There is plenty of incentive for debt collectors to continue carrying on with business without making changes. According to the Center for Responsible Lending (responsiblelending.org), from 2003 to 2012, revenue from debt collection rose 600 percent. During the same time, the use of predatory practices in debt collection also rose. Currently, according to the Center for Responsible Lending, one in seven American adults are dealing with a debt collector, with an average of $1,500 owed on the debt.
Meanwhile, in 2013, the Federal Trade Commission (FTC) reportedly received more than 200,000 complaints about debt collectors, more than any other category of complaint except identity theft. And it is apparently all too easy for debt collectors to falsify debt. The FTC found that only six percent of debts purchased by the largest collection companies came with any documentation and the courts have found in favor of debt collectors, even in cases where documentation was forged, false and/or misleading.
According to the Center for Responsible Lending, many consumers do not know when their debt has been sold or whom it has been sold to. They simply begin receiving harassing phone calls from companies they do not know. In many cases, the consumer’s debt has been sold to a third party, but sold without supporting documentation, or with incomplete or inaccurate information. As a result, debt collectors may be collecting on a debt that has already been paid or settled, or that is owed by someone else.
Because many consumers are afraid of the harassment or believe the threats - such as that they will go to jail if they do not pay the debt - they wind up paying, even if the debt was not their debt to begin with. In other cases, their bank accounts may be frozen or wages garnished if a default judgment is issued against them.
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The Fair Debt Collection Practices Act is designed to protect consumers from predatory behavior, but it has some gaps. For example, it only covers debt collectors not creditors collecting on their own debts, such as banks. Many consumers do not know the laws or how to protect themselves, so they wind up paying to make the harassment stop.
As consumers find themselves fighting predatory debt collection practices, the debt collection industry reportedly continues to grow, for reasons that are clear. The Center for Responsible Lending notes that between 2006 and 2009, around $143 billion in consumer debt was purchased by debt buyers for only around $6.5 billion. Even convincing just a fraction of consumers to pay a debt can result in profits for these companies.