Fair Debt Collection Practices Act – New Video from the FTC

The FTC (Federal Trade Commission) recently produced a new video the concisely explains consumers rights per the Fair Debt Collection Practices Act (FDCPA).  It does a good job of quickly explaining what debt collectors can or cannot do when attempting to collect a debt.

For more information on the FDCPA and other money matters visit www.ftc.gov/moneymatters.

Know Your Rights!

If you’ve ever had to deal with a debt collector, then you would know it’s like stepping into a boxing ring for a fight against one of the toughest in the industry. Knowing just your simple rights as a debtor will prepare you for what could be a long, emotionally draining battle.

The Fair Debt Collections Practices Act (FDCPA) was created to help protect you, the debtor, against the unlawful and abusive tactics that these collection agencies practice everyday. Just knowing the restrictions that are placed on these collection agencies will prepare you when it comes to dealing with them directly. For more information on what a creditor can and can’t do, please visit:

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm

Just remember, creditors are use to dealing with debtors who know nothing about their rights and therefore bully consumers into providing what they want. It is important that you stay strong and do not give into the creditors scare tactics. Do not be afraid to stand your ground and let creditors know that you are aware of your rights and ability to file official complaints with the Federal Trade Commission (FTC). The creditors are simply pushing you as far as they can, so do not be afraid to stand up for yourself.

Outrageous FDCPA Violation

As I was reading an article about a $200 million lawsuit that the FTC and FDIC are jointly trying to file against a major, publicly traded credit card marketer and its debt collection agency for deceptive marketing and numerous FDCPA violations, a Program Manager popped her head in my office to let me know that a collection agency is calling our client’s neighbors and leaving notes on the neighbor’s door about our client.

I am amazed.  The above referenced companies are facing a $200 million lawsuit for FDCPA violations.   The FTC reported in it’s Annual Report 2008: Fair Debt Collection Practices Act that in November 2007, the FTC won a lawsuit against another collection agency for misleading, threatening and harassing consumers.  This collection agency was ordered to pay over $1.3 million in fines to settle the case.  A popular political topic in this year’s presidential campaign has been the credit card industry and America’s growing debt problem.  With all of  this going on, I am amazed that there are still some credit card companies and collection agencies with the audacity to so blatantly violate our client’s basic consumer rights and not think twice about it.  Did they not get the memo on what’s going on, or do they simply think they are above the law?

Well, be assured that we are working very closely with the client to help her through this troubling incident.  She is just as angry as we are about the situation and she plans to file an official claim with the FTC against the collection agency.  I hope that others who have had such an awful experience will do the same so that FDCPA violators can be penalized for their behavior.

(Ref. 1518)

A Collector’s Candid Intention to Violate the FDCPA

One of our Program Managers was talking to an agent from a collection agency today.  The agent was extremely upset that the clients were unable to make payments to their company even though we had explained many times that our clients had financial hardship.  The clients were a couple raising a mentally handicapped son.  The social security benefit they receive for their son is minimal.  In addition, the father has experienced a 3 month job loss and the mother has not been able to work for over 7 years to due a serious injury and has to rely on crutches and a wheelchair.

The agent’s reply to the Program Manager’s repeated refusal to give in to his high payment demands was to list off the names of 10 of our client’s neighbors.  We do not know for sure if these were truly the names of our clients’ neighbors, but the agent insisted they were.  He went on to add that he had their phone numbers and would start calling them right away about our clients’ situation if he didn’t receive a payment.

Our Program Manager said, “If you did that, you would be violating the FDCPA.”

The agent paused, then said that it wouldn’t be a violation if he didn’t disclose the reasons for his call. 

Our Program Manager replied, “You would still be violating the FDCPA.”

The agent ended the call with Provanta abruptly.

The Program Manager immediately contacted our clients to let them know of the agent’s unprofessional behavior and warned the clients that while it was probably just an empty threat, to keep Provanta informed of any misconduct by this agent or anyone else. 

Most collection agencies and collectors prey on consumers and take advantage of the fact that many do not know their consumer rights.  That is why many collectors get away with outrageous harassment threats and why many people give in to their tacitcs.  All of our representatives are fully informed of our client’s rights and they are not afraid to assert them for our clients. 

