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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Winter 2008/2009 – Special Edition: Managing Your Money in Good Times and Bad

When a Debt Collector Calls
Beware of unfair practices and scam artists offering to "help" with credit counseling and debt management

People who are late making payments on a loan, a credit card or other bills may eventually be contacted by a "debt collector," a third-party hired by the original lender. Dealing with a debt collector can be stressful. But be aware that if you are overdue on a bill and get contacted by a debt collector, the federal Fair Debt Collection Practices Act requires that you be treated fairly and without harassment.

In general, the law prohibits certain unfair and deceptive collection practices. For example, the law prohibits a debt collector from calling you before 8 a.m. and after 9 p.m., unless you agree. The law requires a debt collector to stop contacting you if you make the request in writing.

Also, within 30 days from the initial contact made by a debt collector, you have a right to dispute any of the debt you are told you owe. If you dispute the bill in writing, the debt collector can't contact you again to collect the money until you are provided with proof of the debt, such as a copy of a bill.

If you have a problem with a debt collector, you can report it to your state Attorney General's office (listed in your local phone book or other directories) and the Federal Trade Commission (visit www.ftc.gov or call toll-free 1-877-FTC-HELP, which is 1-877-382-4357).

Note that the Fair Debt Collection Practices Act covers debt collectors but not banks or others that lend the money initially. However, under federal law governing unfair or deceptive business practices, banks cannot engage in abusive behavior when trying to collect a debt. If you have a question or a concern about your bank's practices, contact its federal or state banking regulator. You have the right to file a complaint with the regulator if you believe the bank acted improperly or illegally. If you're not sure how to locate that regulator, you can contact the FDIC for guidance (see Sources of Help and Information on Managing Your Money).

Also be on guard against scam artists who prey on people who are late paying their bills by offering to "help" by reducing or eliminating their debts.

"Consumers should be especially wary of promotions and unsolicited offers by companies that advertise credit counseling services or that promise to settle your debts with your creditors for less than you owe," said Deirdre Foley, an FDIC Senior Policy Analyst. "While there are many reputable organizations that offer credit counseling or that help consumers manage their debts, other companies charge high fees for questionable services or for services that are never delivered." (Also see When the Economy Cools Down, Financial Scams Heat Up for tips on how to avoid mortgage rescue schemes and a variety of credit-related frauds.)

Foley added that before working with any company or organization that says it will settle or negotiate your debts, check it out with your state Attorney General and the Better Business Bureau.

Be on guard against scam artists who prey on people who are late paying their bills. Be especially wary of promotions and unsolicited offers that promise to settle your debts with your creditors for less than you owe.
For more information about how to protect yourself when dealing with a debt collector or a credit counselor, read the consumer facts published by the Federal Trade Commission at www.ftc.gov/bcp/menus/consumer/credit/debt.shtm.

For guidance from the FDIC about how to handle difficulties making a loan or bill payment, see When Payments Are a Problem.

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Last Updated 5/26/2009