FTC Comes Down On Unethical Retail Collection Agencies

News And Col­lec­tion Agency Regulations

FTC Comes Down On Uneth­i­cal Retail Col­lec­tion Agencies

By Dean Kaplan

Many con­sumers seem to be hear­ing from retail col­lec­tion agen­cies as they try to col­lect in a time of eco­nomic dif­fi­culty. Appar­ently using a vari­ety of uneth­i­cal col­lec­tion tech­niques, even the FTC seems to be tak­ing notice. In 2010, the FTC received over 140,000 fil­ings against col­lec­tion agen­cies, the num­ber one cause of com­plaint received.

In an attempt to stop these com­pa­nies from uti­liz­ing uneth­i­cal col­lec­tion tech­niques when deal­ing with con­sumers, the FTC is putting agen­cies under their micro­scope, and now has sev­eral Cal­i­for­nia com­pa­nies under investigation.

One Cal­i­for­nia com­pany has been told to halt its ongo­ing oper­a­tions and its assets have been frozen until an inves­ti­ga­tion of its uneth­i­cal prac­tices can be com­pleted. Accord­ing to the Cal­i­for­nia Watch, the com­pany told tar­geted con­sumers that unless they returned the tele­phone call imme­di­ately, they would be arrested, served legal papers, or have a lien placed on their wages or prop­erty. These con­sumers allegedly had no legal suit filed against them at the time of the contact.Another com­pany is also appar­ently under inves­ti­ga­tion because con­sumers con­tacted by the com­pany were threat­ened and endured name call­ing. It was also reported that the com­pany threat­ened to exhume a woman’s deceased child because the funeral expenses had not been paid. The Cal­i­for­nia Cen­tral Dis­trict Court has since placed a restrain­ing order on the com­pany pend­ing fur­ther investigation.These uneth­i­cal col­lec­tion prac­tices exem­plify the lengths to which some agen­cies are going in their attempt to col­lect dur­ing these tough times. All com­pa­nies are try­ing to make a profit. How­ever, most com­pa­nies do not stoop to uneth­i­cal prac­tices to add to their bot­tom line. Hope­fully, the FTC inves­ti­ga­tions will serve as a warn­ing to com­pa­nies using uneth­i­cal col­lec­tion poli­cies to clean up their acts.

One func­tion of the FTC is to pro­tect the rights of debtors against unfair collections.

Eth­i­cal Collections

Many agen­cies have exem­plary records of mak­ing eth­i­cal col­lec­tions. These com­pa­nies fol­low the law and uti­lize proven col­lec­tion tech­niques. Con­sumer col­lec­tion agen­cies must abide by col­lec­tion laws which do not nec­es­sar­ily apply to com­mer­cial col­lec­tion com­pa­nies (i.e., agen­cies which spe­cial­ize in col­lect­ing busi­ness to busi­ness debt). How­ever, regard­less of whether the debtor is a con­sumer or a com­pany, eth­i­cal prac­tices must be used, and ulti­mately lead to greater col­lec­tions successes.

The most effi­cient way to pur­sue a col­lec­tion is for the agency to do its home­work before any con­tact is made. Gath­er­ing all rel­e­vant infor­ma­tion upfront relat­ing to a debt such as con­tracts signed, invoices, pay­ment his­tory and all applic­a­ble con­tact infor­ma­tion will make the ini­tial and sub­se­quent con­tacts more suc­cess­ful. In addi­tion, there will be no rea­son to use uneth­i­cal prac­tices, because the most cur­rent and accu­rate infor­ma­tion is in the collector’s hands.

Even dur­ing tough eco­nomic times, debt col­lec­tions are pos­si­ble. If imme­di­ate pay­ment is not pos­si­ble, then nego­ti­a­tion of pay­ment terms over time can give con­sumers and busi­nesses alike the breath­ing room they need to con­tinue pay­ments and hope­fully enable their sur­vival until times improve. Col­lec­tion agen­cies typ­i­cally are well versed in help­ing develop a liv­able pay­ment plan for a con­sumer or a busi­ness. Agen­cies have vast expe­ri­ence in the debt pay­ment arena, and often are suc­cess­ful in com­plet­ing a nego­ti­a­tion of this kind.

The Kaplan Group is a bou­tique col­lec­tion agency spe­cial­iz­ing in large (over $10,000) debt col­lec­tions due from busi­nesses. Founded in 1991, the com­pany has a stel­lar rep­u­ta­tion (A+ rat­ing with the Bet­ter Busi­ness Bureau) and is rec­og­nized as one of the lead­ing col­lec­tion agen­cies for results on large and com­plex mat­ters.

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