Monday, February 8th, 2010
Anyone who has ever been hounded by a debt collector has probably fantasized about giving the collector a taste of his or her own medicine. That fantasy may be much easier to realize than most people imagine, as the story of a Dallas debtor shows.
Background: Your Rights as a Consumer
Laws are in place at both the federal and the state level to protect all Americans from overly aggressive debt collection practices. In fact, between the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act, a lot of behaviors typical of debt collectors are prohibited.
In addition to other things, debt collectors cannot:
- Lie about their ability to take legal action to collect on a debt
- Call you repeatedly with intent to annoy or harass
- Call you outside of 8 am and 9 pm local time
- Contact you directly when you have indicated that you have legal representation
- Contact you by any embarrassing media (like postcards)
Unfortunately, many consumers are not aware of their rights and so do not take legal action against collectors who break these laws.
A Man with a Plan
According to the Dallas Observer, a man named Craig Cunningham has taken it upon himself to stand up for his consumer rights.
The Observer reports that Cunningham made some poor investment choices when credit was easy and ended up with more than $100,000 worth of debt. But, when collectors began contacting him and asking him to pay up, he decided to fight back.
Essentially, here’s how Cunningham has managed to make the most out of a bad situation:
- He hired a lawyer to represent him and help him understand the intricacies of the consumer protection laws that were relevant to his case.
- He began recording calls from his creditors and saving all forms of contact he received.
- With the help of his attorney, he filed lawsuits whenever a debt collector violated a national or state consumer protection law.
- He began receiving court settlements from successful cases.
Most collection agencies, it seems, prefer out-of-court settlements (which often involve a statutory fine) to taking a case to trial, since settlements save them money. The Observer notes that Cunningham has thus far earned $20,000 from suits against law-breaking collectors.
If you think your rights have been violated by a debt collector, consider contacting an attorney to determine whether you could take steps to receive compensation for the violations.
Additional Resources
Fair Debt Collection Practices Act (PDF)
Posted in Creditors, Financial Literacy, consumer rights, debt collectors | Comments Off
Friday, January 29th, 2010
The Federal Trade Commission announced this month that it has settled charges with three debt collectors accused of various types of abusive debt collection. The settlement, which reportedly includes the largest civil penalty ever levied on a debt collection agency, comes in conjunction with future restrictions for the defendants.
Fair Debt Collection Practices Violated
According to the case, the defendants violated terms of the Fair Debt Collection Practices Act, which outlines acceptable behavior for agencies responsible for collecting on debts. These guidelines prohibit a variety of actions, including:
- Contacting a debtor before 8:00 am or after 9:00 pm local time
- Contacting a debtor after receiving a written request not to do so
- Contacting a debtor at her place of work after being told not to
- Calling the debtor with the intent to annoy, harass or abuse
- Contacting the debtor directly when he is known to have an attorney
- Misrepresenting a debt or using deceit to collect money
- Threatening arrest or legal action when neither is an option
- Seeking more than a person legally owes
- Publishing a person’s name on a “bad debt” list
- Reporting information incorrectly to a credit reporting bureau
- Contacting a third party about a consumer’s debt
- Contacting a debtor by embarrassing media (like a post card)
In this case, the men were charged with threatening arrest and legal action when none was warranted as well as using harassment and abusive contact to collect debts. The men in question were senior managers at debt collection agencies and as such either participated in the illegal actions or were responsible for such actions among their employees.
The Settlements
One of the three defendants, Keith Dickstein, owner of Academy Collection Service, Inc., apparently paid a $2.25 million settlement in 2008. The two defendants who settled early this year, Edward S. Bastian and Edward Hurt, were saddled with fines of $375,000 and $300,000 respectively for abusive collection practices.
The fines were suspended after each man paid $7,500, based on their ability to pay; payment of the remainder will depend upon their future compliance with debt collection laws.
Your Consumer Rights
Federal law outlines many protections for consumers. Make sure you have an idea of what consumer rights you have so you can take legal action, if necessary, should they be violated.
Additional Resources
Fair Debt Collection Practices Act (PDF)
Posted in Creditors, FTC, Financial Literacy, debt collection | Comments Off
