FDIC Consumer News - Fall 2017
Having a Problem with a Debt Collector? You Also Have Protections
Debt collection problems are among the most common complaints received by the FDIC and the Consumer Financial Protection Bureau (CFPB). Many of these complaints suggest that some collectors may be demanding that people pay debts they've already paid or never owed.
If this happens to you, remember that the Fair Debt Collection Practices Act (FDCPA) is the principal federal law aimed at protecting consumers from abusive, deceptive and unfair debt collection practices by third-party debt collectors (companies hired by lenders to collect debts on their behalf).
For example, debt collectors are prohibited from harassing you with repeated phone calls. Collectors also are prohibited from calling before 8 a.m. or after 9 p.m., or contacting you at work if you are not allowed to receive certain communications there. They are not allowed to make false claims about a debt owed or a lawsuit being pursued, or to threaten to garnish your wages. Within five days of being initially contacted, the collector is required to provide a written "validation notice" of how much you owe, to whom, and what to expect next if you want to dispute the debt, unless the information has already been provided by the collector in the initial communication or you have paid the debt.
The law also says that after you tell a debt collector in writing that you refuse to pay or that you want the debt collector to stop communicating with you, the collector can only contact you one more time — either to tell you that all communications have ended or that it will take a specific action, such as suing you, to collect the debt.
While most debt collectors adhere to these rules promoting the fair treatment of consumers, other collectors may not. Be aware that con artists sometimes pose as legitimate debt collectors. "They may even claim to be government officials, including law enforcement, attempting to collect on a non-existent debt," noted Sandra Barker, an FDIC senior policy analyst. "Other possible signs of a fake debt collector include a caller who threatens you with violence or is unwilling to validate the debt by providing proof that it exists."
In one recent example, the Federal Trade Commission (FTC) filed charges against two individuals who allegedly created several businesses that appeared to be law firms to take people's money for fake debts by falsely threatening to sue or have the individuals arrested if they did not pay.
In general, how can you protect yourself when a debt collector contacts you? Find out the collector's name, address and phone number. Obtain the dollar amount they say you owe, including interest charges or debt collection fees, And, ask what the debt was used for and who the original creditor was. "Getting all of this information helps you determine if the debt collector is legitimate and if the information about the debt is accurate," said Heather St. Germain, an FDIC senior consumer affairs specialist.
She added: "If you are not sure the debt is yours or the amount of the debt is accurate, write to the debt collector to dispute the debt or have the company provide more information. If you know the debt is not yours, write a letter immediately to the debt collector and request to not be contacted again. If the debt is yours, but you can't afford to pay it, try to negotiate with the collector to pay a certain amount and have the rest forgiven."
Also take note of how old the debt is. Some states have laws preventing debt collectors from filing lawsuits to collect debts that are several years old.
If you believe a debt collector has violated the law, here are steps you can take:
File a complaint with a federal regulator. Two federal agencies — the CFPB (toll-free 1-855-411-2372) and the FTC (toll-free 1-877-FTC-HELP) — share overall enforcement responsibility for the FDCPA and accept complaints about debt collectors. If you file a complaint with the CFPB, it will contact the debt collector and try to help reach a resolution. While the FTC does not resolve individual complaints, it uses the information submitted to identify patterns of fraud and abuse within certain industries and businesses. The FTC also will provide information about what next steps you can take.
The FDIC, Federal Reserve Board, Office of the Comptroller of the Currency and National Credit Union Administration also handle complaints about debt collection practices at the federally insured depository institutions they supervise. The agencies also forward complaints to other regulators as needed. To determine which regulator has jurisdiction over a particular banking institution, so you can submit a complaint to the correct agency, you can call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342) or use BankFind, the FDIC's online directory of FDIC-insured financial institutions.
Report the problem to your state Attorney General's office or to other state or local regulators. It's possible that a debt collector also may be violating state or local laws. If so, the relevant State Attorney General can sue a debt collector on behalf of the state. Other state or local regulators that handle consumer complaints can take action on your behalf. If you need help locating your state's office, start with the National Association of Attorneys General's website or call 1-202-326-6000.
Note: Even if a debt collector violates the FDCPA, this does not erase any legitimate debt you owe.
For more information on dealing with debt collectors, resources include back issues of FDIC Consumer News and webpages from the FTC and the CFPB. The latter has sample letters you can use to respond to a debt collector and tips on how to negotiate a debt settlement.