In today’s economy, with high unemployment rates and other financial challenges, it is not unusual to fall behind on bill payments. In such cases, debt collectors will be calling, but they are only allowed to use limited means to collect a debt. If they go beyond these limits, they may be in violation of federal law.
Consumer Portfolio Services, which is a subprime auto lender that both loans money and collects loans for other lenders, violated those laws resulting in a $5.5 million fine for accounts they tried to collect between 2008 and 2013.
The Federal Trade Commission now requires that, on top of $2.2 million in penalties paid to the FTC, the company must make refunds or adjustments to more than 100,000 consumers in the amount of $3.5 million, providing some measure of debt relief to those who were targeted by the illegal practices.
Some of the violations assessed against the company involved the following:
- Charging more than the balance on accounts
- Making withdrawals from bank accounts without permission
- Communicating with third parties about the debt
- Misrepresenting the balances on accounts
- Harassing consumers who were behind on payments
According to the FTC, the company violated parts of both the Fair Credit Reporting Act and the Fair Debt Collections Practices Act, both of which are designed to protect consumers from illegal practices by creditors. The company will also be required to change its practices to comply with these laws, and will be subject to monitoring of these practices by the FTC for 10 years.
Being in a situation that causes delinquent debts is stressful enough. Most people want to pay their debts and pay them on time. But when circumstances prevent the timely payment of debts most expect to receive calls from creditors attempting to collect their money.
Federal law requires that those callers to use truthful information, keep debt information confidential, and communications respectful and not harassing.
Any New Jersey resident who feels that any of these requirements have been violated by a creditor or collection agency may want to contact an attorney who represents consumers against predatory lending and collections practices.
Source: Automotive News, “Consumer Portfolio Services to pay $5.5 million for illegal credit practices,” Nora Naughton, May 29, 2014