Ever wonder what debt collectors do with the lawsuits they receive for violations of the Fair Debt Collection Practices Act? Look no further than "Alright, You've Been Sued, Now What Do You Do?," a creditor's guide to responding to FDCPA complaints. The undated posting, written by Mark Ellis of the Sacramento, CA law firm Ellis Law Group, LLP, gives tips to debt collectors ranging from setting procedures on interaction to deciding whether to tell insurance companies about a suit.
The article proves enlightening insofar as it gives consumer advocates a glimpse into the bargaining mindset of debt collectors. Here are some items from the article which it may be helpful to know are in the forefront of a debt collector's mind during settlement:
• If at all possible, any threat of a possible lawsuit or demand should be forwarded to, and handled by, one person or department within your organization. For example, this person may be designated as the “risk manager” in your organization . . . If possible, your “risk manager” should normally handle a call from an attorney.
There is also a full section on trials. Be aware of all this when negotiating an FDCPA claim: on the mind of the debt collectors are their records of the facts, their own standard procedures, their insurance deductible, and the potential cost of litigation.
Last night's 60 Minutes featured a 13-minute expose on the unbelievable frequency of mistakes made by the Big Three credit reporting agencies (Equifax, Experian, and TransUnion), and the utter hopelessness faced by affected folks who try to correct them.
"Whether we like it or not, we live in an age where much of what goes on in our daily lives in monitored, collected, and sold to interested parties," the report begins. The results of the investigation are unsurprising to those with intimate knowledge of the credit reporting industry: nearly 40 million Americans have a mistake on their credit report, and 20 million of those with mistakes are measurably affected by them. What's most alarming is that these mistakes are often impossible to correct.
Take the "dispute process" required by the Fair Credit Reporting Act, a federal law which supposes to provide a modicum of regulatory oversight to an otherwise unregulated industry, as the consumate example of the industry's failure to accurately represent the people on whom it distributes information for money. When a person disputes information on their credit report, the law requires credit reporting agencies to "conduct a reasonable reinvestigation to determine whether the dispute information is inaccurate . . . ." As 60 Minutes discovered, the credit reporting agencies do not actually investigate at all-- the expose features this exchange with a team of former Experian investigators:
"If somebody had a problem with their credit report, they would send in a complaint and it would end up with you?"
In fact, all the "investigators" do is read a dispute, reduce it to a 2-word code like 'never late' or 'wrong person,' and send the two words back to the creditor without documentation. Seems insufficient? Says attorney Leonard Bennett, a consumer advocate from Virginia: "I can say this without qualification: the dispute procedures uniformly used by the credit reporting agencies completely fail to comply with the Fair Credit Reporting Act. Courts have found that, the Federal Trade Commission has found that. It's not even a close call."
It is common knowledge that debt collection agencies can be, charitably, difficult to deal with. Those unlucky enough to find themselves targets of collection often have horror stories of their own to relate. CNN Money took a look today at some of the more egregiously illegal collection tactics used by these agencies:
Threatening to take away children: Last week, the Federal Trade Commission shut down a Texas-based debt collector, Goldman Schwartz, for using deceptive and abusive scare tactics to force people to pay their payday loan debts. Among the alleged offenses:collectors called consumers incessantly, saying "we can take you to jail" or "we'll send the sheriff's department to your job and take care of this the hard way," even though they had no legal basis to do so.
Before federal oversight of these agencies by the Consumer Financial Protection Bureau (CFPB) began on January 2, 2013, civil suits brought by consumers, and the odd administrative enforcement of the Fair Debt Collection Practices Act, were the sole checks on collection agencies' actions. The CFPB will have oversight over agencies "that have annual receipts of more than $10 million, [or] roughly 175 companies. They account for about 63 percent, or $7.7 billion, of the industry’s $12.2 billion in annual collections."
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