FTC Cracking Down Against Debt Collection Companies
In a recent debt settlement case of the Federal Trade Commission v. Asset Acceptance Capital Corp., Asset acceptance agreed to pay $2.5 million in damages to victims of improper debt collection tactics. According to the article this case is just the first of several that may rock the debt collection industry. As an attorney who helps people file for bankruptcy, I hear about all kinds of tactics that these debt settlement companies try and use. Often times these tactics may be violations of the fair debt collection practices act, as was the case against Asset acceptance. In particular, asset acceptance was allegedly guilty of attempting to collect on debt that was older than the allowable statute of limitation without informing the debtors. This is a very deceptive tactic as most consumers become scared at the thought of being sued or being harassed by a collection company.
Most debt collection companies buy debts for pennies on the dollar from other collection companies or original creditors in order to attempt to collect on the debts. Often times they do not check to make sure the debtors actually owe the money or that the original creditor even has standing to attempt to collect on the debts. This is how consumers begin to be harassed without cause. If you are somebody who believes they are being harassed for a debt that you don’t owe you should contact the collection company and ask them to provide evidence that you actually owe the debt. More often than not these companies will not be able to produce such evidence.
In my opinion and I would think all other debt relief professionals would agree, that this recent settlement is very good news for debtors as creditors will not be so inclined to use deceptive tactics against debtors in the future if there are steep penalties to pay.