A report by the US Public Interest Research Group analyzing debt collection complaints filed with the Consumer Financial Protection Bureau found that the largest single source of complaints (25%) was that the debt collector was trying to collect from the wrong person. Another 17% of the complaints were that the debt had already been paid or that the amount sought was incorrect. The single largest source of complaints was Encore Capital Group, a publicly traded debt buyer which does business through Midland Credit Management, Midland Funding, and Asset Acceptance, among other companies. The second largest was Expert Global Solutions, parent of debt collector / buyer NCO, and the third was Portfolio Recovery Associates, another publicly held debt buyer. Those three organizations accounted for over 15% of all debt collection complaints. This strongly suggests that there is a major problem with debt buyers claiming that people owe debts based on minimal and inaccurate information, often aggravated by poor skip tracing efforts.
Consumers Getting Relief through the Consumer Financial Protection Bureau’s Public Consumer Complaints Database
For Immediate Release
THURSDAY, FEBRUARY 27, 2014
WASHINGTON –Debt collectors trying to collect debt from the wrong person were the top source of complaints to the Consumer Financial Protection Bureau (CFPB), according to a report released today by the U.S. PIRG Education Fund. The report also found that debt collection, the newest category in the database, is already a top source of complaints to the CFPB, outpacing common consumer products such as credit cards and bank accounts.
“The CFPB is helping consumers get relief from shoddy debt collector practices,” said Laura Murray, Consumer Associate with the U.S. PIRG Education Fund. “Many consumers who don’t owe debts are being harassed by lazy debt collectors who don’t verify consumer identities.”
For example, Amrit Singh, an adjunct professor at a community college, is dealing with a case of mistaken identity. In February 2014, the thirty-five year-old father of two received a notice of garnishment in the mail based on a 2008 judgment for over $10,000 obtained by a debt buyer he had never heard of. The notice stated that unless he voluntarily turned over 10% of his gross wages until the debt is paid off, the marshal would send the income execution to his employer. Mr. Singh called the New York City Marshal’s office and learned that the original creditor of this alleged debt was a bank with whom he had never done business. Mr. Singh then quickly checked his credit reports and found no evidence of either the original creditor or the judgment appearing on his credit report. Now, because of a debt collector’s sloppy work, Mr. Singh must take several days off work and seek legal counsel to avoid garnishments that could push his family into poverty.
The report, “Debt Collectors, Debt Complaints: The CFPB’s Consumer Complaint Database Gets Real Results for Consumers,” [http://www.uspirgedfund.org/reports/usf/debt-collectors-debt-complaints] is the fifth in a series of reports by the U.S. PIRG Education Fund that analyze the complaints in the CFPB’s public Consumer Complaints Database. The CFPB began accepting complaints in July 2011 and now accepts complaints about most financial products and services. Although the CFPB only opened its doors to complaints about debt collection last July, complaints about debt collection have piled up quickly, accounting for the second largest portion of recorded complaints, after mortgages, between July and January.
Some key findings:
The CFPB has helped enable more than 2,700 consumers – 22 percent of complainants – to receive relief as a result of their debt collection complaints. The majority of these consumers received non-monetary relief, such as halting harassing phone calls.
The most common problem was debt collectors trying to collect debt from the wrong person (25 percent), followed by repeated phone calls (13 percent). State and federal laws protect consumers from harassing phone calls from debt collectors.
Encore Capital Group received the most complaints nationwide.
The District of Columbia ranks #1 in complaints per 100,000 residents, followed by Nevada, Florida, and Delaware.
About 16 percent of responses received from debt collectors to complaints filed with the CFPB were deemed unsatisfactory by consumers and were subjected to further dispute.
Companies varied widely in how frequently they offered relief to complainants. Allied Interstate LLC granted relief to over 97 percent of complainants, while several companies never provided relief.
The report comes as the CFPB finishes collecting comments about debt collection in preparation for a debt collection rulemaking. The report recommended that the CFPB make a number of improvements to debt collection rules, including the following:
Require debt collectors to stringently verify that they are collecting accurately-owed debts from the correct consumers, before they start;
Clarify that the debt collection laws give consumers the right to sue to stop unfair practices and to collect multiple penalties for multiple violations;
Protect service-members by strictly limiting contact with their commanders to verifications of employment and address;
Protect all consumers by mandating additional disclosures concerning the effect of paying debts on their credit reports, such as a disclosure that “Paying this debt will not remove it from your credit report.”
The report also recommends that the CFPB move to make the database more user-friendly, analyze the data they receive regularly, and use the information and analysis to implement strong consumer protections.
“The CFPB has only been taking debt collection complaints for a short time but is already swamped with them,” concluded Murray. “Consumers need a strong CFPB that reins in reckless debt collectors who ignore the rules.”
Download the report, “Debt Collectors, Debt Complaints: The CFPB’s Consumer Complaint Database Gets Real Results for Consumers” here.
This is the fifth in a series of five reports by the U.S. PIRG Education Fund that analyze the complaints in the CFPB’s public Consumer Complaints Database. Previous reports have analyzed bank account, private student loan, credit reporting, and credit card complaints.
