Jennifer Ringstaff felt nothing but relief when the repo-man came to her Virginia home recently and repossessed her Dodge Caravan.
Ringstaff said she had endured months of humiliation at the hands of debt collectors who made calls and disclosed her debt to relatives and employer.
They got so hateful on the phone that I wouldnt answer it, said Ringstaff, a mother of two children, ages 13 and 11. Its embarrassing. I was on the verge of losing my job because they [debt collectors] called my boss at home and called him a liar.
In Tennessee, Bobbie became suspicious when her deceased husband received a bill recently from a debt collection agency based in Illinois offering to settle a debt from a cell phone carrier. Her husband died in 1999. Bobbie asked ConsumerAffairs.com not to publish her full name.
And Annette Jaramillo, of Apple Valley, Calif., was outraged when a Miami debt collector called her home and told her teen-age daughter and son in separate calls that their parents were going to jail.
I dont care how much is the debt. It could be million of dollars, Jaramillo said. You dont do that to a child. My daughter was so scared and she was fearful that something would happen to us.
Debt collector abuses are nothing new. But consumer advocates fear the abuses will grow more widespread in numbers and scope at a time when millions of Americans are struggling to pay their bills.
Theres no doubt that the debt collection industry is thriving. You cant get blood from a rock, but these guys are trying, said Ira Rheingold, executive director and general counsel of the National Association of Consumer Advocates, a consumer advocacy group based in Washington D.C.
Hundreds of consumers, including Ringstaff, Bobbie, and Jaramillo, have posted complaints on ConsumerAffairs.coms site, alleging that scrupulous collectors have threatened arrest and jail, made harassing phone calls, contacted third parties and told about the debts, called employers at work and also tried to collect a debt not owned by the consumer, all violations of the Fair Debt Collection Practices Act. More alarming, consumers have complained that debt collectors have gained access to their bank accounts and made withdrawals without their consent.
Under FDCPA, debt collectors are not allowed to tell others about consumer debts unless that other person is your spouse, attorney or co-signer. They can call neighbors or relatives in their attempts to contact the consumer, if they dont know where they currently live. But they cant say they are calling to collect a debt. And once they found the consumer, those calls should stop.
Even so, the Federal Trade Commission, the federal agency that collects consumer complaints against third-party debt collectors, says the debt collector industry has topped all industries for years in the number of consumer complaints filed each year.
Last year, consumers filed 119,549 complaints against third party and creditor debt collectors claiming violations of the FDCPA, up from 104,642 complaints filed in 2008. Consumer advocates say these numbers dont reflect the gravity of the problem because most consumers dont file a complaint.
Some of the alleged abuses included trying to collect a debt that isnt owed or is beyond the statute of limitations, making harassing phone calls, threatening to make arrests that the debt collector has no authority to make, and collecting a debt discharged in bankruptcy.
Consumers should take notes every time they talk to a collector and start a file to store any legal notices including any hand-written notes or recording conversations with a debt collector or an attorney. If a consumer suspect a debt collector has violated the law, the consumer can file a complaint with the FTC and his/her states attorney general office. Another option is to contact a consumer attorney, if they suspect that an attorney has violated the law.
A law to protect consumers
The Fair Debt Collection Practices Act was enacted in 1977 to protect the public from abusive, unfair and deceptive practices by debt collectors and the FTC became the primary enforcer of its rules and regulations.
While the rules have been the subject of minor changes over the years, the main focus has remained the same: debt collectors are entitled to do their jobs, but not by badgering, pestering, and harassing consumers.
Consumer advocates said the debt collector industry is running amok and nobody, including the federal government, has acted as a watchdog to halt bad practices.
The problem is that harassment and abusive behavior continues and the penalties for getting caught are not big enough to stop it, said Lauren Saunders, managing attorney of the National Consumer Law Center, a consumer advocacy group based in Washington, D.C. Federal regulations had not been adjusted in 30 years and you need an attorney to stop it and a collector getting caught is not enough.
Debt collectors play a vital role in the U.S. economy and third-party debt collectors returned $40 billion to the economy in 2007, according to statistics provided by ACA International, a trade group which represents 3,500 members, which is about 90 percent of the industry in the U.S. There are approximately 6,500 collection agencies operating in the nation.
Rozanne M. Andersen, chief executive and general counsel of ACA International, contends the industry is not out of control.
Theres law enforcement within the states such as the attorney generals and the Federal Trade Commission, Andersen said.
