As more people rely on financing, debt collection has become a significant issue for many Americans. In 2022, the Consumer Finance Protection Bureau (CFPB) received nearly 116,000 complaints about debt collection practices. The following year, the Federal Trade Commission (FTC) logged over 127,000 complaints related to debt collectors. While there are methods available to help people break free from debt, it’s important to consider these methods through an educated lens to avoid exposure to scams. 

Three Key Areas of Debt Collection Issues

When discussing unlawful debt collection, it is crucial to differentiate between three main categories:

1. Legitimate Debt Collectors Violating the Fair Debt Collection Practices Act (FDCPA): These are genuine debt collectors attempting to collect a real debt but using methods that violate the Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits certain abusive practices by third-party debt collectors.

2. Fake Debt Collectors: These scammers try to trick victims into paying debts that do not exist. This can include pressure-filled robocalls and dubious email messages.

3. “Juicing” Tactics: This hybrid approach involves legitimate debt collectors coercing consumers into overpaying their actual debts.

Consumer Tips: How to Protect Yourself

Here are some tips for dealing with aggressive third-party debt collectors and potential scammers:

1. Verify the Debt Collector: If you receive a call from an unfamiliar company, ask for the debt collector’s name, company, street address, and telephone number. 

2. Debt Validation Letters: Debt collectors are required to provide a debt validation letter within five days of their initial contact with a consumer. This letter must include the amount of the debt, the name of the creditor, and a statement informing the consumer of their right to dispute the debt within 30 days.

3. Disputing Errors in a Debt Validation Letter: If consumers find errors in a debt validation letter, they have the right to dispute the debt within 30 days of receiving the letter. They should send a written dispute to the debt collector, clearly stating the errors and providing any supporting documentation. 

4. Stop the Calls: The FDCPA requires debt collectors to stop calling if you ask in writing. While this does not eliminate the debt, it should stop the contact. Make sure to keep a copy of your request for your records.

5. Consult Your Creditor: When dealing with third-party debt collectors, verify the debt with your original creditor. Sometimes the debt is legitimate, but the third-party collector is not. Contacting your original creditor can help you confirm the details of the debt and ensure you are dealing with a legitimate collector.

6. Seek Professional Help: If in doubt, consult an Accredited Financial Counselor® (AFC®). You can find an AFC® professional at https://findanafc.org/. 

7. Report Scammers: File a complaint with the FTC and your state Attorney General if you suspect a scam. Reporting scammers can help protect others from falling victim to fraudulent debt collection practices.

8. Learn More: The FTC and Consumer Financial Protection Bureau have offered excellent resources on debt collection and scams. Educating yourself about your rights and the proper procedures can empower you to handle debt collection issues confidently.

If you believe you are being targeted by unlawful tactics under the FDCPA or feel you may be a victim of a scam, consult a lawyer or a trusted financial professional. Consider seeking help from an AFC® professional, who focuses on helping individuals and families address fundamental financial issues.

Summer Red, AFC® is Education Manager with AFCPE®. As she stated in her blog, you can find an AFC® professional at https://findanafc.org/.