What You Should Know About Collection Agencies

                 "Cosmopolitan" (November 1984) pp 136-143



     Karen Hartney laughed when she pulled the lavishly  illustrated  book on
Galapagos Islands wildflowers out of her  mailbox.   She  hadn't ordered  the
book, wasn't about to pay for it, and  felt   no  obligation  to  go  to  the
trouble and expense of returning it.
     Two weeks later, she was billed $29.95,  plus mailing and handling.  She
threw the statement in  the  trash.     In  time,  the  letters  grew  nasty,
demanding payment and warning that her  credit rating  would  suffer  if  she
didn't respond promptly.  When a collection agent began  calling her at work,
she snapped.
     "Leave me  alone,"  Karen  hissed.   "I  never  wanted  that  dumb  book
anyway!"
     "You might  have thought of that before you decided to keep it," the man
responded.  "I think  the  word  for  taking  things  that  aren't  yours  is
'stealing.'"
     Karen  (whose name has been changed)  was furious--  but  also  worried.
Could the collection agency harm her credit  rating,  contact  her  employer,
neighbors, landlord?  Most of all, she just wanted the  harassing  calls  and
letters to stop.   Though  resentful,  she  mailed the  payment--  now a full
$37.50, including interest and collection charges.
     Karen's case is not an isolated one.   Despite the strong  new  consumer
protection laws passed in recent years,  abuses still exist,  and  a sizeable
minority  of  retailers  and  collection  agencies  engage  in  such  illegal
collection practices.   Charging for unordered goods is only one of the  many
activities that are prohibited by federal law.  (If, by the way,  you receive
unrequested merchandise as Karen did, you are under  no  obligation  to  pay.
You may treat it as a free gift,   but  you  should  notify  the  sender,  in
writing, of your intention as soon as you receive a "bill".)
     The thorniest problems occur when a debt is truly owed and  a  consumer,
through overextension or inadvertence, falls behind in paying it.    In  this
case,  the account is often  turned over to a collection  agency,  which  may
behave unethically in its effort to recoup the money.
     "Some of the most  extreme  cases  we  see  involve  actual  threats  of
violence," reports Diane Conner,  staff attorney  for  the  Credit  Practices
Division of the Federal Trade Commission (FTC).   "Children  have  been  told
over the phone,  'Tell your parents they're  going  to  jail  tomorrow  if we
don't get the money.'    We've also heard about collection agencies trying to
add on illegal fees of up to 100 percent of the original debt."
     Federal law protects you against such abusive  practices.    By  knowing
which tactics are illegal and how  to  stop  them,  you  can  avoid  being  a
victum.

BEYOND THE LEGAL LIMIT______________________________________________________

     The following are violations of consumer protection laws:

     REPETITIVE CALLING OR CALLS AT UNUSUAL TIMES OR PLACES.  Some collection
agents will call a consumer repeatedly during  a  single  day,  or  telephone
late at night without permission--  both of which are clearly  illegal  under
the Fair Debt Collection Practices Act (FDCPA).
     Calls at work are not considered "harassing" if an office  is  the  most
convenient place for you to receive the call-- but, says  Diane  Conner,  "If
the agent knows that your employer does not allow  you  to  receive  personal
calls at work, or if you've asked not to be contacted there,  then  it  would
be a violation."

     CALLS TO PERSONS OTHER THAN THE CONSUMER.    If a collection  agent  has
business with you, you are the only person with  whom  he  may  discuss  that
business.    "We frequently hear  that  a  collection  agent  has  called  an
employer,  or perhaps a neighbor,  and  left  an  "urgent message'  that  the
consumer should call XYZ Collection  Agency  regarding  payment  of  a debt,"
reports Bill McDonough, an FTC staff attorney.   "The only motive would be to
embarass the consumer, and it's against the law."

     ABUSIVE, OBSCENE, OR THREATENING LANGUAGE.   Late bill payers have  been
called deadbeats and bums, subjected to rude and  obscene language, and given
veiled as well as direct threats of  violence  and  imprisonment.    If  this
happens,  end the conversation immediately,  requesting  that  you  never  be
contacted again.    Follow up with a brief letter barring future contact with
the collection agency.    You may then wish to file a complaint with the  FTC
or state consumer protection agency, or pursue private legal action.

