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Regulators push back against fraudulent debt collectors

Sep 20, 2013 Philip Burgess

The debt collection industry has come under increased scrutiny in the past several years, especially as the economic recession led to a higher volume of outstanding loans than ever before. Agencies need to ensure that they are following the best practices and regulatory compliance statutes, such as those under the Fair Debt Collection Practices Act (FDCPA), to avoid sanctions, fines and other issues.

Though the Federal Trade Commission experienced a massive increase in the number of complaints filed against debt collectors last year, many of these communications have yet to be substantiated. Regulatory entities, as well as law enforcement agencies, are beginning to identify fraudulent collection efforts coming from the United States and abroad that threaten businesses and consumers across the country.

BBB speaks out
WIFR 23 News recently reported that the U.S. Better Business Bureau (BBB) has issued a warning to consumers and businesses as the result of an increase in fraudulent debt collection scams. Agencies operating in the sector need to know about these actions, and would do well to educate clients regarding the risks of fake collection firms.

The news provider explained that there were 782 complaints filed by businesses and residents in California between 2011 and 2012, while another 926 were recorded between last year and this September, representing an increase of 84 percent. These complaints were specifically targeted at fraudulent practices and scams coming from a variety of yet to be identified criminals.

According to the source, some of the most telling signs of a scam include high-pressure tactics that are meant to intimidate the recipient of the call, as well as persistent requests for financial data and other potentially sensitive information. Officials at the BBB have urged companies and consumers to report any instances of these types of communications immediately to try and eradicate the issue.

Additionally, the BBB stated that debt collectors always need to verify the debt, as well as their own contact information, when the consumer or business requests such data. If the caller refuses to do so, they are likely not real collectors but scam artists who are only trying to steal information that can be used to levy finances or compromise identities.

"If people call pretending to be debt collectors, consumers can be at high risk of identity theft," Dennis Horton, director of the BBB's Rockford, Calif. Regional Office, explained, according to WIFR 23 News. "Consumers have to be cautious with these callers and must never give out personal information with people they do not know."

Real agencies must align with the law
Proper collection agencies should always ensure that their staff members understand the entirety of the FDCPA, as well as any state or industry-specific regulations that might cover their communications. Though the aforementioned practices are more commonly perpetrated by fraudulent parties, even real agencies will sometimes use these tactics.

To avoid crippling fines, sanctions, hurt reputations and potentially lost funds, companies should always consider using a debt collection agency that has proven its value and handle on the law.