Debt Collection Fraud Tactics You Need To Be Concerned About

With a depressed economy, tighter credit markets and higher unemployment, debt collection fraud is rising. As more and more consumers fall further into debt, collection activity has increased.

This has created an atmosphere ripe with illegal activity from unscrupulous debt collectors. While most agencies operate within the federal guidelines governing collection agency laws explained in the Fair Debt Collection Practices Act, consumer complaints are growing targeting these unethical tactics.

If your business is outsourcing debt collection, or you're considering doing so, you especially need to be aware of debt collection fraud. This can not only cast your business in a bad light, further alienating your customers. You can actually be held liable if a customer decides to pursue legal actions.

Some of the most registered fraudulent complaints include:

Making Calls to the Customer's Work Place-According to the FDCPA, collectors are forbidden to call a debtor's workplace if they can reasonably assume such is prohibited by the employer. If an employee asks not to be called at work, they are in violation if they continue.

Verification-Once a customer is contacted by an agency and informed of a debt, legally they have a period of 30 days to dispute the debt. The past due amount has to be provided, in writing, to the customer if requested. All collection activity has to ceast during this contestation period. They are in violation if they fail to provide written proof of the debt in question to the customer.

Harassment-This can include using verbally abusive language, obscenities, foul and profane language in an attempt to intimidate a customer into paying. Threatening violence is also forbidden. Collection agencies are not allowed to call before 8am or after 9pm.

Cease Contact Notice- A customer can request a collector to stop contacting them about a debt. After this, they are only allowed to contact you to tell you they're pursuing legal action to collect the debt.

Revealing Personal Information to Third Parties- Collectors are allowed to contact other people, but only to attempt to locate you. They may not discuss your debt with anyone, except your spouse, attorney or cosigner. They do this sometimes to intimidate or embarass the debtor. But this is clearly a violation of FDCPA laws. Not only is it potentially damaging to one's reputation, but could also cause a job loss.

Making Threats- Collectors can only threaten legal action for nonpayment. They cannot intimidate with threats of jail or getting fired if they fail to pay. Even wage garnishments and/or property seizures require a judgment, and only after a lawsuit has been affected by the collection agency.

Demanding Payments For Debts You Don't Owe- This is a fairly common tactic. Someone, other than the true debtor, gets a call from an agency demanding payment. Their names may appear similar enough. Or a customer may be intimidated into payment for a debt that's several years old, or has been discharged by a bankruptcy ruling.

Again, ask for written verification of any alleged debt before sending any money.

Debt collection fraud is a very serious, and illegal, matter. Again, most agencies operate ethically and practice sound principles. As a business owner outsourcing debt collection, part of your investigation includes seeking out debt recovery firms with a great reputation and track record.