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Why Do Collectors Harass You Over A Small Debt Even If You Don't Owe It?

By M. Stan Herring

You are shocked to find out there is a bogus collection account against you for a hundred bucks. Or it is legitimate but the collection agency collectors are harassing you over this. They are calling your neighbors or leaving illegal voicemails, etc.

Why would they risk doing this knowing they could be sued? Is it really worth the little bit of money they will make?

These questions are reasonable ones and they also are arguments that debt collectors make when they have been sued. They say "Do you really think we would do this bad stuff to make $20?"

The answer is YES they will break the law for small debts. Let's think about this for a moment.

Walmart is one of the richest and most profitable companies around -- but its profit margin is very small as it sells items as cheaply as possible. So how does it make money? Volume.

Same thing with debt collectors. They make as much money collecting 10 accounts at $50 each as they do with one account at $500.

The key is to collect the 10 accounts efficiently and consistently. They do this by using auto dialers that call your cell phone multiple times a day. They do this by credit reporting even accounts as low as $10 -- it still wrecks your credit reports.

Now there is nothing wrong with collecting debts. And there is nothing wrong with collecting small debts.

But . . . it is wrong to violate the law to collect any debts, large or small. It is wrong to violate the Fair Debt Collection Practices Act (FDCPA). It is wrong to break the Fair Credit Reporting Act (FCRA). It is wrong to violate Alabama state law on invasion of privacy by taking collection actions that are beyond the bounds of reasonableness.

So . . . why do collectors risk getting sued to make just a small fee?

Because most -- almost all - people who are harassed won't do anything about it.

Why not?

Because they don't know what their rights are as consumers and even if they do they simply won't take any action.

It is sad to see people who have been harassed -- who may lose their job over illegal calls to work or who may lose security clearances due to bogus credit reporting -- and who don't do anything about it.

So, if you are in this situation of being harassed -- particularly over a bogus debt that you do not owe -- then learn about your rights. You can request, for free, our book on Stopping Abusive Debt Collectors.

After you learn about your rights, take action. Get with a consumer lawyer in your state to see what the appropriate action is for your situation.

If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Full post as published by Alabama Consumer Blog on November 26, 2010 (boomark / email).