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The growth of debt collection industry has been through aggressive practices
How would it feel if money was taken from your wages for a debt that is not yours? This unfortunate scenario happened two times to a New Mexico woman who had no connection to the Target Bank account or to the collectors employed by Target. With an explosion of growth in the debt buying industry since the 1980′s, cases like these are becoming increasingly prevalent. Now the combination of technology and large debt buyer firms has created a profitable industry that also holds the record for highest industry complaints logged with the Federal Trade Commission. Luckily there are consumer protection statutes in the Fair Debt Collection Practices Act that can help you to fight against collection bullies as the Government does not have the resources to respond to all the complaints it receives.
Lucinda Yazzie had the unfortunate experience of receiving some calls from bill collectors claiming she owed a late balance on a Target card. The creditors were informed by her, that the debt did not belong to her and that another person in area shared her name. Even though the debt collection agency had been informed, the representative followed up with a garnishment order. Her employer insisted this was not the same employee and the garnishment was dropped. The same collector sued Yazzie again after two years receiving another order for garnishment. The order was not lifted until the point in time when she filed a lawsuit of her own for violations against the FDCPA rules and guidelines.
In the end, she received a $1,260,000 settlement in the lawsuit. A very large award for this type of case. Lucina Yazzie took action and held the collection agency accountable; but most all people don’t take action against an industry with plenty of money and composed of competitive operators that are pushed to their max on boiler room floors.
The savings and loan crisis of the 1980′s lead to the creation of the debt buying and 3rd party debt collection industries. After the finished with the Savings and Loan assets, the debt buying and collection industry soon became known by insiders as the “Adjustable Receivables Management” industry. Now they have branched out into credit card and other consumer debts.
Debt buyers and collectors grew at a slow but steady pace until the Recession hit strongly in 2008 at which time analysts predicted an increase in business as well as complaints for the debt collection industry. These predictions turned out to be true as there were roughly 100,000 complaints in 2007. Annual instances rose to 130,000 in 2009. Aggressive tactics ignoring legal boundaries, use of technology to enhance calls to consumers and increased use of local courts to sue for delinquent credit card debts are the leading factors which are contributing to the rise in complaints
Even though creditors are required to hire collection companies with a qualified attorney in the same state as the debtor, this threat of “legal action” is a favorite among collection agencies. If immediate capability and intention to sue on the debt is not held by the collector then this is often an FDCPA violation.
Against a creditor’s lawsuit the fact remains that most people do not show up to defend when summoned to court yet a recent study showed that many of the respondents who did not show up for the hearing ended up having the cases dismissed. The study also states that the most important thing a consumer can do if sued by a creditor is to respond through the court system within the time allowed even if the debt is not theirs.
The fact that many creditor suits are thrown out illustrates that the heavy handed tactics the collectors take can often be a bluff as are many of their threats. However in an industry that has seen an increase in yearly profits of 58% in 2010. Being aggressive can pay off even if the laws aren’t always followed.
To defend themselves against non compliant debt collectors, the Federal trade commission urges consumers to use the provisions under the Fair debt collections practices act In much a similar scenario to the intensely partisan legislative scene that exists today, the FDCPA barely passed after a tenuous debate, and was enacted in 1977. However Congress ultimately realized that there was a need to protect people from all parts of society against abusive debt collection practices that were also rampant in the Seventies. The need still exists today.
A CNN article on money the head of a debt collection company notes that “Debt hangs around longer than ever before Debt is now a fact of life and a burden to manage for many Americans. It’s a good thing Certified Debt Specialists know just how to talk with bill collectors. These people are professionals and are aware of the ins and outs of the system. Now more than ever people are beginning to realize the requirement for a specialist that is certified and has the latest technology to serve as a contact and mediator with big debt collectors that just keep get bigger and bigger.
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