Debt collection scams hurt industry but collectors can stand out with compliance

Debt collection scams can hurt the industry, as it causes a negative reputation of relief agencies among consumers, despite most companies being compliant with laws and ethics.

KXTV-TV recently reported that a woman in Yuba City, California, was subject to an aggressive scam, the exact kind that does little to boost the faith many debtors put in collection agencies. Michelle Bertsch was called several times at home and work by a man who claimed to be a collector, according to the source. Despite not having any outstanding debts, the person told Bertsch that she owed $1,395. The individual then claimed that he contacted the Yuba City Police Department (YCPD).

After that point, Bertsch was called by a woman claiming to be from the local police department who threatened to arrest her. Although the phone number did originate from the YCPD, Bertsch found that no officer was aware of any collection efforts upon calling the number back. It was most likely a fraudulent attempt to collect on a nonexistent account.

These threatening phone calls are in direct opposition to regulations outlined in the Fair Debt Collection Practices Act (FDCPA). Stipulations in the legislation specifically prohibit debt collectors from making threatening statements and claiming that they can have a debtor arrested.

For legitimate agencies, it can be difficult to gain the trust of debtors. However, it can be accomplished by training all employees in best collection practices and ensuring that every worker is knowledgeable of FDCPA regulations.

Another way to promote trust and credibility for debt agencies is to join a reputable industry group. The Association of Credit and Collection Professionals (ACA) is one such organization that has a Code of Ethics and Code of Operations that it requires all member companies to follow.

Inter-industry monitoring and vigilance can be a great tool in promoting business ethics. However, some companies may be unwilling to become a member of the ACA or similar organization. In that case, firms can still establish best collection practices by requiring regular reviews of the FDCPA by all employees.