Bankruptcy

Study: More Complaints About Debt Collectors - Protect Yourself from Creditors

By Meaghan Olson

A new survey by the Consumer Federation of America and two other consumer protection groups shows that consumer complaints about debt collection are growing at the same time that resources available to address these complaints are diminishing.

The Findings: Complaints Increase, Funds Shrink

The survey, which examined 34 state, city and county agencies from 19 states, found these troubling trends:

• More complaints: 62 % of agencies reported more complaints in the past year than in previous years
• Cash crunch: 47 % reported recent budget cuts and one agency was completely shut down due to lack of funding
• Less hurting more: 50 % reported that small-dollar amount complaints were up last year, suggesting that the economy has made consumers more likely to report minor problems
• Debt collection complaints soar: This was the fastest-growing category of consumer complaints
• Mortgage woes continue: Foreclosure rescue scams and other mortgage-related problems stood out as the most egregious of consumer complaints
• Money problems abound: The majority of agencies cited funding shortages as the biggest challenge they faced

Economy Primed for Scams?

The CFA?s analysis of the survey suggests that the increased consumer complaints are no surprise in the current economy ? when everybody?s strapped for cash, people will be more aggressive to collect what they can from others.

Keeping Yourself Away from Scams and Debt Collectors

The CFA offers tips for decreasing your odds of being victimized by a debt collection or other scam.

1. Know your seller. When buying from a new business, check its status with your local Better Business Bureau www.bbb.org.
2. Check licenses. Before hiring an individual, find out about licensing requirements in your state and how to determine whether a person has met them.
3. Pay safely. If you?re required to put money down for something you?ll receive in the future, use a credit card rather than cash or a debit card ? that way, you can dispute charges if necessary.
4. Don?t pay in full up front. Putting down a deposit is normal for services to be rendered in the future ? paying in full is not.
5. Watch out for scams. Any offer involving money transfers, check cashing, upfront money demands or other promises that seem too good to be true are likely fraudulent. Don?t get involved.
6. Read your contracts. Make sure any verbal promises you get appear in writing as well, and make sure you understand what?s in anything you sign.
7. Know where to go for help. Nonprofit, community-based credit counseling services are available across the country. Seek one out on the web or from a trusted source if you need help.
8. Trust your instincts. If you suspect foul play, back up and get some trusted advice.

Additional Resources
Consumer Federation of America, National Association of Consumer Agency Administrators & North American Consumer Protection Investigators: 2008 Consumer Complaint Survey Report

Full post as published by The Bankruptcy Blog on August 13, 2009 (boomark / email).