     MISLEADING THREATS OF LEGAL ACTION.  No one has the right to make  false
threats or to claim that legal action has been or is about to  be  instituted
if that's not the case.  Also prohibited are papers that look  like  official
notices from a state agency  or  court  of  law--  including  documents  with
headings that mimic a common legal  form  (such as  "Ace Collection Agency v.
Jane Consumer") or ones that use an agency name similar to that of a state or
federal agency.

     OTHER ABUSIVE BEHAVIOR.    Because  debt   collectors   show   infinite
ingenuity, the Fair Debt Collection Practices Act  covers  scores  of  other
forbidden tricks,  from tacking on  collection  charges  not  authorized  by
contract or law,  to using false names and  publishing lists of consumers in
debt.   Realizing that it could not forsee every  possible  abuse,  Congress
even added a prohibition against any  "harassing,  oppressive,  and  abusive
conduct"--  a general phrase that increases the power of the courts and  the
Federal  Trade  Commission  to  protect  you  against  improper   collection
practices.

STEPS TOWARD SELF-DEFENSE____________________________________________________

     What can you do if you're the victum of an overeager collection  agency?
Your first and simplest option under the FDCPA is to request in writing  that
all collection contacts stop.   Once you do that,  the collection  agency  is
not allowed to call or write to demand payment;  it can only  advise  you  of
new action, such as the referring of your account back  to  the  creditor  or
the filing of legal action.
     if the harassment  continues,   you  may  wish  to  contact  your  state
consumer agency.    According  to  Cyra  Narva  of  the  Consumer  Assistance
Division of the Massachusetts State Banking Department,  these agencies  will
often intervene  to  solve  the  problem.    "Usually,"  Narva reports,  "the
consumer is content  just to know that the rug has been pulled out from under
the collection agency and that the abusive practices will stop."
     The agencies won't compensate you for their past  harassment;  however a
successful lawsuit might.    You could bring suit under  the  FDCPA  and,  if
successful,  recover a cash judgement of actual damages suffered,  attorney's
fees, sourt costs,  and a special statutory  award  of  up  to  one  thousand
dollars.
     "If a consumer has been truly  injured,"  says  Willard  Ogburn,  deputy
director of the National Consumer  Law  Center,  "he or she is entitled to be
compensated.   The fact that attorney's fees may be recovered in a successful
case encourages  some attorneys to pursue strong cases on a commission basis,
while the possibility of an  extra  statutory  award  of  up  to  a  thousand
dollars acts as an extra incentive to the consumer.   Meanwhile,  the  public
interest is served as  collection  agencies  learn  that  violating  consumer
protection laws can be very expensive."
     Whatever decision you make,  you're sure to reap some gratification from
simply standing up for your  rights  and  the  rights  of  others  like  you.
Rudeness and abuse need never be tolerated,  and  you  can  see  to  it  that
they're not.

