(C) 2006, Total Bankruptcy, Inc. This article may be reproduced in its entirety without limitation and without notice, except that any reproduction must include the entire article, which may not be modified in any way, and must include the author bio information contained herein, including the URL and, if published online, a live link to the referenced URL.
About the Author:
Tiffany Sanders is an attorney who has published two books. Her articles have appeared in numerous newspapers, magazines, newsletters, and web resources in the United States and Australia. She writes bankruptcy law news and articles for Total Bankruptcy , where sponsoring attorneys provide extensive consumer information and resources related to bankruptcy filing and rebuilding credit after bankruptcy.
Posted in Collection Harassment
