New Bill Collector Scheme
Bullying Innocent Consumers
By Daniel Muniz
Suppose you consistently exercise responsible credit behavior. You are never late with your payments because you pay all of your bills on time. Then imagine a collection agency incessantly harassing you day and night for a charged off account belonging to somebody else. Now imagine the same bill collector trashing your credit with that unpaid written off account even though it is not yours.
Such a practice is now becoming commonplace.
Deceitful bill collectors have always been the scum of the financial world although in all truthfulness, the honest ones (which are fewer in number) do play a legitimate role in our economy because they follow the law and play by the rules. Unfortunately, because of the lure of easy money, consumer ignorance and naiveté, and the original creditors washing their hands from the dirty work, the unscrupulous collectors will do practically anything to make a fast buck.
But for collection agencies to target people completely unconnected with a charged off debt is a new low.
This sleazy practice is the result of a new focus of bill collectors. Their hard-nosed bullying tactics have worked so well in the past that this shift is actually more of a natural progression for them. And pursuing the wrong people has a perverse incentive attached to it because it is actually tremendously easier to collect from them. Someone with good credit has so much more to lose and more at stake than someone whose credit is already trashed. Consequently, a bill collector can hold the innocent person hostage with the threat to ruin his or her credit.
Some of the wrong people have just been individuals with the same or similar last name. For others, it can be something as asinine as having the same first name. Still others are just at the wrong place at the wrong time, like moving into the residence that once belonged to a debtor.
Another shameful tactic is targeting “authorized users” of cards that went into collections. Unlike being a joint member of an account, an authorized user is simply anyone who can use the credit line but is in no way liable for it. Collection agencies know full well that they are not allowed by law to collect on authorized users but they are preying on the ignorance of the consumers, especially when it comes to harassment and bullying.
The results have become tragic. An individual wrongly accused of a bad debt may be forced to pay it off in order to protect his or her good credit score. For instance, someone may be waiting on a mortgage or a car loan thus it becomes easier to pay off the extorting bill collector instead of devoting several months or longer fighting the bogus claim. And the collectors do not mind making threats and false accusations since collecting on such an account could represent a huge profit.
In addition to going after the wrong person, collection agencies have also begun pursuing accounts that nobody in the industry would have bothered to waste their time on. For decades, very old charged-off accounts were once considered to be truly uncollectible. Today, collecting on such accounts (especially if it is the wrong person) is big business.
These organizations can acquire this old written off debt for as little as 25 cents per $100 of face value. As a result, a small outlay of cash for such purchases can generate a big profit even if the bill collector is only able to obtain a small portion of the amount owed. Now add some outrageous lying and strong-arm tactics and that same uncollectible account becomes an enormous windfall; hence the desire to be as ruthless as possible.
The prospects of big money have made the crooked bill collectors even more aggressive and forceful. That behavior in itself is creating the inclination for the collection agencies to pursue innocent people. But to add insult to injury, it is not only the wrong person that suffers. Bill collectors also harass their relatives, neighbors, and employers even though it is a violation of the law.
However, people are starting to fight back. Big collection agencies, such as Capital Acquisitions and Management, Allied Interstate, JBC and Associates, and a host of others have been slapped with fines by state attorney generals and even by the Federal Trade Commission. And more states are actively becoming engaged in fighting these sleazy collectors.
But as an individual, the most important thing you can do to stand up against the corrupt bill collectors is to be an informed consumer. You have to know your rights and know which federal protections you already have. And most importantly, you must be assertive with the lying, disingenuous collection agencies.
First, everyone should frequently monitor their credit reports from all three credit bureaus. Every few months, you have to be aware of any adverse activity that may be the result of a bill collector.
Next, if you are the target of collection activity for an account that doesn’t belong to you, then you have to treat it with the utmost seriousness and severity. All too often, there are people who just laugh off the false accusations thinking that the bill collectors are barking up the wrong tree. It is not until their credit is wrecked that they realized the gravity of the situation.
The moment a collector makes a threat or sticks you with a bogus claim, you must immediately send off a certified letter explaining that you are wrong person and that this account does not belong to you and that they must stop all collection activity on you. In addition, you must also emphasize that you are diligently recording each violation of the law if they continue to harass you.
Read up on the Fair Debt Collection Practices Act (FDCPA) and do a Google search for debt validation. Under federal law, you have the right to dispute the validity of a debt and to demand proof that you do indeed own that debt. It is as simple as no proof – no collection activity. And do all of this in writing. Do not talk to bill collectors on the phone because everything needs to be in writing.
And if the harassment continues, contact the local office of your state’s attorney general’s office, especially after you have carefully documented each and every violation. The more documented incidents you have, the better that they can help you.
Right now, these dirt bag collectors are taking full advantage of the ignorance of consumers. And their greatest weapon is fear because so many innocent people with good credit don’t want to have their credit scores ruined. But the best way to counter the unscrupulous collectors is to become familiar with your federal rights, such as the FDCPA. When you can forcefully assert your rights, then the power of intimidation from the collectors is greatly diminished.