Jan 29, 2013 Philip Burgess
Consumer protection agencies and advocates have been increasingly stringent in defending against illegal and immoral debt collection practices. Companies that partake in debt collection processes need to follow the various federal, state and industry-specific requirements when seeking to obtain debts from clients, as failure to oblige the laws could result in serious penalties.
Unfair and abusive debt collection practices can lead to fines levied by watchdog organizations, as well as a loss of the money owed and hurt reputations among consumers. However, by following the laws and sticking to best practices, businesses can recover debts owed in a timely fashion while maintaining a safe distance from legal actions.
Collectors, lawmakers seek better legislation
Minnesota Public Radio (MPR) recently reported that several consumer advocacy groups in the state have cited increasing issues with unfair debt collection practices, with many of the organizations in question becoming abusive in their processes. According to the news provider, the state's Attorney General Lori Swanson has established new legislation that would yield more stringent regulatory requirements for debt collection practices, as well as more dramatic legal consequences for partaking in abusive actions.
The source explained that while the issue seems to be rising as a direct result of the economic recession, it might only be a small portion of the debt collection industry that is being abusive to consumers. The majority of consumer advocates and debt collection practitioners have issued support for Attorney General Swanson's newest legislative action, illustrating how most debt collectors are staying within the guidelines of the current law.
MPR explained that harassing phone calls and emails are among the most common abusive debt collection practices currently afflicting consumers. The source cited one instance of a Minnesota resident receiving more than 50 calls per day from the same collection agency, which is in direct violation of several consumer rights protections regarding fair debt collection practices.
The shoddy practices of very few agencies have historically led to a stigma facing the industry as a whole, and debt collection agencies that follow the law have been working to correct this image for decades. The news provider added that the Minnesota Association of Collectors is helping lawmakers in the state develop the new legislation, especially regarding language, to ensure consumer rights are upheld and abusive collectors are brought to justice.
Chicago to vote on new law
InsideARM recently reported that lawmakers in Chicago, including Mayor Rahm Emanuel, are working on new legislation similar to requirements passed by New York City roughly four years ago. According to the news provider, lawmakers are hoping to force debt collectors to become licensed in the city, which many professionals in the industry view as an aggressive course of action.
The source explained that debt collectors were not consulted by the lawmakers who were writing the proposal, and were shocked to hear that it was going to a vote. The licensing practices would make regulations much more stringent for debt collectors practicing in Chicago than any other area in the country, although the vote has been held off until further notice because of its controversial inception.