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March 06, 2008
Debt collectors breaking the rules even more in bad economy
I got a voice mail yesterday from a woman who wasn't a debtor. She wanted to know what she could do about a harassing call from a collector who listed all the supposed negative attributes of her neighbor. The consumer who called me didn't know that she'd been invited to a party, a block party.
"Holding a block party" is the internal debt collector term for an illegal effort to use phone lookup programs (before the internet, there were "reverse lookup" directories") to identify neighbors of a supposed debtor and then to make calls to "tell the neighborhood" that their "deadbeat" neighbor has to "pay up."
Oh, block parties just happen to be one of the many illegal activities of some debt collectors. And they're on the rise. According to Michelle Singletary's story What Debt Collectors Can't Do in today's Washington Post: One business is going strong in this flagging economy: debt collection. And with a growing number of collectors chasing down debtors, complaints are also rising about how debts are being collected. The Better Business Bureau expects the number of complaints to rise once 2007 figures are calculated. The trend has been upward in the past few years. In 2006, complaints about debt collectors were up 21 percent from the previous year, according to Edward Johnson, president and chief executive of the Better Business Bureau in the District.
"With the current state of the U.S. economy, we are forecasting an all-time high in the number of complaints against the industry," Johnson said.
The Federal Trade Commission said it received 69,204 debt collection complaints in 2006, more than the agency received against any other industry. We agree with the FTC that people should take responsibility for their debts. But they (and their neighbors) shouldn't be harassed by an often lawless industry whose excesses are troubling: "Zombie" debt collectors buy old unpaid debt for pennies (or less) on the dollar, then use merciless and largely illegal tactics to trick you into reaffirming that you owe an old debt, even when you never did. It was someone else with a similar name. Even if was you, you may no longer be legally liable by the statute of limitations. At least one credit card bank, MBNA (now part of Bank of America) has been accused in lawsuits and Congressional hearings of forcing identity theft victims who never had accounts with the bank to pay the debts incurred by the thief (report by National Consumer Law Center, report by Public Citizen, testimony to U.S. Congress by public interest attorney Paul Bland.)
Know your debt collection rights (FTC guide). As part of its resolution of the sub-prime mortgage meltdown, Congress should look into the rise of illegal debt collection activities.
Posted by Ed Mierzwinski at March 6, 2008 05:56 AM
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