Agencies Step Up Oversight Of Debt Collector Harassment

Washington, DCRegulators have stepped up their efforts to prevent debt collector harassment of consumers whose debts have gone into collection. Complaints have arisen lately about bill collector harassment, with at least one debt collector issue resulting in a massive fine against the collector.

The Consumer Financial Protection Bureau released two bulletins on July 10, 2013, regarding debt collection practices. At the same time, it also released tools for consumers to use to fight back against illegal debt collection. Those tools included action letters consumers can use to replay to debt collectors and a means for consumers to file complaints to the bureau about problems with unethical debt collectors.

Meanwhile, the bulletins put out by the bureau clarified the laws about illegal debt collection practices for companies involved in debt collection, including banks and other direct lending institutions.

Among illegal debt collection practices are threatening violence, attempting to recover more money than is actually owed, making repeated contact after being asked to stop, calling outside the hours of 8:00 a.m. and 9:00 p.m., and giving information about a person’s debt to a third party.

In July 2013, the Federal Trade Commission hit Expert Global Solutions with a $3.2 million fine for breaking debt collection laws and harassing consumers. Among the allegations against the company was that it called people at their workplace and called consumers repeatedly in a day.

Consumer Reports (7/16/13) notes that almost 25 percent of complaints received by the Federal Trade Commission in 2012 involved complaints of harassment on the part of debt collectors. In addition to complaints about harassing phone calls were complaints of threats to arrest the consumer or seize the consumer’s property and complaints about obscene language.

In May, the state of California filed a lawsuit against JP Morgan Chase, alleging the bank used illegal tactics against approximately 100,000 Californians. The state also recently passed a law that requires debt buyers - companies that buy debt from lenders - to have documentation that there is a legitimate debt owed.

And there is no guarantee that a debt is legitimately owed. The Wall Street Journal (7/9/13) reports that an internal review of lawsuits filed by JP Morgan Chase against credit card users found that out of 1,000 lawsuits, there were mistakes in nine percent of the cases. Those mistakes varied from inaccurate interest and fees, to errors that inflated the amount owed by the debtor.