FTC “Debt Collection Complaints Rise 73%”

This week the Los Angeles Times reported that the in the past year the Federal Trade Commission (FTC) handled 180,928 complaints about debt collection agencies, landing debt collection in the #1 spot of most complained about industries.

In a down economy like we have today, it’s unfortunate, but the typical debt collector deals with people’s hampered ability to pay by doubling down on their high pressure tactics.

What was interesting to me about this report is that only half of the complaints were about abusive phone calls. Typically this is the runaway category. However many of the complaints this time were about legal tactics undertaken by debt collectors.

UPI reported on a California State Senator, Jose Luis Correa, who found his wages garnished on a $4,329 debt owed to Sears. Only problem is the collector had the wrong Luis Correa.

Why do debt collectors employ this fast and loose approach to lawsuits? Because it works.

Typically the debt collector files suit (often with dubious proof and a shoddy paper trail) and either the defendant is never served so they don’t know about their trial, or they just don’t show up. Either way, like clockwork, this results in a default judgement in favor of the collector. Now they can use the court system to strong arm their collection process.

Then there are the cases of blatant deception.

In another excellent job of reporting by UPI they highlighted the unfortunately to common case of Katie Brown, of Piqua, Ohio, who received a call from a legal aid service she had previously contacted. After divulging private information, the caller disclosed he was a debt collector holding her debt from the International Asset Group of Amherst, New York.

This is false representation and a form of debt collection harassment which is illegal. Ms. Brown is standing up to IAG, turning the tables and suing them.

It’s not easy for the little guy, especially a financially stressed little guy, to stand up to deep pocketed, conniving bullies like IAG. But, going after the bully in the place they value most, their pocketbooks, is likely the only way to get them to stop….short of legislation.