A new Federal Trade Commission report concludes that the system for resolving consumer debt collection disputes is broken, and recommends significant litigation and arbitration reforms to improve efficiency and fairness to consumers.
The report found that debt collection litigation raised concerns about collectors failing to properly notify consumers of suits they have filed, collectors filing suits based on insufficient evidence of indebtedness, courts frequently granting default judgments against consumers who do not appear or defend themselves, collectors seeking to recover on debts beyond the statute of limitations, and banks freezing funds in bank accounts that are exempt from garnishment by law. In its new report, the Commission’s principal recommendations to address these concerns in litigation are:
States should consider adopting measures to make it more likely that consumers will defend themselves in litigation, decreasing the prevalence of default judgments.
States should require collectors to include more information about the alleged debt in their complaints.
States should take steps to make it less likely that collectors will sue on debt on which the statute of limitations has run.
Federal and state laws should be changed to prevent the freezing of a specified amount in a bank account including funds exempt from garnishment.
The FTC’s new report also addresses concerns about procedural unfairness in arbitration proceedings. In its new report, the Commission’s principal recommendations regarding debt collection arbitration are:
Consumers should have a meaningful choice about arbitrating debt collection disputes.
Arbitration forums and arbitrators should eliminate bias and the appearance of bias.
Arbitration forums should conduct proceedings in a manner that makes it more likely that consumers will participate.
Arbitration forums should require that awards contain more information about how the case was decided and how the award amount was calculated.
Arbitration forums should make their process and results more transparent.
The FTC believes that reforms such as those discussed in the report should be made to ensure that the debt collection litigation and arbitration systems adequately protect consumers without unduly burdening the debt collection system, which helps to keep credit prices low and helps to ensure that consumer credit remains widely available.
Mandatory arbitration provisions are fundamentally suspect. They are incorporated in many consumer contracts in the small print and businesses finance the system and, surprise, usually win. Not to surprisingly, courts have found such mandatory arbitration provisions "unconscionable" and unenforceable owing to their often outrageous provisions. Who wants to go to court where the judge is on the payroll of the business you have a complaint about or is going after you? Mandatory arbitration is just a way businesses make sure you DON'T get a fair hearing in an unbiased court of law.
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Nunt
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Excellent article & report from the FTC.
I went solo earlier this year in addressing all the issues that happen to be noted in the FTC report.
Stevenw...unfortunately you are correct...been there, done that and it amazes me to see how companies and corporations - that don't stick together- but cling together in their unfairness against the "average" consumer.
msit..thanks for the additional information & website ...nevertheless, you reap what you sow...and I know that it's reaping time for the unfair debt collectors...and their co-conspirators.
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Spam King
| 9 replies
While I'm happy they are resolving a way to address collection issues that are weighty enough to be litigated or arbitrated, I'm convinced that that real cost of collections to society is being overlooked. That cost is collection robo calls to everyone in the country on a frequent basis.
This occurs because you may have inherited a number, or know or live near someone who does owe someone something. Even if you did owe the money at one time, there is no effective way to resolve the dispute with the calling company..
Out of the 200,000,000 people, or households that added themselves to the DNC list, many probably thought this would also include stopping calls from collection companies that are harassing them, regardless of whether they incurred the debt or not, or owed the debt or not. Today, these "legal calls" cost the collection companies NOTHING. Yet, there is no obligation that they ensure who they are calling even is related to who might owe the money. The result is robo-calling virtually everyone in the nation, costing all of us a huge amount of time, and interfering with all our lives. Yet, the cost to these companies is virtually nothing. This has to stop.
Phones are effective at harassment, yet, virtually useless when trying to reach and resolve the underlying collection issues. So, when phone collection works, it is because the calls themselves will never cease if you don't pay. As a result, many people pay debts they don't even owe, because it is cheaper to pay someone off for a debt they don't owe than to try to fix the problem any other way.
As another article reported, over 200,000 people "wanted to be on the DNC list". That's a pretty bizarre conclusion that we'd have to request to be on such a list. 200,000,000 people, I'd guess, only included those that went to the trouble of adding their number, and the other 150,000,000 of us either don't have phones, or have intended to add their number later. Have you ever met anyone that does NOT want to be on the DNC list?? Only the government would create a rule that requires citizens to join something that they know for a fact that everyone wants. The only reason for this rule is that they were lobbied by those callers that wanted at least some people who they could legally harass.
