According to an article in the Associated Press, New York authorities shut down a collection agency for threatening consumers with jail if they did not pay. Did this agency ever hear of the FDCPA? Probably not since it was owned by some ex-convicts. They probably didn't really care about the law.
But its interesting to note that this agency did work nationwide. Their tactics must have produced results, right?
This article is written by Kat Sanders, who regularly blogs on the topic of court reporter schools at her blog Court Reporter Schools. She welcomes your comments and questions at her email address: katsanders25@gmail.com.
It’s never an easy situation when you’re in debt; the thought that you cannot pay back money you owe is as frightening as the fact that the debt collectors are going to be knocking down your door sooner than you think. But there are ways to deal with the collection agents and agencies, without losing your cool or getting intimidated by them.
• Know your rights. If you know your rights, you’re less likely to give in to demands from collectors that may be unscrupulous. They’re not allowed to harass you or use threats to collect money from you. They must follow the rules according to the Fair Debt Collection Practices Act (FDCPA) and not call you at odd hours of the day or night.
• Negotiate with them. Every debt collector worth their salt knows that if you refuse to pay, they cannot use force to make you do so. So if you explain your situation to them and try to reach an agreement where you can pay a lump sum down or a minimum amount every month to keep your creditor satisfied and show that you do intend to repay the debt in good faith, you can make your situation a whole lot easier to bear.
• Don’t be bullied down by threats. Some collectors may try to intimidate you by threatening to collect your debt directly from your pay check. But unless they have a valid court order to do so, they cannot do such a thing. So don’t allow yourself to be browbeaten into paying more than you can afford and neglect your food and rent in the process.
• Don’t use threats of your own. It’s best to deal with debt collectors in a conciliatory way and avoid antagonizing them for your own peace of mind. While you must show them that you are aware of your rights. Don’t throw facts in their face. Instead, try talking to them about your situation and asking them for a grace period in which to repay your debt.
It’s not easy when you know the collector is due to come calling, but with a little patience and planning, you should be able to deal with this crisis and get back on your feet soon enough.
On May 11, 2009, I wrote a blog post about the FTC's new Red Flag rules. These rules require prospective lenders to develop policies and procedures to identify identity theft. Sounds like a good idea, right? Sure...right up until the FTC said that these Red Flag Rules apply to lawyers and law firms as well. Now, the gauntlet has been dropped and many state bar associations, including (not surprisingly) New York, have picked it up and are ready to do battle with the FTC regarding these rules.
Since identity theft is such a rampant crime, the FTC did a good thing by making prospective lenders develop policies for identifying potential identity theft and requiring businesses to report it and deal with it effectively. So what is the problem lawyers? Are we just a whiny bunch or are there some legitimate reasons why our businesses should not be subject to the Red Flag rules?
Many lawyers believe that the Red Flag rules would undermine the Attorney/Client Privilege since it would require us to identity our own clients. I am not sure that this is a legitimate argument. The Red Flag Rules are designed to identify and deal with identity theft at the inception of a relationship. When Joe Client walks through our office door and introduces himself as Joe Client, don't we want to know for a fact that he is Joe Client? If he is NOT Joe Client, don't we want to know why he introduced and represented himself to be Joe Client? If he is NOT Joe Client, don't we owe it to our community to identity this guy as an identity thief?
Lets go one step more towards reality. How many of us have had clients misrepresent their identities to us when they wanted to form a professional relationship. Perhaps I might be surprised, but in 20 years it has happened once, and then, it was over the internet. If I had the ability to identity the real person, I would have identified him and complied with the Red Flag Rules to prevent him from trying to scam anyone else.
At the end of the day, I think lawyers who oppose the Red Flag Rules really should take a moment to examine what it is and why they are opposing these rules before puffing their chests and arguing for the sake of avoiding a little bit of extra regulation designed to protect the rest of us.
The Federal Fair Trade Commission just issued an advisory opinion to the American Collectors Association. In that opinion, the FTC answered the question, what is a collector supposed to do when a debtor sends in a cease and desist communication letter to a collector while, at the same time, disputing an item on his credit report. The problem is that under the FDCPA, when a third party debt collector receives a cease and desist letter, he is supposed to stop all communication with the debtor, except in certain circumstances. BUT....when the debtor disputes an item on his credit report, a collector may conduct an investigation, but can the collector report his findings back to the consumer if that consumer also sent in a cease and desist letter? The FTC said yes, that indeed, the collector can report his findings and conclusions that result from his investigation.
While ACA has posted a Youtube video on receiving this advisory opinion, it sure raises a lot of questions regarding what the real effect of this opinion will be. For example:
1. After the collector (who has already received a cease and desist letter from a consumer) calls the consumer back and informs him that the debt belongs to the consumer, can the debt collector continue, in that same conversation, to ask for payment from the consumer?
2. if the collector finds that in fact, the debt did not belong to the consumer, does the consumer have an FDCPA action against the collector and collection agency for previously alleging that a debt was due when, in fact, no such debt was ever due?
3. Why would any consumer dispute a trade line with a collection agency. That is just plumb wrong. Consumers, please posit your disputes with the credit reporting agencies. Then and only then have you preserved your rights under the Fair Credit Reporting Act. Complaining to the lender does not preserve your rights.
As you can see, this advisory opinion may raise more questions than it may solves.
