Debt Collection Industry Abuses Run Wild
While rumors and anecdotes of illegal and abusive practices occurring in the nations' debt collection firms have swirled around the Internet for years, Newsweek offers a report from someone who worked inside the industry for five years.
Alexis Moore, who took the debt collection job because it was either that or homelessness, recalls that during her tenure with the debt collection firm, she was asked to break the law by her employers every day. For starters, Moore was ordered to call debtors in California, which has stringent consumer protection laws that pertain to debt collection. She was asked to disregard those laws.
When someone would hang up on her, reported Newsweek, “I would get direct orders to immediately call that person back,” says Moore, and to continue calling until she got results. And while federal law strictly prohibits (in the Fair Debt Collections Practices Act) debt collectors from informing or enlisting in the help of third parties – such as relatives or neighbors – Moore was asked to do that as well.
“When we couldn’t reach someone, we were instructed to contact a neighbor and ask them to pin a note to a person’s front door, saying to call us because they owe us this money,” said Moore, who was also asked to contact a debtors' family members.
Why not complain to her employers? Those employees who did complain about the tactics the firm used were told they could leave if they wished. (Which would appear to be the only thing separating the debt collectors from organized crime.)
Moore, who understands some Spanish, told Newsweek she regularly heard Spanish-speaking debt collection employees threatening debtors with deportation, and she even heard some threaten debtors with physical violence. (“We know where you live so you better pay up.”)
Illinois' Attorney General revealed earlier this year that consumer complaints about debt collection practices have been soaring as of late and were consumers' number one complaint to consumer protection organizations. Overall, the FTC (News - Alert) registered 164,361 complaints from consumers through December 8 of this year. That number is 17 percent higher than the 140,036 debt-collection complaints the FTC for all of 2010.
Debt collection abuse is now under the purview of the newly created Consumer Financial Protection Bureau (CFPB), and the agency is expected to target – among other things – the illegal and abusive practices of the debt collection industry.
Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.
Edited by Jennifer Russell