FTC: Debt Collectors Provoke More Complaints Than Any Other Industry

March 22, 2011 -- For many Americans debt is a daily part of life -- and according to a new report from the Federal Trade Commission the debt collection industry causes them more pain than almost any other business.

The FTC received 140,036 complaints about debt collection in 2010, an increase of 17 percent from the 119,609 it received in 2009. Those numbers are higher than for any other industry.

"It tells me we need more law enforcement in debt collection and more guidelines," said Gail Hillebrand, director of Consumers Union's Defend Your Dollars campaign. "These things have been illegal for years and they are still taking place.

The Fair Debt Collection Practices Act of 1978 was intended to protect consumers from harassment, abuse, and deceptive collection practices -- precisely the complaints consumers made in record numbers last year.

Some numbers:

Joel Winston, associate director at the FTC, says many consumers do not know that collectors are required to provide a lot of information upfront when they first start collecting on a debt. Within the first five days, collectors must send consumers a written notice detailing the amount of debt, the name of the creditor and to whom the debt is owed.

The FTC said 29.8 percent of people claimed collectors never sent the mandatory notice.

"What's interesting is the number of complaints about third party creditors went up, while complaints against creditors collecting on their own did not," said Winston.

Third party creditors work for the original creditor and receive a fee or percentage of the money they are able to collect. In some cases they also buy old debt and try to collect where others have failed.