Abusive debt collection: feds bust predatory collection agency
In November 2014, seven individuals were charged with the federal crime of conspiracy to commit wire fraud for their roles in operating an abusive debt collection scheme, announced the FBI, in partnership with the U.S. Department of Justice, the Federal Trade Commission and the Consumer Financial Protection Bureau.
Based in Georgia, the firm targeted at least 6,000 debtors – or would-be debtors – nationwide, collecting more than $4 million over five years. According to the FBI in its press releases, sometimes the collection agency attempted to collect authentic debts (apparently purchased from original creditors) and other times, debts created out of thin air.
The firm’s manipulative and often false assertions meant to intimidate and frighten debtors into paying money were draconian. Some examples:
- Callers threatened to suspend driver’s licenses.
- Callers claimed to be part of the DOJ, U.S. Marshals Service, fabricated government entities, local law enforcement, law firm and more.
- Callers used legalistic language.
- Callers were particularly cruel toward vulnerable debtors such as those who were pregnant, ill or unemployed.
- Callers threatened to arrest, prosecute or imprison debtors.
- Callers accused debtors of having committed crimes.
- Callers used false names and titles.
- Callers created bogus payment deadlines.
- And more
While this case was serious enough to result in criminal charges in connection with the collection scam, it also illustrates examples of civil restrictions on debt collection.
Both federal and state laws regulate debt collectors. The main consumer protection law restricting debt collectors from using abusive or unfair practices is the federal Fair Debt Collection Practices Act, known as FDCPA, enforced by the Federal Trade Commission, often called the FTC, a federal agency.
The FDCPA targets debts of an individual person in his or her private capacity, not business-related debt. So when a debt collector tries to collect money to satisfy an obligation like a medical bill, personal credit card, mortgage, car loan and so on, the collector must comply with the FDCPA’s restrictions, which include:
- Collection activity may only take place between 8 a.m. and 9 p.m., unless agreed.
- Collectors may not call debtors at work if they have been told not to do so.
- Debtors may tell collectors in writing not to contact them (with narrow exception).
- Collectors must send validation notices in writing within five days from first contact.
- Debtors may contest debts in writing or ask for proof of debts within 30 days of the validation notices, after which the collectors may not contact them except to verify the debts, or after verification.
- Collectors may only contact third parties like family, friends or colleagues about debtors for certain identifying information like addresses, phone numbers and places of employment; and collectors may not harass those third parties.
- And more
The law also controls the manner and content of the debt collection attempt. For example, a debt collector may not harass; threaten harm; use obscenity; misrepresent or lie; threaten arrest; threaten legal action that it is not authorized to take or does not intend to take; engage in unfair practices like try to collect extra interest; and more.
If you are experiencing harassment from a debt collector, contact an experienced consumer protection attorney like a consumer advocate from Philadelphia’s Bensley Law Offices, LLC. A knowledgeable collection defense lawyer can advise you of your legal rights, including a potential lawsuit for damages in state or federal court based on the FDCPA.