Last week, the FTC reached a settlement with a Texas collection agency that allegedly used lies and threats to collect debts. Whitewing Financial Group agreed to pay a $150,000 judgment and refrain from illegal practices when collecting debts. The FTC had accused Whitewing of buying and attempting to sell very old debts, many so old they were no longer legally collectible or even eligible to be placed on a person’s credit report. Many of the debts had been discharged in bankruptcy, the FTC said.
The settlement came as debt-collection complaints continue to pour into the FTC. In 2005, nearly one-fifth of all the complaints the FTC received (66,627 of them) involved debt collectors–more than any other industry. That’s up from 58,698 in 2004, when debt-collection complaints accounted for 17 percent of all complaints filed with the FTC. With the ACA numbers reflecting the sharp growth in the number of debt collectors, it’s no wonder that the FTC has been bombarded with complaints.
And for those of you who think the FTC numbers are low, consider what the agency told Congress in its annual report: “The commission believes that the number of consumers who complain to the agency represents a relatively small percentage of the total number of consumers who actually encounter problems with debt collectors.”
Meanwhile, late last month, New York’s Spitzer charged a national debt collection company — JBC & Associates, its successor companies, JBC Legal Group and Boyajian Law Offices and their operator, Jack Boyajian of New
Jersey — with numerous illegal and abusive practices. Several other states have sued the same collection agency in the past few years.
In the New York lawsuit, Spitzer charged the group with the following:
* Falsely threatening to file lawsuits in cases where New York’s six-year statute of limitations for bounced checks has expired.
* Trying to collect more than allowed under state law.
* Harassing consumers by calling them late at night and at work and improperly contacting neighbors, relatives and employers about the debtors.
New York said more than 200 people had filed camplaints against JBC and Boyajian since January 2003. Boyajian’s office did not respond to my query.
By Caroline Mayer | July 12, 2006; 7:00 AM ET | Category: Credit Issues
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Sure, call the whole industry evil since some (ok, maybe many) of the participants break the law. You know, I feel the same way about (insert ethnic group here) since some (ok, maybe many) of the members of said group break the law.
To those complaining about debt collectors. If you can’t repay the debt, don’t borrow the money.
Posted by: Non debtor | July 12, 2006 08:01 AM
To Non debtor: Which ethnic group were you referring to when you said “some (ok, maybe many) of the members of said group break the law”? I know of no ethnic group in which the majority of the population breaks the law to participate in group practices. Comparing debt collectors (a professional choice) to ethnic groups (a biological predisposition) is highly charged and very much unfair. As is claiming “if you can’t repay the debt, don’t borrow the money” without knowing people’s circumstances. Many times people can repay the debt when they borrow the money. Then circumstances change, one thing leads to another and they end up in trouble. But no one should be allowed to break the law or instill fear or terror into someone simply to collect these debts – especially ones that are so old.
Posted by: Non-judgmental | July 12, 2006 08:51 AM
Well, Another way to look at this is why are people being extended credit? Certainly circumstances change etc, but it seems as though debit, it’s collection, and incredible intrest rates from credit-providers all work together to creat said credit and debit crisis.
Posted by: not debit free | July 12, 2006 08:53 AM
“Whitewing Financial Group agreed to pay a $150,000 judgment and refrain from illegal practices when collecting debts.”
That’s great. I’m going to rob a bank and when caught I’ll agree to give back some spare change and I’ll promise to refrain from robbing more banks.
Posted by: Washington | July 12, 2006 08:55 AM
When I stop getting five credit card offers a day in the mail, I’ll maybe start having some sympathy for the lending institutions. Otherwise, if you push your lending services on the weak and marginally competent, you deserve all the misery you get, so far as I’m concerned.
Posted by: Gene in Dunn Loring | July 12, 2006 09:56 AM
Isn’t it disingenuous to say consumers “get back” the equivalent of 155 gallons of gas from debt collection? That’s assuming all that money goes to reducing the costs at the companies for whom debt is recovered. More likely, that money is sucked away as profits for those companies (especially banks, which have done awfully well in the recent past).
This study is more evidence of the re-distribution of wealth away from the poor and middle-class to the rich. Collection agencies just add muscle to the legal but unethical process of stripping lower classes of any wealth they might be able to accumulate.
Posted by: Susan | July 12, 2006 10:31 AM
So on a more productive note, how do we find out what collection practices are legal in our state, and whom should be contacted when illegal attempts at collection occur? I live in VA, but would be interested in MD as well.
Posted by: ljb | July 12, 2006 10:59 AM
To Susan: Your comment “stripping lower classes of any wealth they might be able to accumulate” goes to the underlying principle that guides debt collection. The goods and services that tagets of collection calls are accumulating are not paid for in full. They agreed to pay for these things, but then, for whatever reason, did not.
Posted by: Patrick | July 12, 2006 11:08 AM
how does one go about becoming a debt collector?
Posted by: RitaMae | July 12, 2006 11:46 AM
Federal law actually covers this:
http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
Any additional laws on collection practices for each state are usually posted on either the State Attorney General’s site, or whatever agency handles Consumer Affairs/Consumer Protection.
Very glad to see NY taking action against JBC & Boyajian — they recently hassled my husband over a debt that couldn’t possibly be his, based solely on the fact that he had the same name as the debtor. They called several times a day, and it took six weeks and multiple letters to make them go away. I’d advise anyone improperly contacted by them to be VERY careful about providing any further personal information. No way do I believe that debt collectors help the process or save me money — the credit issuers are way too agressive in granting credit to risky individuals & businesses, and then they expect the rest of us to pay for it…ugh.
Posted by: PVT | July 12, 2006 12:00 PM
1. Blaming the marketing of credit cards on one’s mismanagement of personal finances is tantamount to blaming car salesmen for auto accidents. The inability for most people to take personal responsibility for their actions is embarassing.
2. Collections is not a redistribution of wealth from the poor to the rich. It’s a functional necessity of lending that has been around as long as rope. If you lent someone money and they didn’t repay you, would you just let it go?
3. Collections habitually ‘forgives’ a lot of debt balance during the collection process, which equates to an undeclared form of social welfare (I did a research paper on this). Don’t believe me? Ask the IRS – they would love to tax the amounts forgiven by collectors in the course of their work!
4. There are some bad people in that business, but to generalize that they are all thugs and crooks is an ignorant and factless generalization. While I believe some (or many) complaints may be valid, there is also an element of scum on the other side.
Paypal scam alert 
