If you’ve gotten behind in paying your bills, you undoubtedly would rather not dig into your credit report. Chances are, your credit score has taken a hit with even a few missed payments. Nevertheless, it’s critical that you keep tabs on your credit report. Here are three reasons why:
1. Identity Theft. Identity theft isn’t just something that happens to somebody else. The statistics about the incidence of identity theft are alarming, but what’s really troublesome is that it can take years for people to realize that their identity has been stolen. The best way to ensure that you’re not a victim is to regularly review your credit reports, checking to see if the lines of credit and credit cards listed correspond with those you know you have. If something is amiss, you can begin to the process of straightening it out.
2. Debt Collector Shenanigans. Debt collection agencies are notorious for reporting collected accounts to credit bureaus, but aren’t at all diligent about reporting payments you might have made or telling the credit bureaus that you’re disputing a debt (required by the Fair Debt Collection Practices Act). That can hurt you in both the short- and long-terms, so you need to stay on top of it. If you find that a debt collection agency has reported harmful information, you can sue under the FDCPA and/or the Fair Credit Reporting Act.
3. You Pay for Errors. If your credit report contains errors, you’ll end up paying. Those who extend credit use credit reports to determine whether or not you qualify and what interest rate to charge. Employers can use credit reports to make decisions about whether to hire or promote you, and landlords use them to decide whether or not to rent to you. It’s in your best interest to ensure that your credit report is accurate.
Federal law says that you’re entitled to one free credit report every 12 months from each of the three major consumer reporting agencies (Experian, Equifax, and TransUnion). In order to obtain these free reports, you can use the federal website, annualcreditreport.com. Be on the lookout for other sites that trick you into paying for these free annual reports.
Debt collectors at the Australia and New Zealand Banking Group (ANZ) are the subject of an internal investigation and may face charges under the Australian Federal Privacy Act for posting a fake Facebook profile in order to “friend” customers who owed money. The profile, listed under the name “Max Bourke,” was used to try and find bank customers who had moved without leaving a forwarding address. The profile has been taken down. The lesson: Make sure you know who your Facebook “friends” are.
As if going to college wasn’t expensive enough…. Inside Higher Ed reports that colleges and universities are going the extra mile to ensure that those who’ve received parking tickets pay up.
The University of Central Florida, for example, has hired debt collection agency Williams & Fudge to put the squeeze on those who haven’t paid their citations. The debt collector receives 23% of every dollar it collects; that’s powerful incentive to collect on even small amounts.
The University of Florida puts a parking boot on vehicles with outstanding tickets, while the University of Texas at Austin goes high-tech, using cameras to scan license plates and alert parking attendants to put on the boot. For those who get tickets but don’t come back on campus, Austin has a one-two punch. The first collection agency bills consumers, and tacks on a $10 fee. If the person doesn’t pay up, a second collection agency takes over, adding $10 to the bill every month for up to two years.
Earlier this week, the executive director of Utah’s Department of Commerce alerted consumers to a debt collection call scam. The Utah Division of Consumer Protection received complaints whereby people “are targeted by offshore scam artists using pre-paid cell phone numbers who give verbal threats that they are going to damage a person’s Social Security Number, file a lawsuit against them and other actions unless the victim sends them money.”
While Utah raised the red flag, you can be sure that these scam artists are calling consumers all across the country. This serves as a reminder not to give personal information, like your Social Security number, over the phone, and that the Fair Debt Collection Practices Act requires debt collection agencies to send you a written notification within five days of contacting you. Once you receive the written notice, you have the right to request that the debt collector validates the debt.
In the meantime, if you’ve been called by one of these scam artists, contact your state’s attorney general. You can find your attorney general’s contact information by clicking here, and then clicking on your state.
Collections and Credit Risk recently ran an article written by Experian Vice President Dan Buell that offers an interesting insight into collection agency trends. In the article, the credit bureau executive discusses whether or debt collection agency mergers and acquisitions will see an uptick against the current economic backdrop.
