Liar, Liar, Pants on Fire: Illegal Debt Collection Practices

Fair Debt Collection Practices Act | Photo by United States Marine Corps [public domain]
Photo by United States Marine Corps [public domain]
In 1970, the Fair Credit Reporting Act was passed in the United States to protect and regulate the collection, dissemination and use of consumer credit information. Seven years later, the Fair Debt Collection Practices Act was implemented to help establish legal protection from abusive practices. Additionally, it promotes fair debt collection and provides an avenue for disputing errors and validating debt information.

While many legitimate companies adhere to the laws, I’ve heard many horror stories of improper—and downright illegal—debt collection practices in my time here at Better Business Bureau. Plus, as someone who has been on the incorrect receiving end of collection attempt calls, I personally understand how incessantly frustrating they can be: I waged an epic phone battle in the summer of 2011 with a company that was trying to track down a debt owed by someone else and had obtained my phone number somehow…

There will always be those who try to game the system for personal gain. As the cost of living surges, debt is becoming a common issue facing many consumers and the percentage of unlawful activity is likely to increase as well.

In fact, according to

  • More than 160 million Americans have credit cards.
  • The average credit card holder has at least three cards.
  • On average, each household with a credit card carries more than $15,000 in credit card debt.
  • Total U.S. consumer debt is at $11.4 trillion, which includes mortgages, auto loans, credit cards and student loans.

As part of a cooperative agreement between the Federal Trade Commission and BBB, a comprehensive guide of Facts for Consumers was published in 2010—and I highly suggest that everyone reads it—to answer questions like:

  • What debts are covered?
  • Who is a debt collector?
  • How may a debt collector contact you?
  • Can you stop a debt collector from contacting you?
  • May a debt collector contact anyone else about your debt?
  • What must the debt collector tell you about the debt?
  • What types of debt collection practices are prohibited?

Know your rights and file complaints with the appropriate agencies if they are abused; these complaints are taken very seriously. If you don’t believe me, just ask the owner of this Texas-based debt collection company, who was permanently banned from business for using deception, insults and false threats to collect debts.

And remember, the best way to avoid sketchy debt collectors is to manage credit wisely and work hard to avoid debt in the first place.