States Focus on Debt Collection Education this Week

On the heels of the FTC’s annual report on consumer complaints, which prominently featured debt collection, state consumer agencies have been issuing alerts and content for residents to help them deal with debt collectors.

The Washington Department of Financial Institutions (DFI) Thursday issued an alert on debt collection scams in the state.  The alert, interestingly, makes a distinction between legitimate debt collectors and those posing as ARM companies to swindle consumers.

“Consumers should be on high alert when receiving a collection call about a debt if the consumer has any question about the validity of the debt,” the DFI said in its press release.  “Scam collectors have claimed to be from law offices, the FBI, and other law enforcement and governmental agencies.”

“It’s appalling how many people will try to prey on others just to make a few bucks,” DFI Director Scott Jarvis said. “We hope to limit the damage to Washington consumers by raising awareness of this scam, which is criminal.”

The alert notes that debt collectors must play by certain rules, as laid out in the Fair Debt Collection Practices Act (FDCPA). Consumers must look for certain signs on collection calls – like the caller being unwilling to provide written validation of the debt or even a mailing address – to determine if the debt, or the company calling, is legitimate.

Also on Thursday, the Attorney General of New Jersey, Jeffrey Chiesa, and the New Jersey Division of Consumer Affairs announced the release of a Debt Collection Handbook and accompanying video, “Understanding Debt Collection” (embedded below).

The Debt Collection Handbook (also available in Spanish) and Understanding Debt Collection video include important information for any consumers who owe money, or who have been contacted by a debt collector about money the consumer does not believe he or she actually owes.  The bottom-line advice is that, if a debt is legitimate, the consumer must pay it.  However, the FDCPA protects consumers by prohibiting debt collectors from using abusive, unfair, or deceptive practices.

The Division’s creation of the Understanding Debt Collection Video was funded by a grant from the Sears Consumer Protection and Education Fund.

“The new booklets and the new video provide practical information that every consumer can use for self-protection,” Eric T. Kanefsky, Acting Director of the Division of Consumer Affairs, said.  “These topics are particularly relevant today, as more and more individuals and families rely on the Internet to make purchases, and many also face the possibility of outstanding debt issues.”