Buell makes a strong case that smaller and mid-size debt collection agencies are feeling the squeeze, and may be gobbled up by larger debt collectors, such as NCO Financial Systems and Alliance One. He discusses a number of other factors affecting mergers and acquisitions, including the potential for increased federal and state regulation, security and compliance issues, and the scarcity of available capital. He anticipates that collection agencies with a strong offshore presence – and therefore lower operating costs – will be well-positioned to buy other debt collection agencies, and notes that companies that buy debt are less attractive takeover targets than agencies that don’t buy debt.
According to a report by KATU in Portland, Oregon, Select Portfolio Servicing appears to be kicking people when they’re down. KATU conveys a heartbreaking story of the widow of a fallen National Guardsman who thought she would lose her home after her husband was killed in Iraq. She felt hope, however, when she received a letter from Select Portfolio Servicing, who said that she could receive a federal loan modification and reduce her payments to something she could afford. After making one payment, though, the woman was told by Select Portfolio Servicing she did not qualify for the loan modification program after all. According to the report, “the money Select Portfolio would get from selling (her) home – after foreclosure – was more than it would get by modifying her loan.” This was despite the fact that Select Portfolio Servicing received $782 million from the federal “Making Home Affordable Act.”
We have to wonder why the feds gave Select Portfolio money in the first place. After all, when the company was known as Fairbanks Capital Corp., it paid the Federal Trade Commission a $40 million fine after being charged with deceptive and illegal practices in servicing mortgages.
On Monday, Mayor Michael Bloomberg announced new regulations governing how debt collectors can conduct business when collecting from New York City residents. Together with the Department of Consumer Affairs Commissioner Jonathan Mintz, Bloomberg highlighted the underhanded tactics that debt collection agencies are currently using. Essentially, debt collectors take a name from their collection list and call everyone in the five boroughs with that same name.
According to the Mayor’s office, “Under the new regulations, any debt collection agency attempting to collect a debt from a New Yorker must provide proof the debt is owed at the consumer’s request. The collector must provide a copy of the original debt documentation, a copy of the final account statement of the originating debt, a document itemizing the remaining amount due, including any additional fees or charges claimed to be due and the basis of the consumer’s obligation to pay them. Other provisions of the new regulations include disclosing the consumer’s rights regarding the statute of limitations, and providing written confirmation of the debt payment schedule or settlement within 21 days of the agreement. In addition, debt collection agencies must provide New Yorkers with a phone number that must be answered by a live operator and not an answering service.”
Bloomberg noted that, over the course of the Great Recession, debt collection agencies have resorted to ever-more brazed tactics. Indeed, the Department of Consumer Affairs found that New York City residents were wrongfully pressured to pay more than $1 million in debt that they didn’t really owe. According to Mintz, “Wrongful debt collection is more than just annoying and stressful. Such wrongful collection attempts can cause serious and long-term damage to a family’s finances, including seized bank accounts, damaged credit ratings, and more.”
If you live in New York City and have been the victim of improper debt collection calls, you can call 311 or file an online complaint by clicking here.
According to a report in the Roanoke Times, Asset Acceptance Capital Corp, Access Acceptance LLC, and Genesis Financial Solutions may be trying even sneakier ways to get consumers to pay up. A lawsuit filed against the three companies, which buy old debt for a song and then try and get consumers to pony up, alleges that the debt collection agencies are sending credit card offers to consumers, telling them that if they transfer debt to the credit card, they won’t face collection. The sleight-of-hand comes into play in two ways. First, the fine print says that the debts are subject to collection. Second, consumers who agree to the card may be agreeing to pay debts that are past the statute of limitations or that have been discharged in bankruptcy proceedings.
The Consumerist has published an excellent example of the shady tactics used by RJM Acquisitions to try and get unwitting consumers to pay debts they do not owe. The debt that RJM Acquisitions was trying to collect was not only invalid, but it was past the statute of limitations for collections. The consumer wrote a strongly-worded cease and desist letter, which The Consumerist has also reproduced. Kudos to the consumer, and to The Consumerist for spreading the word.
According to the Charleston Gazette, a Winfield, West Virginia, man was awarded $237,358 in a lawsuit he waged against Portfolio Recovery Associates after the debt collection agency called and harassed him about a debt he did not owe. The suit also found that Portfolio Recovery Associates kept contacting the man, even after he had hired an attorney to represent him, which was a violation of state law (as well as the Fair Debt Collection Practices Act).