The Minneapolis-based group has a code of ethics and the organization can terminate the membership of those found violating federal rules and the groups ethics.
The trade group has terminated 21 memberships since 2004. If a member is suspended or expelled, the members company name is published in Collector magazine and on the ACA Web site for one month.
I know that many people think that its like a fox watching the henhouse and consumers might not trust the process, but we are committed to expelling or suspending those who are not abiding the law, Andersen said. We denounce the bad practices that you described [intimidation and harassment].
Consumers describe alleged abuses, debt collectors respond
After her husband underwent heart surgery in 2007, Ringstaff tried to refinance her vehicle loan but Chrysler Financial turned her down.
I told them [Chrysler] I didnt want the car and that I couldnt afford it, said Ringstaff, noting the company told her that they would work with her to make the payments.
But, Ringstaff, who works four jobs to support her family, fell behind in her payments and couldnt catch up.
Thats when the calls began: Debt collectors called her home at all times of the day even if she was one day late making her monthly payments.
The harassment went to a level so bad that it was illegal, said Ringstaff, 36.
Citing privacy issues, Chrysler Financial declined to comment about the specifics of Ringstaffs case.
Chrysler Financial, however, noted the company is not considered a debt collector as defined by the federal FDCPA, even though the company collects its own accounts, according to Amber Gowen, a spokesperson for the company.
When asked if the company disciplined employees for violating any state and federal rules, Gowen said: Failure to comply with state, federal laws and regulations are grounds for disciplinary action including termination.
We take these matters [consumer complaints] seriously, Gowen said, adding that consumers with complaints should call 800-556-8172. We investigate and handle cases individually.
The robo calls began days after Bobbies deceased husband received the bill from AFNI Collection Agency offering to settle the $320.40 debt, apparently owed to a cell phone carrier, for $100.
Bobbie, who always handled the household bills during her 35 years of marriage, said shes certain her dead husband didnt owe money to any cell phone carrier.
When someone is offering you an opportunity to send them money that raises a red flag with me, Bobbie wrote in an e-mail message because she was too upset to talk about it.
ConsumerAffairs.com contacted AFNI to inquire about Bobbies case but wasnt able to obtain much information because of privacy issues.
Debra J. Ciskey, spokesperson for AFNI, said the company ceases collection after a consumer dispute a bill. AFNI created a consumer relations desk a year ago to address consumer issues.
We are required by law to allow consumers to dispute the bill, Ciskey said, noting that mistakes occur, but consumers need to contact the company. Consumers need to exercise that right.
Ciskey promised to look into the case after ConsumerAffairs.com provided the account number with Bobbies permission. AFNI, Ciskey said, owns the account, a common practice among third-party collection agencies, which buy old debts in bulk and try to collect the debts to make a profit.
Because AFNI owns the accounts, the company has the flexibility to settle the old debt for less money.
Recently, Bobbies husband received another letter from AFNI dated April 6. This letter, however, brought unexpected news: AFNI investigated her dispute and decided to close the account.
Bobbie was thrilled and grateful that the matter is resolved, she wrote in an e-mail.
Asked about consumer complaints usually posted on Internet boards naming AFNI and other debt collection agencies, Ciskey said consumers should contact the debt collector and seek resolution.
Two way conversation or correspondence between the consumer and the collection agency is the best way to solve these problems, Ciskey said.
In Jaramillos case, the debt collector disclosed the debt to her friends, relatives and her husbands employer. The calls to her relatives caused tension in her family after a debt collector, who identified himself as Paul Martinez working on behalf of Capital Collections, LLC, called her sister in Colorado and threatened to arrest her, she said.
Jaramillo said Martinez identified himself as an attorney on the calls. ConsumerAffairs.com conducted a search on the Florida Bar Association Web site, where members are listed, and couldnt find an attorney practicing law in Miami under Paul Martinez.
This is my husbands debt of about two years ago. We were separated at the time. We are talking of a debt of about $200-$250, said Jaramillo, 51.
Jaramillo called the debt collector and tried to negotiate a monthly payment to pay the debt even though she was unemployed at the time. But the debt collector refused and the conversation turned into a confrontation after the debt collector used profane language on the phone, she said.
And thats when the calls began. The phone rang at all hours of the day and night.
Ive been working on the legal field for more than 20 years, Jaramillo said. I knew that everything he was doing was totally illegal.
