The Federal Trade Commission (FTC) is required by law to
report annually to Congress on its activities, including those surrounding
enforcement of the Fair Debt Collection Practices Act (FDCPA). During Y2K,
complaints to the FTC from consumers regarding third-party collection
activities continued to exceed complaints form any other industry.
16% of the complaints were for false or misleading
statements about the true status or amount of the debt, such as pending legal
action or the amount of debt owed. Complaints that a verification notice was
not sent, calls were made to an employer when prohibited, and threats were
received each comprised about 5% of the complaints. Ominously, the FTC
commented in its report that it considers the complaints it hears to be a small
percentage of the actual violations experienced by consumers.
Finding of violation can be onerous. The FTC cited its
July 2000 settlement with North American Capital Corporation for $250,000 for
complaints that included improper third party disclosures and profane language,
as well as false and misleading statements.
The FTC also reported
to Congress that over one-third of the total collection industry complaints it
received were about in-house collectors.
While acknowledging that such
complaints cannot be pursued under the Federal Trade Commission Act. As if that
warning were not sufficient, the report pointed out that March 2001 charges
against The Associates and its successors were filed under the FTCA.
What is the best prevention? The FTC’s Annual Report
emphasizes the importance of education and information. Contact Phoenix
Resource Group today to learn more about how our interactive CD-ROM can help
your organization avoid complaints, investigations and penalties.