According to the 2011 FTC Report to Congress on the Fair Debt Collection Practices Act, the FTC receives more complaints about the debt collection industry than any other industry. According to the report, 27% of all complaints received from consumers in 2010 were FDCPA complaints, with about 83% of those being for third party collectors.(1)
Debt collectors are notorious for violating the law in the regular course of business. In March, 2011, West Asset Management, Inc. agreed to pay $2.8 million to settle FTC charges that it violated the FDCPA. Among the charges were claims that the company disclosed the existence of debts to third parties, ignored consumers’ written demands to stop calling them, took money from bank accounts or credit cards without consent, falsely claimed that consumers would be sued or arrested for nonpayment of the debt, and took partial payments as a "settlement" and attempted to collect on the rest.(2)
There have been other similar settlements with large collection agencies and the FTC, and for every large company that gets caught, there are hundreds–if not thousands–of smaller companies who continue to break the law while flying under the FTC radar.
Just because the FTC can’t go after every single company for every single violation of the law, it doesn’t mean that you the consumer have to stand for the illegal actions of debt collectors. You can take debt collectors to court for violations of the Fair Debt Collection Practices Act. You can also complain to the FTC, and you can use their violations and the corresponding complaints as leverage to get the collection accounts permanently removed from your credit report.
So what are the most powerful parts of the FDCPA to catch a collector violating the law?
Based on the 2011 FTC Report to Congress on the FDCPA, there are several:
1. FDCPA Section 806: Harassment or abuse
"A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt […]"
Under the FDCPA, collectors may not harass consumers in the process of attempting to collect a debt.
Almost 50% of all FTC complaints about debt collectors in 2010 alleged harassment or abuse on the part of the collector, making this the most frequent law violation about which consumers complained.
2. FDCPA Section 807(2): Misrepresenting the character, amount, or legal status of the debt
"A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: […](2) The false representation of (A) the character, amount, or legal status of any debt…"
According to the FTC, complaints covered under this category include attempting to collect on debts not actually owed by the consumer, attempting to collect more than what is actually owed, and attempting to collect on debts that have been discharged in a bankruptcy.
All of these are common scenarios, and violations of the law for which you can hold debt collectors accountable.
3. FDCPA Section 808: Unfair Practices
"A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt."
There is a long list of violations that would fall under this category. The one mentioned specifically in the FTC report is "Threatening dire consequences if the consumer fails to pay." The most common scenario in which this occurs is when a collector threatens to sue or take some other action that they cannot legally take (or otherwise don’t intend to take).
If a debt collector threatens a lawsuit over a $30 phone bill collection account, it’s a pretty safe bet that they are bluffing, and are in violation of the FDCPA.
4. FDCPA Section 807(11): Failing To Identity Self As A Debt Collector
Under FDCPA Section 807(11), the failure to disclose "that the communication is from a debt collector" or that "information obtained will be used for [the collection of a debt]" is a violation of the law.
If a debt collector doesn’t give the proper disclosures, this could be a $1,000 FDCPA violation right out of the gate. Simple details like this can cause a collection account to go away in a hurry!
5. FDCPA Section 805(b): Communication with third parties
"COMMUNICATION WITH THIRD PARTIES. Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector."
Debt collectors are prohibited from revealing an alleged debt to a third party, but they frequently do so to intimidate, embarrass, or harass consumers.
Debt collectors CAN contact third parties in order to get your "location information", but they cannot disclose details about the alleged debt OR contact a single third party more than once unless specifically requested to do so by that party.
Again, this is another rule that collectors frequently violate.
6. FDCPA Section 809: Debt Validation
About 10 percent of FDCPA complaints to the FTC included problems with debt collectors failing in one way or another with regards to the validation of a debt.(1)
This includes things like:
* ignoring validation requests and written disputes
* not sending proper validation
* continuing to collect in spite of disputes and lack of proper validation
It has been a well known fact for some time that collectors regularly fail to sufficiently validate debts, often simply sending an affidavit claming validity, or re-stating what is in their own records (instead of obtaining proper validation from the original creditor).
Collectors have also been known to completely ignore validation requests by consumers.
So what can we learn from all this?
Collection agencies have pretty bad track records when it comes to following the law.
If you have one or more collection accounts on your credit report, then it is wise to document carefully everything that happens in connection with each account. Record phone conversations (where permissible by law), keep all letters and correspondence, and watch closely for violations of the law–because they really do happen all the time.
(1) Federal Trade Commission Annual Report 2011: Fair Debt Collection Practices Act