The article below is courtesy of the Boston Globe. What I teach in my self help system helps people to avoid and counter the abuses discussed in this article.
Debtors don’t have to tolerate bad collectors
By Michelle Singletary | January 14, 2010
The Federal Trade Commission has just wrapped up a case that should send shivers down the spines of managers working in the debt-collection industry. You know, the same shivers that many consumers get when they receive calls from intimidating bill collectors.
In 2008, a Pennsylvania-based collection company – Academy Collection Service Inc. – and its owner paid $2.25 million to settle FTC charges its employees violated the Fair Debt Collection Practices Act. It was the largest civil penalty ever imposed on a debt-collection business. Recently, the FTC said it had entered into a settlement with the two remaining individual defendants who worked at Academy. The agency accused the supervisors of participating with, or having the authority to control, collectors who allegedly misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, all in violation of federal law.
Neither the company nor the managers admitted guilt. No one from the company returned calls for comment.
“The FTC wants to remind debt collectors of their responsibilities and obligations under the law,’’ said David Vladeck, director of the FTC’s Bureau of Consumer Protection.
Under the terms of the FTC settlement, two senior managers, who oversaw Academy’s Las Vegas collection center, were ordered to pay penalties of $375,000 and $300,000.
The fines have been reduced to $7,500, based on the financial situations of the managers. It’s dreadfully ironic that the managers get a big break on their debt after their company was accused of harassing debtors. I wish the larger fines hadn’t been reduced. This would have been a better example to the industry. These individuals would then understand how it feels to be a hounded debtor.
The FTC charged that Academy employees, in violation of federal law, were disclosing to consumers’ parents, children, employers, co-workers, and neighbors that they had unpaid debt. Individuals were also being called on their jobs even though collectors were told that the debtors’ employers prohibited such practices.
The FTC also said that Academy was making unauthorized withdrawals from consumers’ bank accounts and that collectors threatened consumers with violence.
The company’s internal compliance program sometimes caught collectors violating the law but allowed employees with multiple violations to go unpunished, the FTC charged. Even when workers were terminated for violations, the company rehired the same collectors within a few weeks or months, the FTC complaint said.
Although there are plenty of responsible debt collection firms, the Government Accountability Office has called for change to the law that covers how companies collect debt. The rise in credit card delinquencies and charge-offs that has accompanied the economic recession has focused new attention on the practices of creditors and third-party companies in collecting delinquent credit card debt, the GAO said.
The FTC has been evaluating whether there is a need to update the debt collection act. For example, the agency is proposing that when a debt collector contacts a consumer, the name of the original creditor and a breakdown of the debt owed, including the original principal, total interest, and total fees, must be disclosed.
While we wait for Congress to act, there is something you can do if you’re a debtor – know what your rights are.
You can find more information at www.ftc.gov/moneymatters.
Michelle Singletary writes The Color of Money for The Washington Post.
