Feb 11, 2013 Philip Burgess
The debt collection industry continues to become more popular and profitable, as consumers and businesses hold a higher volume of outstanding loans than ever before. Growth in the sector was likely the result of the economic recession, when demand for credit was extremely high and companies had a much more difficult time when trying to payback outstanding debts.
As a result of the increase in debt collection activity, many new firms are beginning to sprout up across the nation to take advantage of this financial opportunity. However, more federal and state entities are getting involved in the enforcement process, as abusive and illegal activities on behalf of either uninformed or shoddy debt collections agencies has led to an increase in complaints.
Keeping it simple
FOX Business recently reported that many consumers and businesses are becoming frustrated with debt collectors, as certain agencies will either bend or break the laws in the interest of seeking funds in a timely fashion. Some of the practices can be considered in violation of the Fair Debt Collection Practices Act (FDCPA), which protects consumers from abusive agencies.
According to the news provider, validation is an often overlooked but crucial component of debt collections, as agencies seeking out the loans have to provide debtors with a variety of information. This includes the amount of the debt, the creditor who currently owns the loan, a statement outlining the validity of the debt, a notification that indicates who the original creditor was and other information.
When disputes arise, agencies must cease efforts to obtain the debt for as long as it takes to send out supplemental information. Debt collectors can verify this information by mail or phone, and should always ensure the consumer or business gets a proof of payment to avoid any further issues in the collection process.
High risk of ill-advised practices
There are a variety of stories regarding the abusive practices of certain debt collection agencies, many of which have led to a widespread distrust for the industry at large. This includes hundreds of phone calls in a single week, posing as celebrities and stating that criminal charges are being filed when they are not.
However, debt collectors can avoid the current stigma facing their industry by following the laws and guidance as outlined by the Federal Trade Commission, Better Business Bureau and Consumer Financial Protection Bureau.