If you’re trying to correct an error in your credit report at one of the nation’s largest credit reporting companies, Equifax, Experian, and TransUnion have added a function to their dispute-handling system that makes it easier for you to explain your dispute.
Now you can upload, mail, or fax any supporting documents you have to explain the errors in your credit report.
Why you should care about correcting your credit report
Credit reports play a part in most major consumer lending decisions– including mortgage loans, auto loans, credit cards, and private student loans.
If there is inaccurate information in your report, it could cause a lender to offer you an interest rate that is less favorable than it would otherwise offer. Some inaccuracies could even lead lenders to turn you down entirely.
Including relevant supporting documents can be important because it allows you to provide evidence that supports your dispute.
Credit reporting companies must forward your dispute, including all relevant information, to the furnisher (the company that originally gave the information to the credit reporting companies). If the furnisher corrects your information because of your dispute, it must correct that information with every credit reporting company with whom it has a relationship.
Check your credit report
So, if you haven’t done so recently, get your free annual credit report at annualcreditreport.com. Check for errors. And if you find an error, use your own words and supporting documentation to explain your dispute. You can also submit a complaint with the Consumer Financial Protection Bureau.
Question: Can someone take you to small claims court for money they loaned you 13 years ago?
Answer: If the agreement to pay was in writing, and stated all the terms, and was signed, 10 years from last payment. If not completely in writing, 5 years. Also note that an agreement which by its terms cannot be performed within one year must be in writing to be enforceable at all.
Question: Is the person responsible for a nursing home resident bill after they give up the Power of Attorney? My dad is a nursing home resident. My sister was the Power of Attorney. She failed to pay the December 2012 bill. She then gave up the Power of Attorney. I then obtained a Power of Attorney. The nursing home is billing me now. Isn’t she still responsible for the December bill?
Answer: The only person responsible is your father. A power of attorney or other agent is not responsible for the principal’s debts unless they sign a writing accepted liability individually, not as agent.
Question: Is there a law about a company calling me about a bill? I am on disability and cannot pay it.
Answer: The Fair Debt Collection Practices Act allows you to direct a third party debt collector or debt buyer to cease contact. They can still sue you, but not write or call.
Under the Telephone Consumer Protection Act, you may direct anyone not to place calls to a cell phone using an autodialer or recorded/ artificial voice.
An original creditor can call your landline or place manual calls to your cell phone, subject only to fairly restrictive law on harassment, intentional infliction of emotional distress, etc. A complaint to the Attorney General or a regulatory agency might help
Question: If a spouse incurs credit card debt in his name only, is his wife ever responsible for that debt?
Answer: Probably not, but it may take a lawsuit to determine the question. Under the federal Equal Credit Opportunity Act, one spouse may contract on his/her own for credit, without involving the other spouse. There is a state Family Expense Act which makes both spouses liable for “necessaries,” but it is probably preempted by the federal law. It is also unclear if it ever would apply to a lender, as opposed to an actual provider of goods and services.
Question: What is the rate of interest on an Illinois state court judgment? It only says “with interest until paid.”
Answer: Illinois judgments bear 9% simple interest from entry until payment. That is, the unpaid interest is never added to the principal. If payments are made on the judgment it is necessary to compute the interest separately for each period during which a different amount is owed.
Question: I received summons in July 2013 in a case seeking collection of a debt. It said I had 30 days to answer. I called the lawyer and agreed to make payments. I have done so regularly. Today I received a summons seeking to garnish my wages. If I have been making regular payments which they have accepted how can they garnish my wages?
Answer: This is a common problem. Calling up the agency and agreeing to payments does not by itself prevent entry of a judgment. If you want to avoid entry of a judgment you need to appear in court. Often, if a payment plan is agreed to the judge will either dismiss the case without prejudice, subject to reinstatement if you don’t pay, or continue it. Any agreement a person makes with a debt collector should specifically cover whether a judgment will be entered or not, and should be confirmed in writing.
You need to file a motion to vacate the judgment under section 2-1401 of the Code of Civil Procedure on the ground that you were deceived into allowing the entry of the judgment.
This sort of practice often violates the Fair Debt Collection Practices Act. Consult an attorney such as ourselves who practices in that area.
Question: What do I do if my car was repossessed, we paid over $1600.00 to get it current and when we were planning to get it, it was gone?
They moved it to another city.
Answer: If they accept reinstatement money, they have to return the car locally. There are substantial statutory damages for repossession violations. An attorney should review the contract, the facts, and all notices you received.
Question: In a small claims court, can I be sued for a credit card debt, if the Statue of Limitations has expired?
Answer: Anyone can file a lawsuit. If the statute of limitations has expired you have a defense. However, you need to appear and assert it. In Illinois, most credit cards have a five year statute. This is measured from default or last payment, whichever is later.
If the debt was for personal, family or household purposes, as opposed to business purposes, the filing of a time-barred lawsuit violates the Fair Debt Collection Practices Act.
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