PITTSBURGH – After more than a decade of eluding phone calls, a Brighton Heights man said his experience with a third-party collection agency hired to recoup his student loan debt went from marginally annoying to borderline cyber stalking.
Even for loan scofflaws there are rules collection agencies must follow, and two government agencies are working to make that better known.
Clarifying that laws outlined in the Fair Debt Collections Practices Act of 1977 also apply to collection attempts made through digital media has been a priority for the Federal Trade Commission and Consumer Finance Protection Bureau, said Christopher Koegel, assistant director of the FTC’s Bureau of Consumer Protection’s financial practices division.
For example, full and honest disclosure of identity and the intent to collect a debt is mandatory for collection agencies.
It also prohibits contacting third parties without prior consent from the debtor or a court unless they’re seeking location information for the debtor. The act bans disclosing debt obligations to third parties; contacting debtors after 8 p.m. and before 9 a.m.; directly contacting consumers who have attorneys handling the debt; making any false or misleading statements; using obscene or profane language; and using threats of violence to collect.
Individual debt collectors found in violation of the act could face fines of $1,000 per violation – money that goes directly to the debtor.
Last year the federal agency initiated or resolved nine debt collection cases, obtained injunctions against agencies or individuals in seven cases, and referred two cases to the Justice Department for civil penalties.
Yet, a 2014 report says last year the commission received 204,464 debt collection complaints, up from 202,616 in 2012. Thirty-eight percent involved collectors misrepresenting the type of debt, amount or status; 19.7 percent were failure to identify as a debt collector and 16.6 percent involved repeated calls to third parties.
The Consumer Financial Protection Bureau, which only began enforcing debt collector complaints last July, has handled 30,300 debt collection complaints in less than a year. Twenty-three percent of those surrounded collector’s communication tactics, 8 percent involved improper contact and 13 percent were concerns about disclosure and verification of debts.
The Brighton Heights man asked to keep his identify secret because his student loan debt has ballooned from around $80,000 in 1998 to more than $270,000 following years without payment. In 2012, he hired an attorney and accountant to set up a payment plan. He believed the worst was over.
That is, until a picture taken in May at Regent Square restaurant Square Cafe with PBS personality Rick Sebak was posted to Facebook and shared more than 50 times within a friends list of more than 5,000 people.
Within days, a person who said he was looking for the man contacted Square Cafe and left a phone number that traced back to Salem, N.H.-based collection agency Windham Professionals Inc.
“I don’t understand what my rights are. I didn’t know I had any,” the Brighton Heights man said.
If a debt collector researched Square Cafe by becoming his Facebook friend under false pretenses or by connecting with individuals on his friends list under a false pretense, the company is in violation of disclosure laws and laws prohibiting contact with third parties associated with the debtor without prior consent, Koegel said.