ConsumerAffairs.com contacted Capital Collections, LLC, and attempted to interview Paul Martinez twice, but he refused to answer any questions.
In November, Capital Collections LLC was among four debt collectors sued by West Virginia Attorney General Darrell McGraw for allegations to stop the victimization of the states consumers by payday lenders and their collection agencies.
Last October, a report by the U.S. Government Accountability Office, the investigative arm of Congress, called for major changes to the FDCPA law. The report indicated problems with all involved in the debt collection industry including debt collectors themselves, consumers, the FTC and state court systems.
And it emphasized the need to make changes to the law to reflect the evolving debt collection market place and use of technology, since the law was passed before the advent of e-mail, cell phones and fax machines.
The report has invigorated consumer groups, including NACA, as they emphasize the need for a Consumer Financial Protection Agency.
In todays complex financial world, consumers need a federal regulator that is looking out for their interests, rather than the interests of the financial industry, Senator Carl Levin, D-Mich, said in a press release issued after the report was released in October. Even well-intentioned laws like the Fair Debt Collection Practices Act can erode over time and offer less and less protection to consumers.
In December, the House voted to approve the Consumer Financial Protection Agency Act of 2009 (H.R. 3126), sponsored by U.S. Rep. Barney Frank, D-MA, which would establish an independent executive agency with the authority and accountability to supervise, examine, and enforce consumer financial protection laws and financial transactions falling under the agencys jurisdiction including mortgages, credit cards, students loans, auto loans, payday loans and more.
But lawmakers in Capitol Hill dont seem to agree what powers, if any, to grant the new watchdog agency, and its uncertain at this point whether the new agency will have any authority over debt collection agencies, including third-party debt collectors.
Regardless of federal and state laws, unscrupulous debt collectors continue to use threatening and harassing tactics to intimidate or pressure consumers into paying their debts.
Though consumer advocates contend the FTC collects only complaints and it rarely takes strong action, the agency has successfully sued unscrupulous collection companies in recent years.
In 2008, the FTC settled with Academy Collection Service, Inc., a debt collection agency with offices in Philadelphia, Nevada and Pennsylvania, and its owner for $2.25 million, the largest civil penalty the federal agency has assessed against a debt collection company. Some of the allegations included false threats of wage garnishment, arrest, and legal action; communicated with third parties about consumers debts; and called consumers at their workplace.
Many state attorneys general have taken drastic actions against unscrupulous debt collectors.
Last year, New York Attorney General Andrew Cuomo went after a Buffalo-based debt collection operation alleging that the companys employees, which consisted of at least nine debt collection companies across Western New York, had violated state and federal law by routinely posing as law enforcement officials, threatening to arrest consumers and throw them in jail unless they made arrangements to pay the company immediately.
Cuomo has tried to shut down other operations and filed lawsuits against them including the Bening-Smith Group for alleged verbal abuse and in some instances, sexual harassment.
In Florida, a Jacksonville debt collection agency was ordered to pay $1.3 million in restitution and civil penalties in 2008 for violations of Florida and federal collection laws.
Debt collectors abusive practices have become a growing trend in Florida where complaints filed by consumers with the Florida Attorney Generals office have jumped from 1,554 in 2007 up to 2,215 in 2009, according to statistics provided by the office.
Florida Attorney General Bill McCollum is currently investigating over a dozen debt collector companies, according to Sandi Copes, a spokesperson for the attorney generals office.
McCollum sent a letter to the state legislature last November asking for expanded authority to bring civil lawsuits against abusive out-of-state debt collectors and credit repair companies.
We want to work and look at the whole problem instead of taking a piecemeal approach, Copes said.
The change in state legislation would allow the attorney general to pursue a violation of the debt collection act as unfair or deceptive without having to prove separately unfairness or deception.
The AGs office has also been working closely with other state attorney generals to provide complaints about debt collection agencies operating outside Florida, but abusing consumers in the state, Copes said.
As Congress debates the powers of the proposed federal consumer agency, unscrupulous debt collectors continue to ignore federal and state rules.
Both Ringstaff and Bobbie said they want to stop the abuse. Ringstaff filed complaints with the FTC and her state consumer agency and Bobbie wrote a letter to Tennessee governor.
They urged consumers to do the same.
I think is wrong and someone needs to do something to stop them, said Jaramillo, who filed a complaint with Florida AGs office. They cant treat people like that [harassment] to collect a couple of hundred dollars.