Unfair debt collection: Part 2

Many consumers are not aware that they have debts in collections.

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) share overall enforcement responsibility for the Fair Debt Collections Practices Act (FDCPA). The FDCPA, declares that “there is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” The March 2015 report published by the CFPB summarizes the activities taken by the CFPB and the FTC to administer the FDCPA. The debt collection industry is worth $13 billion dollars; however the FTC reports that the debt collection industry generates more complaints to the FTC than any other industry. 

It is safe to say that debt collection is big business. Unfortunately for consumers it also poses big issues. Many consumers are not even aware that they have debts in collections. This is particularly true of medical debt which can be very confusing for consumers. The report points out that as the economy improves, the supply of debt is expected to increase across debt markets.  One can conclude that as consumers go further in debt, their exposure to debt collectors will continue to increase. The oversight of this industry will continue to be very important for consumers.

Consumers are able to file complaints by calling the CFPB at (855)411-2372 or by going online to the CFPB website. In addition, consumers can contact the FTC to file a complaint online or by calling (202)326-2222. In 2014, the CFPB received about 88,300 debt collection complaints. The CFPB acts on these complaints in a number of ways. According to its 2014 report, they sent 45 percent of their debt collection complaints to companies for their review and response. Forty-four percent were referred to other regulatory agencies and the remaining 11 percent were incomplete or are still pending decision with the CFPB.

Of the debt collectors within the supervision of the CFPB, reviews found the following to be the most common complaints: excessive or inconveniently timed telephone calls made to consumers, misleading representations, false threats of litigation, prohibited disclosure of consumer’s information and outright false communication. These prohibited actions were not left unattended. According to the report, public actions supported by the CFPB and the FTC have resulted in over $570 million in consumer relief and over $13 million paid into the civil money penalty fund.

  The report references a number of tactics that were the basis for enforcement actions. In one case a debt collector led consumers to believe that they would be sued or subject to criminal prosecution if they did not make their payments. In another case, accusations of false claims had been made and the debt collection firm actually filed more than 350,000 debt collection lawsuits in one state alone over a four year period. Yet another action found that consumers were deceived into making payments on debts that were void or otherwise did not have to be repaid.  Outright fraud, coercion, intimidation, deception and various threats are common tactics. 

Violations of the Fair Debt Collection Practices Act are a big issue. 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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