Debt collection agency complaints racking up
The number of consumers who are filing complaints with the Federal Trade Commission regarding improper practices by debt collection agencies is surging, according to figures obtained by the Wall Street Journal.
The newspaper reports many complaints have been disclosed to the FTC regarding debt collection firms who violate laws through illegal retrieval methods, including late-night phone calls and threats of arrest.
According to the FTC, there have been more than 164,000 complaints about debt collectors between January 1 and December 8, which is already higher than all of 2010, when there were roughly 140,000 complaints filed.
To curb illegal debt collection practices, J. Reilly Dolan, acting director of the FTC’s financial-practices division, told the Journal that the agency “is cracking down on abusive collection practices and directs its resources to go after some of the largest debt collectors.”
Despite the substantial number of grievances filed with the agency, the paper states the FTC has only taken legal action against four debt collection companies.
The increased number of complaints comes during a year during which the total value of consumer loans, including credit cards and auto loans, is less than $100 billion – roughly $20 billion less than during 2010.
The head of the FTC’s consumer protection bureau between 2001 and 2004, J. Howard Beales, told the newspaper the agency should be taking legal action against more than just four firms.
Thomas Maronick, a marketing professor at Towson University in Maryland who used to work for the FTC, relayed to the newspaper that many consumers mistake the agency hearing complaints as a sign that it will automatically take legal action against debt collectors.
“It creates the impression among consumers that a single complaint will result in regulatory action, but that is not how things work,” said Maronick.
While the Journal obtained the complaint figures from the agency, the official numbers won’t be released until early 2012.
Complaints can be filed with the FTC through the agency’s toll-free hotline, which consumers can use to explain their grievances. However, consumers can prevent issues from forming with debt by contacting credit counselors at the onset of credit issues.