Watch for Debt Collection Scams

Debt collection scams can cost consumers financially as well as cost time and aggravation.  Debt collection scams and errors occur when the information about a consumer’s debt is recorded incorrectly.  Errors regarding debts and debt collections may include minor issues such as the wrong amount recorded in the credit report or major issues such as the wrong person being attributed to the bad debt. 

Errors often occur when a bad debt is released or sold from the original creditor to a collection company.  These bad debt errors can cost an individual money with unnecessary payments as well as a poor credit history and bad credit score.

Unfortunately, in some egregious cases the debt collection error is due to willful acts made by the collection agency.  Collection agencies that end up doing more damage to an individual credit history and credit score by not recording payments properly or displaying a debt as not paid when it should be and other related problems that are caused by willful neglect or intentional deceit. 

An example of improper acts conducted by collection agencies was brought to light by a settlement between the FTC and large collection agency.  The FTC news release regarding this settlement simply stated “Claimed Debts Were Owed Despite Consumers’ Disputes”

In the press release by the FTC the complaint stated that a nationwide debt collector has agreed to pay a fine of more than $1 million to settle charges that it violated federal law by inaccurately reporting credit information and pressing consumers to pay debts they often did not owe.  The FTC charged a company called Credit Bureau Collection Services with these actions and of violating the FTC Act and the Fair Debt Collection Practices Act.

The company was charged with violating the Fair Credit Reporting Act by reporting information to credit reporting agencies that consumers had proved was inaccurate, failing to inform the credit reporting agencies that consumers had disputed the debts, and failing to investigate the accounts after receiving a notice of dispute from a credit reporting agency.

The Federal Trade Commission is a federal government agency authorized to prevent fraudulent, deceptive, and unfair business practices and includes practices in credit reporting and debt collections.  Unfortunately, by the time the FTC addresses an issue there may be numerous consumers who have already experienced damaging results by the actions of others.  Knowing the laws and rules regarding credit reports, credits cores and debt collections can help save someone from being the victim of unlawful practices and abuses.