A recent post, Collecting from the Top, sparked an exchange about debt collection, including a query from a reader about whether data existed to support my proposition that public concern about debt collection might be increasing.
At least at the federal level, debt collection is a growing concern for consumers. Complaints about both third-party debt collectors and in-house debt collectors have risen significantly in the last few years. From 2004 to 2005, the FTC saw complaints about third-party debt collectors rise 14% to a record level of 66,627 complaints. Complaints to the FTC about in-house creditor collection also increased, both in absolute terms and as a percentage of all complaints. In total, complaints about either third-party debt collection or in-house collection exceeded 25% of all FTC complaints. More information is available in this FTC report. And then there are the responses to ABC’s story on Debt Collectors Gone Wild, which conveniently was released the day after the exchange on CreditSlips.
A consumer complaint to the FTC, or a post to a news blog, does not necessarily mean that a debt collector or a creditor violated any law. The FTC complaints and blog postings are evidence, though, that the consumer BELIEVED the debt collector’s actions were inappropriate. The rising number of complaints, combined with the industry trends that I highlighted in the prior post, suggest that Americans’ concerns about debt collection may be increasing and will continue to increase. The fact that national news programs are doing stories on debt collection suggests this topic is of interest to a broad swath of Americans. This increasing interest in debt collection, and its expanded coverage in the media, may spark a renewed conversation about what the proper boundaries of debt collection should be and how best to design a law that effectively enforces those boundaries.
Comments
4 responses to “Trends in Debt Collection”
In looking at the FTC Report, I note that virtually all of the increase comes in one area – Demanding a larger payment than is permitted by law. This topic includes misrepresenting the character, amount or legal status of a debt. Any ideas as to the why this is so? What are the collectors doing differently? All of the other categories are virtually unchanged in terms of number of complaints.
I forgot to inquire as to how this data supports your proposition that the new breed of small-operator debt collectors is causing the increase in public awareness. I did not see anything in the FTC Report which indicates that complaints regarding small agencies have increased.
Most people do not realize what debt collectors can and cannot do. People should educate themselves on the FDCPA. So they will be enlightened on how to handle debt collectors.
I am absolutely agreed with this article everybody should know about debt collectors that what they can do and what they can not do.
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