It can be challenging for debt collection companies to stay on the right side of the law. These companies are required to follow the law that outlines how they can contact debtors and collect money. When they fail to do so, the Federal Trade Commission (FTC) can shut them down, ban them from operating and even file lawsuits against them. Below, you will find common illegal debt collection practices.
Debt collection firms are not permitted to make threats when trying to collect money they are owed. Debt collection companies often threaten to tell the debtor’s neighbors about their debt, threaten bodily harm and even threaten to have them arrested.
It is required by law for debt collectors to identify who they are when they contact debtors. They cannot pretend to be anyone other than a debt collector when trying to collect outstanding payments. Many debt collectors often pose as lawyers, government employees and police officers in an effort to collect debts.
Federal law allows debt collectors to call between the hours of 8 a.m. and 9 p.m. The worst debt collection agencies out there will call very early in the morning and very late at night to hassle debtors into making payments.
Debt collectors are only allowed to contact you and your lawyer to collect the debt. They cannot contact your neighbors, your employer or any other third party with whom you are associated.
All of the practices mentioned in this post are banned by the FTC and if a debt collection firm is caught performing them, it can wind up being banned by the government agency. Make sure you know how debt collectors can contact you before simply handing over your money.