Beware of Dirty Debt Collection Practices

Nov. 1, 2008 — -- In tough economic times, millions of Americans are in debt. Some of them have been contacted by collections agencies.

Many of those interactions have been far less than pleasant for the consumer and, sometimes, they're even illegal.

According to the Federal Trade Commission, consumer complaints about debt collectors are on the rise. Americans have reported being harassed, threatened and even coerced into paying debts that are not their own.

Collections agents often do not work directly for the company to which the consumer owes money. Rather, they are outside professionals with a single goal: collect the outstanding debt.

Buffalo news reporter Fred Williams spent three months working undercover as a collector to see what some collectors are trained to do, and found that some of the tactics were dishonest or illegal.

According to Williams, he was taught to use "implied threats, misrepresentation, pretending to be someone you're not [and] pretending to be law enforcement."

"People would misrepresent themselves, claim to be connected with a law firm or even imply that they were with law enforcement," he said.

Williams added that what bothered him the most was a perfectly legal collection strategy.

"We were coached to tell them to take money out of their IRA, which is very expensive," he said, "or even skip a mortgage payment and use that money to pay their debt to us. ... It was perfectly legal to give people really bad financial advice.

"They treat everyone like deadbeats," Williams said. "I'm going to assume you're lying and try to get the money because that's my job."

Heather Thomas claims she was a victim of such intimidation tactics.

Thomas answered her ringing doorbell one day to find her neighbor in tears. The neighbor told her that a debt collector had just called and claimed that the police were coming to arrest Thomas.

"She just wanted to let me know that they were on their way," Thomas told "Good Morning America." "Right after that, the phones started ringing and it was a debt collector."