Debt Collection News - Debt Collection Supervisors Settle FTC Charges
The Federal Trade Commission administer a wide variety of consumer protection laws, engages in law enforcement, and develops policy and research tools to prohibit unfair and deceptive acts or practices against consumers including actions that involve credit reporting agencies, credit repair services and debt collection activities.
The FTC produces press releases on action taken against businesses and individuals that fall under the jurisdiction of the FTC.
This is a recent press release on action taken by the FTC regarding unfair and deceptive practices regarding debt collections.
Concluding a case that drew the largest civil penalty ever imposed on a debt collection business, the Federal Trade Commission settled with the two remaining individual defendants who allegedly misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. The settlement order requires each of these senior managers to pay a civil penalty and bars them from future violations.
“The FTC wants to remind debt collectors of their responsibilities and obligations under the law. Abusive collection actions are illegal, and if debt collectors use abusive tactics they could face legal action,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “At the same time, we want consumers to understand their rights if their debts go into collection. Money matters, and the more people know about managing their debt and dealing with debt collectors, the better off they will be.”
According to the FTC’s complaint, filed by the Department of Justice on the FTC’s behalf, the defendants participated in, or controlled, the actions of debt collectors whose unlawful practices included false or deceptive threats of garnishment, arrest, and legal action; improper calls to consumers; frequent, harassing, threatening, and abusive calls; and unfair and unauthorized withdrawals from consumers’ bank accounts. The complaint also alleged that the defendants failed to adequately investigate consumer complaints or discipline collectors, and collectors who were terminated for violating the Fair Debt Collection Practices Act (FDCPA) often were rehired within a few months.
In 2008, Academy Collection Service, Inc. and its owner, Keith Dickstein, paid $2.25 million to settle FTC charges that Academy collectors violated the FTC Act and the FDCPA while collecting debts, and that Dickstein failed to stop the violations. The settlement order announced today, negotiated by DOJ and the FTC, imposed civil penalties of $375,000 and $300,000, respectively, on Albert S. Bastian and Edward Hurt, who oversaw Academy’s Las Vegas collection center. The judgments were suspended upon payment of $7,500 each, based on their ability to pay. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.
The order bars Bastian and Hurt from making false, deceptive, or misleading representations in debt collection efforts, such as that nonpayment will result in garnishment of wages, seizure of property, or lawsuits, or that they or their agents are attorneys. They also are prohibited from withdrawing money from consumers’ bank accounts without their express informed consent, and from depositing or threatening to deposit postdated checks before the date on the check. In addition, the pair are barred from improperly communicating with third parties about a debt; communicating with a consumer at any unusual time or place; and harassing, oppressing, or abusing any person in connection with debt collection.
The Commission vote to authorize DOJ to file the consent decree was 4-0. The consent decree was entered in the U.S. District Court for the District of Nevada. This consent decree is for settlement purposes only and does not constitute an admission by these defendants of a law violation. A consent decree is subject to court approval and has the force of law when signed by a judge.
Rules to Follow with Debt and Debt Collectors
We all want to pay our bills on time but sometimes due to some financial crunch it is not possible to make even the minimum payments and meet due dates. If a debt goes unpaid for an extended period of time, creditors may turn your account to a collection department or agency. It is true that debt collectors have the right to demand payment and take legal action if necessary, but often they would rather collect a portion of the debt than have to take more drastic actions.
Before you start dealing with delinquent accounts and collection agencies, take a look at your monthly budget. Take a real look, not a wishful peak. If your budget is upside down or underwater it is time to address this situation. Half the world has too much debt and is struggling; no one will look down on you because you are struggling too. But address your budget to obtain your own financial freedom, figure out how far behind you are and then what you can fix or maybe what you can not fix. Stress will kill you, not the credit card bill.
If your credit is not in terrible shape already, it may be possible to reduce your other monthly expenses. This may very well mean making hard choices or changing your lifestyle to fit your income and get your bills under control. A little bit of pain to reduce expenses is well worth it to alleviate the stress and maintain fair to good credit. Consider all options such as, selling a household goods, getting a part time job, taking equity out of your home, applying for a non secured signature loan, obtaining a loan from a relative or other money raising endeavors.
If the wolves are already at the door, that is the debt collectors and collection agencies, handle these debt collectors courteously and promptly. Often, creditors are more agreeable to working with consumers who admit they are in trouble and need some help with their budget and working things out.
Before you handle what it is that is coming your way, it is important to know where you stand. Try to understand what debts are delinquent, how much you owe and what your capacity is to pay these debts back. This is fairly standard budgeting 101. Unfortunately, for many consumers who are behind the eight ball the number one response to bill collectors and over indebtedness is to bury their head in the sand. Don’t be alarmed, this is a common response. But, try to pour an extra cup of coffee one morning and wrote down where you stand.
In the big picture, you can’t go to jail for owing money on your car or credit card or medical bill. Relax, but spend time to review where you stand. Delinquent debts are going to be reflected in your credit report and impact your credit score for the worse but you can rebuild and money is just money it is not love or happiness.
It is usually best to act quickly for the most effective resolution. Heck, if you can’t settle the bill to your satisfaction you can always try again. The faster you address the issue early on, the more likely you are to help save your credit report and credit score but equally important if you can not reach an agreement in the early stages with the bill collector, let them stew for awhile while you work on plan B.
Be prepared to negotiate. Collection agencies are almost always authorized to negotiate repayment terms that are significantly below the total amount of the debt. If you can’t pay the full amount, but are willing to pay a percentage, tell them so. In many cases, they will prefer to get something from you than nothing at all. Don’t cave in too early, make them work for their money and pay as little as you can.
Make sure not to offer too much information. Don’t give a collection agency your bank account information or credit card number. If at any time you feel pressured, slow the conversation, out the conversation on hold or if you are really feeling overwhelmed exercise some power and hang up. High pressure collectors should be hung up on or better yet if they are caught engaging in illegal collection activity they should be sued.
Collection agencies have had a reputation for bullying and even using threatening tactics to try to intimidate people into repaying debts. This kind of abuse and harassment is illegal and should be reported to the FTC.
The Fair Debt Collections Practices Act is a Federal Law meant for the protection of consumers. The Fair Debt Collections Practices Act outlines specifically what collection agencies can and cannot do when trying to collect unpaid debts. Some of the rules they must follow such as not being allowed to call at your workplace without your approval. If you need to or want to, you can send a letter using registered mail to the credit collection agency asking them to stop calling you. By law, the collection agency must comply.
Obscene language or threats of violence are absolutely forbidden and a collector is not allowed to threaten you with false statements. The law also defines the type of information a debt collector is entitled to collect from the debtors. The FDCPA spells out the rules for legal action that can be taken against the creditors and the collection agencies for violating the Act.
You should know your rights and demand to be treated fairly and with respect when you work with debt collectors and collection agencies.
If you are having too much difficulty making ends meet and your credit is already damaged you may want to put a hold on everything by looking into a bankruptcy filing. Consider this option if you are so far in debt that you can never repay it. Issues regarding bankruptcy should be reviewed with an attorney or at least a credit counselor. Bankruptcy can have the biggest impact on your credit profile and may be the least desirable from a credit standpoint. But, when it is necessary, it is a viable option that should not be ignored.
In the early stages of credit collections and debt management, the goal is to try and rearrange your budget and clear up the debts and keep your credit record from too much damage.