Beef on weck, frozen custard – and one of the largest debt
collection industries in the U.S. Those are some of the things Buffalo is known
for. That’s why the FTC kicked off its continuing Debt
Collection Dialogue in Buffalo on June 15, 2015. Hosted with
the New York State Attorney General’s Office, the event brought law enforcers,
industry representatives, and consumer advocates together to talk about recent
enforcement actions, consumer complaints, and compliance issues. If you
couldn’t make it, here’s our informal take on what attendees talked about.
Dealing with debt collectors is a day-to-day experience for many
Americans. According to some studies, 15% of
consumers – nearly 30 million people – have an account in collections. And
we’re not talking nickels and dimes. The average is more than $5,100.
Recent law enforcement actions have focused
on some particularly egregious practices. Why the uptick in debt collection enforcement? Because some
companies have stepped way over the lines set out in federal and state debt
collection laws. Among the allegations in recent FTC complaints were that the
defendants:
·
lied to consumers that they would be arrested
if they didn’t pay the alleged debts quickly;
·
pretended to work for government agencies,
including the FBI and other federal and state law enforcers;
·
threatened to sue people when they had no
intention of filing;
·
called consumers’ family members, friends,
and co-workers and told them about the alleged debts;
·
hounded people about debts they either never
owed or had already paid off; and
·
sent text messages that violated
the Fair Debt Collection Practices Act.
Bad apples in the industry are making things harder for consumers
struggling to stay afloat – and for legitimate companies trying to comply with
the law. In certain circles, the current state of
affairs has created a perfect storm of non-compliance. Many consumers are
behind on their bills, some of those debts are getting harder and harder to
collect, there’s questionable paper for sale, and a workforce of more than 450,000
collectors are making close to a billion consumer contacts each year. Those are
just some of the factors that led to the 283,000 debt collection complaints the
FTC received in 2014 alone. The harm to consumers should be obvious, but
lawless debt collectors also damage the reputation – and the bottom line – for
industry members who follow the rules.
Data security and integrity should be important industry
priorities. The security of personal information
is a concern in every sector of the economy and debt collection is no
exception. The FTC went to court last year to challenge the practices
of debt brokers who posted portfolios for sale in a way that publicly
disclosed sensitive information. That would be bad in any circumstance,
but phantom debt collectors compound the impact of slipshod security.
When fraudsters get access to account details, it’s easier for them to
impersonate the company authorized to collect the debt. That puts consumers in
a deeper financial hole and makes it harder for legitimate collectors to do
their job. An FTC publication, Buying or
selling debts? Steps for keeping data secure, offers guidance for
industry members. The accuracy of information matters, too. Portfolios filled
with outdated or incorrect data undermine the entire system.
Federal and state agencies stand united in the fight against
illegal debt collection. Through the Fair Debt
Collection Practices Act, New York’s debt collection law and rules, and other
federal and state statutes, the standards are clear for companies willing to
comply with the laws – and the FTC, State AGs, and the Consumer Financial
Protection Bureau coordinate their efforts to challenge the practices of
companies that aren’t. One theme at the Buffalo Debt Collection Dialogue was a
call for reputable collectors to lend their support by letting law enforcers
know about rotten apples that are ruining the industry barrel.
The FTC will continue the conversation at Debt
Collection Dialogues in Dallas and Atlanta. Check back soon for
details.
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