New state law protects consumers

A bill that would give state agencies more control over abusive debt collection practices has been approved by the Florida Legislature.

Appropriately termed "The Debt Collection Bill" (SB 2086/HB 7233), the measure provides greater authority to the state attorney general and the Office of Financial Regulation in punishing abusive debt collectors and bringing charges against them.

The bill comes after an investigation described the abusive practices of some debt collectors and the state's failure to stop them. Also revealed was that fact that the Office of Financial Regulation, has not fined a single debt collector or suspended a single license in more than two years, despite receiving more than 1,400 formal complaints.

Consumers told horror stories of debt collectors threatening violence, spewing obscenities and claiming they were investigators prepared to serve arrest warrants. In a few cases, collectors reached the young children of debtors claiming their parents would be hauled off to jail unless they paid immediately. In other instances, collectors called people about old debts that were no longer owed or contacted the wrong person simply because they had a name similar to the alleged debtor.

The bill received broad support from lawmakers and passed on a final vote of 114-0. Applauding passage of "The Debt Collection Bill," Attorney General Bill McCollum stated: "As our economy continues to decline, more and more Floridians are faced with unpaid bills and mounting debt. I appreciate the efforts of Sen. Richter, Rep. Patterson and Rep. Grady to ensure that proper safeguards are in place to protect Florida consumers from abusive debt practices."

The new bill strengthens consumer protection laws by granting the state attorney general authority to pursue violations of the debt collection statute.

According to the Federal Trade Commission (FTC), debt collectors that lie, harassand intimidate their targets account for approximately one-quarter of the consumer complaints received each year. In the wake of the worst recession since the Great Depression, the FTC is cracking down on abusive debt collection practices. As part of that effort, the agency is educating consumers about what practices are illegal and what can be done to stop them.

Common complaints include:

Calling before 8 a.m. or after 9 p.m. unless expressly given permission. A total of 46.5 percent said debt collectors called continuously in an effort to harass them, including calling late at night or early in the morning.

Attempting to collect excessive amounts or debts discharged in bankruptcy. A total of 31.1 percent said debt collectors attempted to collect on debts that had been discharged in bankruptcy, had never been owed, or had fees and charges not allowed by law.

Consumers are entitled to receive a notice that stipulates how much is owed; who the debt is owed to; and what fees and charges were added to the debt in the collection process. 25.7 percent said debt collectors refused or failed to provide this notice.

Threaten an action they have no authority or intention in taking. 20.9 percent said debt collectors threatened dire consequences, including garnishing wages or having the debtor thrown in jail if they did not pay up.

Calling a debtor at work when an employer prohibits said calls. 13.6 percent said debt collectors called them at work after being told to stop.

Providing information to third-party. 12.2 percent said debt collectors impermissibly revealed information about the consumer's debt to another party. Providing information about a consumer's debt to an employer, co-worker or even a relative is strictly forbidden.

Failed to investigate a disputed debt as required by law. 11.5 percent said debt collectors refused to investigate a claim notwithstanding a valid dispute.

Failure to cease and desist all communication. 8.4 percent said debt collectors ignored their demand to cease all contact with them.

"Debtors have a whole host of rights under state and federal law that they are unaware of," said Paul Herman, an attorney with the Fair Credit Law Group. "One phone call to a consumer protection advocate can often solve the problem, but they are afraid to take the first step."

If you are being harassed by a debt collector, file a complaint with the Florida Attorney General at www.myfloridalegal.com and the Office of Financial Regulation at www.flofr.com. The FTC also offers a consumer collection guide detailing your rights at www.ftc.gov.

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of "The Credit Report with Bill Lewis" on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.