Illegal Debt Collection Tactics by Credit Card Companies

Written by: TheCardExaminer Staff

Illegal Debt Collection Tactics by Credit Card Companies

Debt collectors have never been known for being patient or fair to their customers. In fact, anyone who has ever been late on a payment can relate to the famous quote “The only man who sticks closer to you in adversity than a friend is a creditor.” Unfortunately, while debt collectors in the past often used harassing phone calls and other inappropriate and illegal debt collection tactics to try to collect unpaid debt, it seems that the problem is only becoming worse.

Debt Collection Problems

With ongoing financial struggles and many Americans simply being unable to pay the staggering amounts of credit card debts that they have, debt collectors are becoming more aggressive than ever before in an attempt to collect debts. In fact, according to a 2011 story on ABC News.com, the Federal Trade Commission (FTC) has been forced to crack down on debt collectors and take legal action due to the unscrupulous practices being used.

The ABC News article indicated that the number of complaints the FTC receives about debt collectors is staggering. Second only to complaints of identity theft, the number of complaints about debt collectors reached 144,159 in the year prior. This means that debt collection agencies and debt collectors generate more complaints than any other industries (including used car salesman who used to hold the number one position).

The behaviors that prompted the FTC action against debt collectors went beyond simply calling during prohibited hours or otherwise committing simple violations of the Fair Debt Collection Practices Act (FDCPA). In fact, according to the ABC news article, debt collectors threatened to harm debtors using violence, and called them names including “crackerhead,” “lowlife,” “deadbeat” and “white trash.”

Systemic Issues

While threats of violence are a pretty extreme violation of the FDCPA, the wrongdoing among debt collectors is not limited only to rogue collection agencies who are among the most aggressive.  In fact, there is ample evidence that there are widespread  problems with the behaviors of even major credit card companies who are attempting to collect debt.

These problems were brought to light in an August 12, 2012 article in the New York Times entitled: “Problems Riddle Moves to Collect Credit Card Debt.” According to this article, credit card companies are making some of the same mistakes that were made during the wave of foreclosures in a desperate effort to try to collect on unpaid debt. These mistakes include relying on incorrect or erroneous documents and incomplete records and providing “robo-testimony” from witnesses in court cases. Robo-testimony refers to generic testimony wherein the witness has no specifics about the case; it is compared to robo-signing in foreclosure where one person signed thousands of foreclosure documents without reading them.

When credit card companies have incomplete records, wrong records and uninformed witnesses, this can lead to lawsuits being filed against people who don’t actually owe money or who do not owe as much as creditors are claiming. According to the New York Times article, many who were the subject of lawsuits did not agree with the claims made against them. Those being sued are not the only ones recognizing problems either.  One Brooklyn judge estimated that as many as 90 percent of the lawsuits against debtors are flawed and the creditors are not able to prove that the debtor actually owes the amount of money that is being claimed.

Protecting Yourself

As debt collectors become overly aggressive, it is important to take action to protect yourself from illegal debt collection tactics. This means knowing the rules under the Fair Debt Collection Practices Act, including the fact that you have the right to demand verification of your debts without which the creditor cannot continue to try to collect against you. If the FDCPA is violated, you can take legal action against the creditor to collect attorneys’ fees as well as other economic damages. If no such damages exist, the judge may award up to $1,000.

It is also essential that you respond to any lawsuit that is filed against you by a creditor. If you do not respond and come to court, then the judge will be forced to issue a judgment against you based on what the credit card company is alleging is the truth- even if there are flaws in the evidence.


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