In the economic downturn, the debt collection industry has gotten more and more aggressive.
How would you react if your wages were garnished to pay a debt that is not your liability? This unfortunate scenario happened two times to a New Mexico woman who had no connection to the Target Bank account or to the collectors employed by Target. Cases like this are becoming more common as the debt buying industry has grown by leaps and bounds since the 1980′s. Now the combination of technology and large debt buyer firms has created a profitable industry that also holds the record for highest industry complaints logged with the Federal Trade Commission. Luckily there are consumer protection statutes in the Fair Debt Collection Practices Act that can help you to fight against collection bullies as the Government does not have the resources to respond to all the complaints it receives.
Lucinda Yazzie was very dismayed to receive calls from bill collectors accusing her of being late on paying her Target card bill. She told the collectors there was another person living in the same area as her with the same name, and the debt was not hers. Debt collectors successfully obtained a garnishment order despite her repeatedly contacting dept collection agencies. Her employer claim that this was a different employee and stopped the garnishment. Yazzie had another garnishment order against her two years later when the same debt collection firm filed suit again. Until filing a lawsuit of her own for FDCPA violations, the former standing order was still considered in affect.
In the end, she received a $1,260,000 settlement in the lawsuit. This award is larger than usual for this type of case. Lucina Yazzie took action and held the collectors accountable; however most Americans don’t take action against an industry with plenty of money and composed of very motivated employees that are pushed to their maximum on noisy collection floors.
The debt buying industry and 3rd party debt collection had its’ origin during the 1980′s Savings and Loan crisis. Soon after dealing with Savings and Loan assets, the debt buying and collection industry became known by insiders as the “Adjustable Receivables Management” industry. They have now branched out into credit card and other consumer debts.
Debt buyers and collectors grew at a slow but steady pace until the Recession hit strongly in 2008 at which time analysts predicted an increase in business as well as complaints for the debt collection industry. These predictions turned out to be true as there were roughly 100,000 complaints in 2007. Annual instances rose to 130,000 in 2009. Several factors influencing the rise in complaints include aggressive tactics that ignore legal boundaries, technology to increase calls to consumers and the increasing use of local courts to sue for delinquent credit card debts.
Although a creditor must hire a collection agency with a qualified attorney in the same state as the person who owes the debt, the vague threat of “legal action” is a favorite among bill collectors. If the collector doesn’t have the immediate means and intentions to take legal action on a debt, this could be a violation of the Fair Debt Collection Practices Act.
Research has shown that respondents who appear before the court for their creditor lawsuits are much more likely to have their cases dropped than those who did not. If sued by a creditor the most important thing a consumer can do is to respond through the court system within the time allowed even if the debt is not theirs, the study shows.
Because many suits are rejected by the courts it’s evident that collectors are often bluffing. However in an industry that has seen an increase in yearly profits of 58% in 2010. Even though the laws are not fully followed, just being aggressive can give good results.
Due to the large number of complaints, the Federal Trade Commission (FTC) advises individuals to utilize the provisions noted in the Fair Debt Collection Practices Act that are there to assist consumers in protecting themselves against debt collectors who do not follow the guidelines set out in the law. In much a similar scenario to the intensely partisan legislative scene that exists today, the FDCPA barely passed after a tenuous debate, and was enacted in 1977. However Congress ultimately realized that there was a need to protect people from all parts of society against abusive debt collection practices that were also rampant in the Seventies. That need still exists today.
In an Article on money by CNN the owner of a debt collection agency notes that “Debt hangs around longer than ever before Debt has become a reality and burden for many people in America. Fortunately there are Certified Debt Specialists who have experience talking to hundreds of bill collectors. They have all gone through extensive training in order to familiarize themselves with every possible situation. More than ever before consumers are realizing the need for a specialist with technology that is certified to serve as a contact and mediator with big debt collection agencies that just keep get bigger and bigger.
