I get them regularly because someone who had my telephone number before me didn't pay her bills. Some of them just won't believe I'm telling them the truth that I'm not that person and just keep calling my number. I quickly report them and their number to the FTC. And my story is tame compared to the case brought by Dianne McLeod in which she says her husband died because of credit collection calls.
So why is that happening more often? The U.S. Government Accountability Office (GAO) just did a study on the Fair Debt Collection Practices Act and found that the Federal Trade Commission (FTC) has limited ability "to address the concerns related to the adequacy of account information, collectors' use of modern technologies, and other issues that arise in an evolving marketplace." The GAO definitely thinks it's time to update the act.
As the numbers of people who are late on their payments continue to rise, we're seeing the highest rate of past due accounts in 18 years, the GAO found. To recover this delinquent debt, credit card issuers use their own collection departments, outside collection agencies, collection law firms or they just sell the debt to someone else.Credit card companies usually try to collect on their own when accounts are less than six months overdue, but after that things can get very messy about who owns the debt and who's collecting that debt.
Some credit card companies hire third-party collection agencies or law firms to collect debts over six months old. These third-party collection agencies use primarily mail and telephone contact, but often that means automated mail and phone systems that can get pretty annoying, especially when they have the wrong number for the debtor.
Credit card accounts, because they are unsecured debt (no assets attached that can be taken) are often sold to a third party to collect the debt. That way the original company that owned the debt can get some money, even if greatly reduced, for the amount owed.
Often these credit card debts can be sold several times depending on their age, location, and number of times previously placed for collection. By the time the second or third firm buys this unpaid debt the debtor has moved and changed telephone numbers. So instead of trying to collect from the person who truly owns the debt, the collector calls people who inherited the phone number. Phone numbers are given out again after about six months of dormancy and sometimes even more quickly in high-population areas.
The GAO looked at state and federal enforcement actions, as well as anecdotal evidence and the large volume of consumer complaints to federal agencies, to determine where the problems are. Basically the GAO found that:
- Collection agencies and debt buyers often may not have adequate information about their accounts, sometimes leading the collector to try to collect from the wrong consumer or for the wrong amount.
- Accounts are frequently sold and resold, which can make verification more difficult as the owner of the debt becomes farther removed from the original creditor.
- Communications tools available today were not available when the FDCPA was first enacted in 1977 and the law needs to be updated to include modern day communications technologies. For example, mobile telephones, e-mail and voice mail were not prevalent in 1977.
Clearly the law needs updating. The Federal Trade Commission needs more flexibility to make changes as technology changes in the future.
Right now if you want to know your rights, you can read the FTC's excellent guide to debt collection online. Report any abuses you experience and contact your Congressmen to ask for the FDCPA to be updated to include modern-day technology.
Lita Epstein has written more than 25 books including "The Complete Idiot's Guide to Improving Your Credit Score."