EagleTribune.com, North Andover, MA

Business

September 2, 2012

Complaints mount against debt collectors

WASHINGTON — Hard economic times have helped push millions of Americans deeply into debt, plunging many into a dark world filled with relentless collection agents, aggressive lawyers and companies that profit mightily if they can get people to pay up.

Aided by outdated laws and lax oversight, debt collection has become a $12-billion-a-year business as people increasingly have fallen behind on their bills for credit cards, student loans, hospital stays and other expenses.

The Great Recession and its aftermath have led to a sharp increase in the number of people facing debt collectors to an estimated 30 million Americans this year _ up nearly 50 percent since 2003.

At the same time, job losses and underwater mortgages have made it more difficult for many of those people, who already are struggling to make ends meet, to pay off their debts.

Federal regulators, along with lawmakers in several states, are starting to take action against debt collection firms over aggressive tactics that authorities said are becoming rampant.

Those tactics include intimidating phone calls, unfounded threats of arrest, harassment of relatives and neighbors and a flood of lawsuits aimed at squeezing money for unpaid bills from paychecks or home equity — recovering $55 billion in debts in 2010.

Southern California is home to two of the debt-collection industry’s major players — ones that consumer advocates alleged have been at the forefront of improper behavior.

Encore Capital Group Inc. of San Diego, which buys unpaid bills from businesses, has faced numerous lawsuits filed by state attorneys general and private lawyers, alleging it used false and faulty affidavits, much the way banks allegedly used robo-signing in filing foreclosure documents.

Although some cases are still pending, Encore said it has corrected the problems.

And Brachfeld Law Group in El Segundo, Calif., one of the nation’s largest debt collection law firms, has been contending with allegations that it failed to investigate the facts adequately when it pursued some debts. A spokesman said the firm checks to ensure accuracy.

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