(Ref. 1512)

Fighting Fire With Fire

Sometimes, it’s like a battlefield…

In October 2007, Provanta negotiated a settlement on a $12,900 account with a collection agency who was representing the original creditor.  As with all settlements, Provanta required the collection agency to supply a written settlement agreement before any payment to them.  We received the written agreement, sent the settlement payment of $5,600 to the collection agency, and saved our clients a gross amount of $7,300. 

Three weeks later, Provanta received a call from a supervisor at the collection agency.  She informed us that the original creditor recalled the account and as a result they could not proceed with the settlement agreement.  This was completely unacceptable to Provanta, for we had a valid, signed settlement agreement that was in already in place, performed upon, and the payment accepted. 

To make matters worse, the original creditor sent the account to a collection attorney who threatened to sue our clients unless they paid the balance in full.  This was the last straw for Provanta, and we contacted an attorney that we have worked with for many years.  He specializes in consumer law and FDCPA, Fair Debt Collection Practices Act, violations.  He was more than happy to assist our clients. 

It took about 6 months and lot of letters to reach an agreement but we finally did.  In the end, the collection attorney agreed to accept the $5600 original settlement agreement, or deal with a lawsuit against themselves, as well as the original creditor, should they persist.

(Ref. 1506)

Did You Know All This?

While we at Provanta celebrate and applaud the do-it-yourselfer, it’s a step that ought not be taken lightly without really considering what you need to know in order to set yourself up for success. Let’s consider one aspect of settling your debts, working with debt collectors.

Here’s a post from a lawyer explaining just a bit about the Fair Debt Collection Practices Act (FDCPA), as enforced y the Federal Trade Commission (FTC):

“No, A Debt Collector Can’t Threaten You With a Baseball Bat”

At Provanta, our negotiators know the legal rights of its clients. What’s more, the collection agencies know that Provanta knows, so this in itself tends to protect clients from the worst abuses. Even still, our clients file a significant number of complaints every year on the FTC website.

FTC Issues 2008 Fair Debt Collection Practices Report to Congress

According to the FTC website:

Issuance of Commission report to Congress: The Commission has authorized the staff to release publicly the 30th Annual Report to Congress on the Fair Debt Collection Practices Act (FDCPA). This report, which is available now on the FTC’s Web site, summarizes the Commission’s administration and enforcement of the FDCPA during 2007. It presents an overview of the types of consumer complaints received by the Commission, descriptions of the Commission’s debt-collection law enforcement actions, and a summary of the Commission’s consumer and industry education initiatives. The FDCPA prohibits deceptive, unfair, and abusive practices by third-party debt collectors. Section 815 of the FDCPA requires the Commission to submit annual reports to Congress. The Commission vote to issue the report was 5-0. (FTC File No. P084802; the staff contact is Karen Hickey, Bureau of Consumer Protection…

The 16-page report (PDF) can be obtained here. Among many items of note in the report…

These actions are part of the Commission’s ongoing effort to curtail deceptive, unfair, and abusive debt collection practices in the marketplace. Such practices cause substantial consumer injury, including payment of amounts not owed, unintended waivers of rights, invasions of privacy, and emotional distress.

[...]

The Commission staff held a two-day public workshop in October 2007 to examine the industry and a number of current issues. The staff invited consumer advocates, industry representatives, state and federal regulators, and other experts to provide information and their views on the collection industry and related policy issues.

Of course, what the FTC may likely be unaware of is that the debt settlement industry is the perfect “private enforcement” of professional debt collection practices. We see violations of the FDCPA virtually every day at Provanta, and while most are not of the most egregious sort (child answers the phone; debt collector informs child he’s going to put mommy and daddy in jail if they don’t pay up), professional debt settlement companies go a long way towards mitigating the embarrassment and abuse that can result from a sincere financial hardship.

A suggestion concerning the FTC’s workshop: The Association of Settlement Companies (TASC), of which Provanta is a proud member, ought to field representatives from our industry the next time around.

I’ll have more to say about the FTC’s report in subsequent entries.