Debt collection tactics can be dishonest and intimidating

The article below, printed in the Columbus Dispatch in January 2016, shows the debt collection tactics to which collection agencies stoop to collect debt – sometimes imaginary debt – from unsuspecting people. If you are being hounded by calls from creditors and you don’t know what to do, call me for a consultation and you will receive calm guidance and direction from a profession.

FTC case shows dirty side of debt collection

The Federal Trade Commission recently smacked down four debt-collection outfits and their affiliates that the agency said engaged in abusive practices.

This latest round of action is part of a federal, state and local effort across the country to target deceptive debt collectors.

I’ve been on the other end of a telephone call with a collector trying to bully me into paying a debt I didn’t owe. The person was trying to collect some medical payment that he claimed was owed by my deceased brother.

As I recall, he first tried to make me feel guilty, arguing that it was my moral obligation to pay for my brother’s debts. When I didn’t fall for that ploy, he became belligerent. I hadn’t co-signed on any debt for my brother, so I knew I was under no obligation to pay.

The shame of it is that many people would feel guilty or think they were obligated and would fall for something like this. Here are some of the tactics the companies involved in the recent FTC cases were alleged to have used:

• One collection operation, working under a number of names, demanded payment from consumers for payday loans and other debts even though the companies couldn’t prove that the people owed the money. Employees even pretended to be law-enforcement officials, according to the FTC. The agency said their ill-gotten gains came to $4 million.

• Another group of affiliated companies also had debt collectors impersonate law enforcement and threaten to arrest people. Employees also pretended to be “process servers” and told folks they would be sued and theirs wages garnished. The companies have agreed to a federal court order that bans them from collection activities and imposes a judgment of $2.2 million, which represents the companies’ debt-collection revenue.

• Another company sent people letters or postcards that were designed to look like they had come from a municipal court. The correspondence contained intimidating language such as “Warrant for Your Arrest,” “Final Notice Before Arrest” and “Pay Your Fine Now — Avoid Going to Jail.” Other recipients were told their vehicles could be impounded or they couldn’t renew their driver’s license. An order imposed a nearly $200,000 judgment, but it was suspended because of an inability to pay.

• A separate debt-collection outfit tried to collect payday loans that weren’t owed. People working for this company were prolific in their pretending, according to the FTC. They claimed to be affiliated with a law firm, with a government-fraud task force and with other federal and state agencies. The collectors had gotten access to information about people who had merely inquired online about payday loans. The company was found to have violated federal law by telling consumers’ family members, employers and co-workers about the purported debt. Debt collectors can try and locate you, but they are generally not allowed to discuss your debts with other people.

People working for the company used profanity and didn’t provide information in writing about the debt, according to the FTC.

This collector was ordered to pay more than $4.4 million for using deception and threats to collect on the phantom loans.

Under the settlements they agreed to, the four companies neither admit to nor deny any of the allegations, a spokesman for the FTC said. These cases bring to 130 the number of actions the FTC has taken over the past year in an enforcement initiative called “Operation Collection Protection.”

Even if you owe money, you have rights under the Fair Debt Collection Practices Act. You have a right not to be lied to or abused. The debt collector has to tell you how much you owe and the name of the creditor. You also have a right to dispute the debt. Find out more information about your rights at www.consumer.ftc.gov/articles/0149-debt-collection.

To help inform consumers, the FTC is releasing a series of videos with personal testimonies of people’s encounters with fraud. The first one deals with debt collection. The first video, “Fraud Affects Every Community: Debt Collection,” can be found at ftc.gov. It features Bryan Noyes, a veteran from Maine, who got help in fighting a collection action over a debt he didn’t owe. The next video will feature government imposters and be in Spanish with subtitles.

Don’t ignore a debt-collection action, but don’t let anyone intimidate you either.

Michelle Singletary writes for the Washington Post Writers Group.