Confirming other recent surveys, studies, and reports, Consumer Federation of America (CFA) publishes a report that reflects the growing epidemic of fraud in the U.S. and from overseas. Debt collection, too, also ranks very high as a source of consumer complaints.
In the early part of 2012, CFA contacted state, county, and municipal consumer protection agencies across the country. CFA, located in Washington, D.C., asked the agencies to name the top 10 consumer complaints received by each agency. The survey responses were limited to the year 2011.
Thirty-eight agencies responded and most included the raw number of complaints received and provided a tally of the amount of money recovered on behalf of victimized consumers.
CFA found the data obtained from the survey particularly relevant because consumer protection “agencies work at the grassroots level, providing consumers and businesses with information about their rights and responsibilities and advice about how to resolve disputes.” The majority of consumer protection agencies take a hands-on approach to consumer complaints and will mediate disputes. Moreover, the agencies generally have administrative, civil, and/or criminal authority to stop fraud and obtain restitution at the local level.
Federal consumer protection agencies like the Federal Trade Commission or even the non-profit Better Business Bureau do not have local powers. On the other hand, as scamsters hide on the internet or overseas, the agencies’ locality can hamper redress for victimized consumers.
Debt Collection Still Leads Consumer Complaints
Of particular note, the CFA report, entitled “2011 Consumer Complaint Survey Report” and jointly
authored by the North American Consumer Protection Investigators, details how debt collection is continuing its status as a dubious leader in consumer complaints and how actual fraud is permeating debt collection.
According to the report, Consumers complained of debt collection matters the second-most highest, and the agencies themselves listed debt collection as one of the worst categories of consumer complaints.
The report detailed how junk debt buyers, “who purchase uncollected debts for pennies on the dollar from creditors that have long since written them off generated many complaint,” generated a slew of debt collection complaints in Georgia. The Georgia Governor’s Office of Consumer Protection filed administrative complaints against Nelson, Hirsch & Associates and Dorsey Thornton & Associates both of whom are involved in junk debt collection. The complaints alleged that the debt collection agencies engaged in tactic that were:
- threatening consumers with arrest and imprisonment,
- refusing to provide consumers with proof of the debts,
- collecting more than the amount owed,
- threatening to call consumers’ employers and garnish their wages,
- calling repeatedly – sometimes as much as 50 times a day – and outside of the times of day that are allowed, and
- continuing to call after consumers told them to stop.
Both debt collection companies have resolved the complaints by, among other conditions, extinguishing about 36,000 debt collection accounts valued in excess of $19 million and pay civil penalties and costs of the investigations.
Other debt collection agencies, like University Fidelity Corporation were reported to have dunned consumers for nonexistent debts allegedly owed for movie rentals. After Hollywood Video filed for bankruptcy and dissipated, the New York Division of Consumer Protection received many complaints from consumers complaining that Universal Fidelity Corporation demanded money that was not owed. It is likely that Hollywood Video accounts were sold en masse when the bankruptcy court liquidated the former Blockbuster competitor. However, when a company, employees, etc. disappear in a bankruptcy, account disputes are near impossible to resolve.
Alarmed, the report detailed a relatively new form of debt collection scam. Fake payday lending sites promising easy money are created for the sole purpose of capturing sensitive financial data. Consumers, already in the dumps if they are considering payday loans, provide their information hoping to receive lending approval. Rather than get money in their accounts from a payday loan, the reverse happens. The fake payday lender steals money from the bank accounts the consumer unwittingly provided. To really bring this fraud home, the fake payday loan will be turned over to debt collection.
The CFA advises consumers involved with debt collection:
Don’t be pressured into paying money you don’t owe. If you’re not sure, or the amount is incorrect, or you believe you don’t owe the debt at all, you can dispute it. Get information about your rights under federal law… and check with your state or local consumer protection agency about state law.
To read the 58-page report leaves all but the most hardened cynic depressed and disillusioned with the ignobility of man. From ripping of single mothers trying to feed their children to scamming 95 year-old widows, reading the report will wise you, nonetheless, to the latest scams, frauds, cons, and rip-offs.