Unfair debt collection: Part 1

From January 1, 2014 through December 31, 2014 the Consumer Financial Protection Bureau handled approximately 88,300 debt collection complaints.

From January 1, 2014 through December 31, 2014 the Consumer Financial Protection Bureau (CFPB) handled approximately 88,300 debt collection complaints. This is according to a new report issued last month. The primary law on the books since 1977 to protect consumers from unruly debt collectors is the Fair Debt Collection Practices Act (FDCPA). This is found at 15 U.S.C. § 1601 et seq. and can be easily accessed through the Federal Trade Commission (FTC) website.

The number one complaint by consumers is that debt collectors are attempting to collect on a debt that is not owed. Some additional common complaints involve communication tactics or debt collectors that do not properly disclose information about the owed debt or properly verify that the debt is actually owed. Seemingly worse are the complaints that debt collectors are making threats or actually taking illegal actions. Consumers are able to file such complaints by calling the CFPB at (855)411-2372 or by going online to the CFPB website. 

Under section 802 of the FDCPA entitled “Congressional findings and declarations of purpose” it is stated that there is “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” The complaints filed by consumers in 2014 seem to indicate that these practices are still widely used. In fact, CFPB sent approximately 39,500 of the debt collection complaints directly to the debt collectors for review and response. 

About two-thirds of these complaints were closed by the companies after giving an explanation tailored to the consumer’s complaint and in many cases giving an explanation that met the consumer’s desired resolution.  For example, if a consumer claims that they did not owe a debt, the company may respond by telling the consumer that they are right and that they just made a mistake. Sometimes a collector might continue to try collecting debt that is not owed because of a mistaken identity. It may be that the collector has your phone number in the wrong collection file. However, many consumers have complained that they continue to receive calls even after telling the collector that the alleged debtor cannot be contacted by the number dialed. 

The CFPB has been known to documented harmful telephone tactics. It is reported that one collection entity made 17,000 calls outside the hours allowed by the FDCPA. Even worse, they documented that this same entity had contacted a few consumers as often as 20 times within two days. In addition to misusing the telephone, some collection entities filed unfounded collection law suits. When someone is sued they have an opportunity to respond to the allegations.

Last year, CFPB examiners found that of 70 percent of consumers that answered the debt collector’s allegations, one or more of the debt collection entities dismissed the suit because they were unable to locate documentation to support their claims. In another situation, debt collectors would not actually file suit, but they would use the possibility of a lawsuit as a threat.  In 2014 the CFPB directed one or more debt collectors to cease threatening consumers with litigation that they did not intend to pursue.

If you believe that you may be the victim of unlawful or abusive collection practices, be sure to contact the CFPB or the FTC and file a complaint. If you are struggling with debt problems, Michigan State University Extension offers a variety of money management programs throughout the state of Michigan or you can visit their personal finance website for more information.

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