Daily Archives: March 10, 2016

Debt Collection Abuses

Debt Collection Abuses, getting better, or worse? zombieDEBT

The Federal Trade Commission (FTC) brought more

actions last year, than, well, ever.

From Jan. 1 through Dec. 31, 2015, the FTC brought or resolved 18 debt collection cases, according to the report, which is the highest number in any single year.

So far, they seem to be getting along with their fellow bureaucrats at the Consumer Protection Finance Bureau (CPFB).

From the same story linked to above, here are there self-touted accomplishments:


  • Coordinated the first federal-state-local enforcement initiative targeting debt collection practices, Operation Collection Protection. So far, the effort has resulted in more than 70 law enforcement partners bringing more than 130 actions;
  • Prosecuted a sweep of cases against collectors that used unlawful text messages to collect debts;
  • Filed 12 new cases against 52 new defendants (a record number of debt collection enforcement actions for the FTC in a year);
  • Resolved nine cases and obtained nearly $94 million in judgments;
  • Banned 30 companies and individuals that engaged in serious and repeated violations of law from ever working in debt collection again;
  • Published a list of every company and individual banned by federal court order from engaging in debt collection activities;
  • Filed three amicus briefs, two of them jointly with the CFPB, on key debt collection issues
  • So, I am all for debt collectors following the law.  And for the government explaining to folks what they can, and cannot, do.  Color me skeptical that debt collectors will behave noticeably better.
  • Some older FTC statistics bear out my experience, which is that debt buyers sue people without ANY documentation that the debt is actually owed by that person.
  • The Federal Trade Commission, which examined 5,000 debt portfolios purchased by the nation’s largest debt buyers in 2013, found that only 12% included documentation.

  • Penny Crossman writes in the American Banker article from which this quote is taken:
  • Many collectors work debts for which they’ve never seen the charge-off statement or prior statements. They don’t know the collections efforts that have already taken place, and they don’t even know the terms and conditions of the original paper.

  • I agree with her suggested solution, central clearing houses of who owns what debt.
  • This would best be done by private companies, which could rate debt that the zombie bottom feeders are buying.  Insurance could be purchased by the zombie debt buyers on their purchased portfolios, based on the ratings.
  • There is no incentive for that to be done, until folks start defending the zombie debt suits and judges start throwing them out when there is no documentation.


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