+----------------------------------+    +-----------------------------------+
|        STOPPING TROUBLE          |    |    CONSUMER AGENCIES  THAT CAN    |
|        BEFORE IT STARTS          |    |     HELP YOU PROTECT YOURSELF     |
|                                  |    |                                   |
|     Healthy credit use  is  not  |    |  THE  FEDERAL  TRADE  COMMISSION  |
|  inconsistent    with     sound  |    |  (FTC).   Your  regional  office  |
|  personal  finance  management,  |    |  can advise you of  your  rights  |
|  but if you  overextend,  these  |    |  and may even make  an  investi-  |
|  measures should enable you  to  |    |  gation if a collection agency's  |
|  resolve the  problem   without  |    |  abuse has  been  severe  or  if  |
|  becoming vulnerable to further  |    |  yours is one  of  several  com-  |
|  embarassment or harassment:     |    |  plaints   against   the    same  |
|                                  |    |  agency.   Meanwhile,  let  both  |
|  IMMEDIATELY CONTEST IN WRITING  |    |  creditor and collection  agency  |
|  ANY  INACCURATE  CHARGES,  AND  |    |  know that  you've  alerted  the  |
|  REQUEST VERIFICATION.           |    |  FTC.  Their attitudes  may  not  |
|  No collection  activities  may  |    |  improve,   but  their  behavior  |
|  proceed   until  a  charge  is  |    |  probably will.                   |
|  verified:   Waiting may make a  |    |                                   |
|  challenge more difficult.       |    |  STATE    CONSUMER    PROTECTION  |
|                                  |    |  AGENCY.   In some states,  this  |
|  IF YOU REALIZE  THAT  YOU  ARE  |    |  government office can arbitrate  |
|  NOT GOING TO BE ABLE  TO  MAKE  |    |  a  dispute   and   order   that  |
|  REQUIRED PAYMENTS ON  A  DEBT,  |    |  abusive practices  be  stopped.  |
|  CONTACT THE CREDITOR.     Most  |    |  If your debt is  undisputed  or  |
|  are  understanding   and   co-  |    |  can be proved,  the agency  can  |
|  operative if  you  propose  an  |    |  help you negotiate a reasonable  |
|  alternate payment plan at  the  |    |  extended-payment plan;  it  may  |
|  first sign of trouble.  Review  |    |  also  have  greater   power  to  |
|  your own budget,  determine  a  |    |  intervene in an individual case  |
|  monthly amount you can  afford  |    |  than  a  regional  FTC   office  |
|  to  pay,   then  explain   the  |    |  would.                           |
|  problem to  the  creditor  and  |    |    To learn what state  services  |
|  offer  to   pay   the   lesser  |    |  are available  to  protect  you  |
|  amount.                         |    |  against collection  harassment,  |
|                                  |    |  contact your  state  government  |
|  DON'T ALLOW YOUR ACCOUNT TO BE  |    |  information-office   or    your  |
|  TRANSFERRED  TO  A  COLLECTION  |    |  state    attorney     general's  |
|  AGENCY    THROUGH   YOUR   OWN  |    |  office.                          |
|  INACTION.     Creditors    use  |    |                                   |
|  collection  agencies  to  goad  |    |    If the improper conduct comes  |
|  the  reluctant  or  forgetful.  |    |  from an attorney practicing law  |
|  A  creditor  who   understands  |    |  in the collection area, contact  |
|  that you are overextended  but  |    |  your LOCAL BAR ASSOCIATION, and  |
|  doing the best  you  can  will  |    |  ask for the disciplinary  board  |
|  have no reason  to  resort  to  |    |  or   licensing   agency    that  |
|  such measures.                  |    |  receives   complaints   against  |
|    Many people are too  anxious  |    |  lawyers.   They probably  won't  |
|  or embarassed  to  approach  a  |    |  step in  directly;  however,  a  |
|  creditor  about  dificulty  in  |    |  lawyer    who   knows   that  a  |
|  making payments. Remember that  |    |  complaint   is  being   checked  |
|  the creditor, whether a merch-  |    |  generally takes  more  care  to  |
|  ant or a banker, wants to keep  |    |  act within  legal  and  ethical  |
|  your  business.   An  amicable  |    |  bounds.                          |
|  resolution is in  "everyone's"  |    |                                   |
|  interest.                       |    |  CONSUMER   CREDIT    COUNCELING  |
|                                  |    |  AGENCIES.     Frequently    the  |
+----------------------------------+    |  problem is less one of outright  |
                                        |  harassment than of anxiety  and  |
                                        |  increasingly short  tempers  on  |
                                        |  both sides.   A nonprofit  con-  |
                                        |  sumer credit counceling  agency  |
                                        |  has  no  official   enforcement  |
                                        |  power, but it  "can"  help  you  |
                                        |  assess your financial situation  |
                                        |  and act as a mediator in making  |
                                        |  more mutually suitable  payment  |
                                        |  arrangements.                    |
                                        |                                   |
                                        +-----------------------------------+






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