Add up the cost of these calls to consumers and this would likely exceed all the debts that the collection calls are incurring by the hard working robots that cost nothing to operate. Robo-calling must be made illegal.
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jb
Time to take these collection companies out at the knees, in an economy that is floundering left, right and center - they need to be fined, arrests need to be made. Time to get tough - NOW.
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ps
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Definately needs something done and the fact that 3rd party zombie bottom feeder debt collectors can buy up a portfolio for cents on the dollar and then extort an amount over and above what was alleged as owed is wrong and a big scam. I understand a need to make some profit however making this an item under the way the stock market runs (because of purchasing say a $100 debt for $10 and collecting $110 out of someone- thats quite a nice bit of stock portfolio u have wouldn't u say?) it should then be scrutinized also by the sec as well as the ftc. They should not be allowed to extort 110% from someone on an old out of statute expired debt period!
This is a huge problem. It starts with the judges that are appointed lawyers. Their friends or former colleagues get in front of them and know they don’t have to do anything to win a case. The courts were supposed to be for common man but these days if you don’t have a blood sucking lawyer then you might as well throw in the towel and your home because they will find a way to take it. They use process servers that lie on affidavits with absolutely no consequences. The lawyer will just stand there time and time again and let the server lie and the judge accepts it every time. People get default judgments against them because the process server never did his job, never delivered the papers and lied about the service. There has to be a better way of informing someone of a case than through the law office that is trying to take the money they don’t deserve. The lawyers know better than anyone how to play the system and the judges who used to be those lawyers let them get away with it and probably get a kick back from that.
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Kohn Law Firm
| 2 replies
I was shocked how they play games and lie, They are horrible and need to be stopped. These people will stop at nothing to get a judgment and will pull off some pretty nasty tricks in the Milwaukee area.
They have no soul.......how do they look in the mirror in the morning.
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Michelle
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The other thing they need to do is make it illegal for a debt to be sold to a collector after it has passed the statute of limitations. There should be a Federal SOL, say, five years, and after that the debt is gone forever. No more reselling it, no reporting it to credit bureaus, nothing. It's wrong to have a debt collector buy a 10-year-old debt, put a mark on your credit report, lower your credit score and start to call everyone who might have known you since the age of 5.
They also need to really tighten the evidence rules. The collector should have to PROVE you owe the debt and prove how much you owe. You shouldn't have to prove you don't owe it. That goes against the notion of innocent until proven guilty.
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Fed-UP
Yes! A federal SOL that equals most state SOL's. They should also stop debt collector from inaccurate reporting to the credit bureaus. NCO is the worst offender, they operate under several names. If you ask for proof of the alleged debt, they sell the account to another of their "companies" to avoid the "cease and desist" communication letter/s. Then they keep reporting as a "new account" an account that is past the SOL, putting nothing in the credit report except alleged amount due. No account number, no date of account opened, no last payment date, no original creditor name, and so on. Then to keep the account alive, reporting each two weeks, with an adjustment for interest for the last two weeks. Again, "new account opened" Thankfully the credit bureaus do not buy all of the false stuff, but they do put into "other accounts" rather than a new account listing. Financially Insolvent means one is broke, not enough funds to hire a lawyer to file bankruptcy, and thanks to our crooked investments gurus, and some banks, no hope to recover funds lost by financial mismanagement involving a number of entities.
Its funny you think that most companies sell debt, when in fact they do the opposite.
They pay the companies a percent of what they collect. So as long as you pay your bills you shouldn't get any phone calls. You also need to understand telemarketers and debt collectors are two totally different jobs. First of all if you are one of the stupid people who spent the 48 million, call me, I have some ocean front property to sell you in Arizona. Some people may be very intelligent, but don't have any common sense.
So you think the people who rip companies off every day, causing half of this recession shouldn't get any phone calls. You cant be serious. Its funny to me that the people who gripe about getting phone calls are usually the people who owe the money. If people paid their bills, this country would be in a better position.
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