| October 7, 2011

Consolidated Credit Consumer Alert

Deficit-Reduction Plan Would Allow Federal Debt Collectors to Contact People on their Cell Phones

President Barack Obama unveiled the new deficit-reduction plan last week in an effort to cover the costs of his jobs bill, but Consolidated Credit’s experts want to warn Americans of new details regarding the way debt collection agencies can contact debtors. According to page 26 of the deficit-reduction plan, debt collectors pursuing government-backed debt (i.e. mortgage loans, unpaid taxes and federal student loans) will have the authority to contact debtors via their cell phones.

With an idling economic recovery the political focus has been on two prominent agendas: the jobs bill and the tax increases included in the deficit-reduction plan. Little spotlight has been given to an alteration to the Communications Act of 1934 which would allow government backed debt collectors to contact debtors via their cell phone.

There are pros and cons to this change that Americans need to be aware of — on one hand, debt collectors will most likely be able to generate more money and possibly stimulate our sluggish economy. On the other hand, many Americans may incur additional phone expenses if debt collectors call several times a day causing consumers to go over-the-limit on their minutes and the debt collectors may cause disruption to people while at their work place.

There are other factors that Consolidated Credit wants consumers to be aware of concerning this new piece of legislation. “If we enable government financial entities more leeway to collect debts, it is only a matter of time before all collection agencies demand the same access to consumers who owe money on outstanding debts. It’s unrealistic to give government debt agencies the privilege of contacting debtors via cell phones but not private creditors,.

Consolidated Credit cautions Americans that if the bill does become law, debt collectors may become more aggressive in their methods of communication and may take advantage of their new found authorization. Some debt collectors have poor reputations and in many cases, it is well deserved. The Federal Trade Commission assembles an annual list of consumer complaints and nearly every year, debt collectors come in at No. 2. Last year alone, the FTC received 119,549 complaints about debt collector practices.

To learn more about the rights citizens have when it comes to dealing with debt collectors, visit the Federal Trade Commission’s website to learn about The Fair Credit Reporting Act.

 

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