Pennsylvania residents who are struggling with overwhelming debt will likely know that debt collectors can be extremely persistent and aggressive. The Fair Debt Collection Practices Act places strict rules on lenders and prohibits unfair, deceptive or abusive collection practices, but finance companies often skirt these rules and seek to insulate themselves from the consequences by engaging the services of third parties to pursue unpaid debts on their behalf. This was the conclusion reached by the Securities and Exchange Commission after reviewing consumer complaints submitted about bill collectors.
The independent government watchdog referred to the behavior of debt collectors as unscrupulous. The agency backed up this observation by citing examples of consumers being threatened with violence or other criminal acts for not making payments on their debts as agreed. The collection companies hired by lenders also used obscene language, made contact at inconvenient times and threatened to inform others, such as employers and family members, about unpaid debts even though they were not parties to the loan agreements in question.
In response to these illegal practices, the SEC has introduced sweeping new rules that include heavy fines for financing and lending companies for a first and second offense. The penalties for third and subsequent violations are even more severe. The fines for these offenses are doubled, and third-time offenders could also be suspended for up to 60 days and have their permits to operate revoked.
The rules governing debt collection are clear, and companies can face civil litigation as well as official sanctions for violating them. Attorneys with consumer protection experience could help individuals who are being hounded by debt collectors by scrutinizing the tactics that are being used and identifying violations of state and federal law. Attorneys could then send cease and desist letters on behalf of consumers or initiate litigation against lenders or debt collection companies.
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