It’s easy to feel powerless in the face of collection activity. Confusing letters, intimidating voicemails and seemingly complicated legal notices might lead you to pay whatever is being asked of you or cause you to ignore the matter altogether. But debt collectors aren’t as untouchable as they may seem—you have rights and they have certain rules they have to follow. Read on to learn more about the most common illegal debt collection tactics and what you can do if you find yourself on the receiving end.
Top Debt Collection Violations
In a 2019 report on the Fair Debt Collection Practices Act (FDCPA)—the federal law that regulates collection activities—the Bureau of Consumer Financial Protection (BCFP) and Fair Trade Commission (FTC) broke down more than 81,000 complaints submitted by consumers over the previous year.
As listed in the report, the most common debt collection complaints concerned:
- attempts to collect amounts people said they didn’t owe;
- illegal letters;
- inappropriate communication;
- threats to take negative or legal actions;
- false representations;
- and improperly involving a third party in collection activities.
Behind many of these complaints lies illegal debt collection activity. So, what do each of these complaints actually mean and, more importantly, what can you do about them? Below we'll explain each type of complaint, what they might mean for you, and how you can get your issue resolved once and for all.
Complaint #1: But I don’t owe any money!
Just because a debt collector says you owe a debt doesn’t mean that it’s automatically true. In fact, most complaints received by the BCFP in 2018 were from consumers who claimed they didn’t owe the money the companies were seeking to collect.
There are numerous explanations for being mistakenly or improperly asked to pay a debt you don’t owe—maybe the debt was discharged in bankruptcy proceedings, already paid off, or even owed by someone else with a similar name (yes, that actually happens sometimes). It goes without saying, but a company cannot force you or harass you into paying a debt you do not owe.
Complaint #2: What is this letter even referring to? I’m confused.
Under the FDCPA, companies are required to include various pieces of information in their letters to clearly communicate what debt they’re referring to. The letters must state the following:
The name of the creditor The amount owed How to dispute or obtain proof of a debt
Listing who is owed money in a debt collection letter might seem like common sense, but companies often mess this part up. A debt collector could get in trouble if it doesn’t explicitly label any entity as a creditor, or if the identified name is not registered as a legal business name. For example, a class action we covered on our newswire back in September took issue with a letter that referred to a department store credit card account without naming the bank behind the card as the actual creditor.
The amount owed also seems like a no-brainer, but debt collectors can fall short here too. One lawsuit filed in New York claimed that the plaintiff’s letter illegally failed to note whether interest was included in her balance or whether it would accrue. Another case we covered on our newswire argued that a collection agency confused a man as to his debt amount by including a zero-dollar “interest balance” line item when his account could never actually accrue any interest. The suit said the company also misled the man by only giving him instructions on how to submit a written debt dispute and not how to do it over the phone.
Complaint #3: This company is getting really aggressive.
Even if a debt collector says all it is required to say, they have more rules to follow regarding what they can’t do or say. Excessive phone calls and being contacted at odd hours could be grounds for harassment charges, for instance. Companies are also prohibited from using aggressive language to pressure and scare you into paying.
Complaint #4: I think this is a threat…
The FDCPA also prohibits debt collectors from threatening to take any action they cannot legally take. For example, if the statute of limitations on your debt has expired, collection agencies can’t say that they are going to sue you because, well, they’re prohibited by law from taking you to court when your debt is that old. They also can’t suggest that not paying the balance could land you in jail (it can’t) or falsely threaten to submit the debt to credit reporting agencies.
A lawsuit we covered in June, for instance, alleged that a letter deceptively stated that a woman’s debt would appear on her credit report for seven years when, in fact, the clock began ticking from the date of default, not from when she received the letter. Deceptively suggesting the debt would appear on her report for seven more years was meant to coerce the woman into making a payment, the suit said.
Complaint #5: I think I’m being lied to…
Debt collectors can’t lie to you, plain and simple. The most popular misrepresentations mentioned in complaints sent to the BCFP concerned not-so-accurate debt balances and companies illegally impersonating law enforcement, attorneys and government officials.
Inaccurate debt balances often stem from companies tacking on illegal fees and interest to the amount you owe. Even something as seemingly minuscule as a processing fee of a few dollars, for instance, may be unlawful if it was not authorized by the agreement creating the debt. For instance, one plaintiff claimed Advanced Collection Bureau violated the law when it demanded a $5.00 processing fee for each $150 payment made via credit card; another plaintiff claimed Account Management Services outright charged an extra 30% to his debt amount that was never authorized or allowed.
Implying attorney involvement in the collection or review of an account is another common misrepresentation. If a letter seems like it’s from a law firm, but no attorney personally reviewed your file, it may be in violation of the FDCPA. For example, a New York consumer claimed in a lawsuit that he was misled by a debt collector when he received a letter from a law office, as no individual attorney was actually involved in the collection of his account.
Complaint #6: They called my boss/partner/family!
Debt collectors can’t contact or threaten to talk to a third party about your debt, such as your employer or relative, without the permission of the debtor or the government. (One exception: they can make one phone call to a known family member or acquaintance to try to find your contact information.)
Additionally, companies may not reach out to you directly if they’ve been instructed to only communicate with your lawyer. You can control who a debt collector is allowed to talk to and how they can reach you.
I think I’ve been a victim of an illegal collection tactic. What are my options?
Your best bet is to contact the debt collector directly. The CFPB has a handy list of sample letters to send to debt collectors. If you need more information than what was provided in a letter, concrete proof that you owe money, or want to dispute a debt you don’t think you owe, you can write to a collection agency using the CFPB’s templates. There’s even an example letter if you want to write to a company to indicate how and when they can contact you, if at all.
Aside from communicating with the company directly, you can also:
- Report suspected violations to the BCFB, which will pass your complaint along and help resolve the problem.
- Reach out to your state attorney general for information on state-specific debt collection laws, such as how long your debt is valid for and what steps you can take to deal with violations.
To find out what your legal options are and to determine whether you can file a lawsuit, talk to an attorney in your area. Look for someone who identifies as a debt collection lawyer or FDCPA attorney.
A lawyer? I can’t afford one of those.
Attorneys typically offer free initial consultations, during which you can get a better idea of what you can and cannot do. You aren’t obligated to proceed with any further legal action unless you want to, so there’s really no harm in speaking to someone about your rights.
It’s also worth noting that most FDCPA lawyers handle cases on a contingency-fee basis. This means you won’t have to pay anything unless you win. Any money you owe for legal representation would be taken directly out of your settlement or judgment against the company.
To read up on recent class action lawsuits filed against debt collectors and to find out more about what’s considered illegal and what’s not, visit our newswire page.