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Business // Thinking Smart
David S. Chang

Dealing With Debt Collectors

The Federal Trade Commission (FTC) recently slapped the largest civil penalty of $3.2 million on Expert Global Solutions, a third-party debt collector, for violating the Fair Debt Collection Practices Act (FDCPA). If you have been behind on paying bills or, in some cases, records mistakenly show you are, you may have had to deal with debt collectors. As of 2012, approximately 30 million U.S. consumers have on average $1,400 of debt under collection. Regardless of whether or not you owe the money, the FDCPA gives you the right to be treated fairly by debt collectors.

Some banks and creditors collect their own debt or sell it off to third parties. These third-party debt buyers can collect the debt themselves or sell it off again for collection. The Consumer Financial Protection Act of 2010 also protects all consumers from unfair, deceptive, abusive acts or practices from any collection agency. Here are things debt collectors cannot do:

* Repeatedly call to harass you, even after you’ve asked them to stop.
* Try to recoup more money than you actually owe.
* Threaten violence or some other exaggerated consequence, such as wage garnishment, jail time or damage to your credit score.
* Use obscene or abusive language.
* Make false promises that debts will be forgiven if consumers settle.
* Call before 8 a.m. or after 9 p.m.
* Divulge your debt to third parties, such as family, coworkers or friends they may contact in order to track you down.
* Call you at work after you’ve asked them to stop and knowing your employer does not allow it.
* Leave phone messages that disclose your name and existence of the debt.
* Won’t verify debts that you choose to dispute.
* Ignore your continued pleas to stop contacting you.

Regulators are greatly expanding their effort to crack down on debt collectors violating the law. The Consumer Financial Protection Bureau (CFPB) is another agency putting companies on notice about over-zealous debt collection practices. The CFPB has “published five action letters that consumers can consider using when replying to debt collectors.” To download and use the letters, visit ArtofThinkingSmart.com under SMART FINANCE. The five action letters are if you need more information on the debt, want to dispute the debt, want to restrict how and when a collector can contact you, have a hired a lawyer, and want the debt collector to stop and all contact.

“These bulletins make clear that it doesn’t matter who is collecting the debt – unfair, deceptive or abusive practices are illegal,” CFPB director Richard Cordray said at a hearing in Portland, Maine. “Consumers need options to help them secure fair and respectful treatment from those debt collectors who fail to abide by the law.”

To report a collector, contact the FTC, CFPB, the Better Business Bureau of Hawaii or the Department of Commerce and Consumer Affairs in Hawaii.

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