Stop abusive debt collectors

Published July 8, 2006

Crawling out of debt can be a tough, emotionally taxing task - especially when that debt is not legitimately your own. The New York Times recently described the case of a New York City woman whose bank accounts were frozen when a third-party agency reported that she owed $2,300 to a credit card company for general expenses, including gas. The woman, who has never once owned a car, is one of a growing number of Americans who have fallen victim to illegal intimidation practices used by consumer collection agencies. Third-party debt collectors are popping up in Florida and across the country like spring dandelions, and too many of them aren't playing fair. Instead of following appropriate protocol, it has become all too common for collectors to misrepresent themselves and harass borrowers who have fallen behind - and some who are already victims of identity theft. It's time for a federal crackdown.

The Federal Trade Commission received 66,627 complaints of inappropriate debt collection methods in the 2004-05 fiscal year, an increase of 14 percent from the previous year. This raises a sea of red flags that ought to catch everyone's attention.

Third-party collection agencies usually come into play when creditors sell bundles of debt cases to avoid the potential costs of litigation. Some consumers cited incidents in the New York Times where collection agents posed as lawyers or law enforcement officials, threatening legal action or arrest. Others said debt collectors came knocking for money that was already deemed as stale or unenforceable debt. In Florida, where the number of active debt collection agencies has risen 30 percent in the last six years to more than 1,000, similar cases are being pursued by Attorney General Charlie Crist.

A year ago, the FTC won a $10.2-million judgment for illegal collection practices against National Check Control of Secaucus, N.J. This battle was a victory for the government, but it was only one agency in a business with too many bullies. The only way to reduce such consumer abuse is through tighter controls and better enforcement of the Fair Debt Collection Practices Act. It's not enough to play catch-up by getting the bad guys through a few big-money court cases. Consumers should pay their debts and be held accountable when they don't, but they should not be subject to misrepresentation and harassment by aggressive bill collectors.