When debts are made up

By Charles Sowell  

SEPTEMBER 9, 2010 2:00 p.m. (0)

Debt collectors pressing for payment of a debt that the consumer doesn’t owe is a common beef, said the Federal Trade Commission (FTC) in a 2010 report on debt collection abuses.

The FTC received 119,364 complaints about third-party and in-house debt collection attempts, according to the report.

In a recent case the FTC reached a $1 million settlement with Credit Bureau Collection Services over accusations the debt collectors inaccurately reported credit information and pressed consumers to pay debts they didn’t owe in violation of federal law.

The Better Business Bureau (BBB) recommends five steps to fight back against erroneous debt collection attempts.

“It can be an exhausting process to set the record straight on a debt you don’t actually owe,” said Kathy Barrett, BBB President. “Because debts are often sold and resold to many different collection agencies over time, you may have to make the same case every few years when the debt trades hands again.”

There are many legitimate reasons for attempts to collect debts that aren’t owed, BBB said. Mistaken identity is the most common sharing the name or inheriting the phone number of a person who owes money.

Outright fraud is also common, either by identity thieves stealing personal information and opening lines of credit, or by would-be identity thieves pressing for payment of a debt that isn’t owed in order to get personal information.

If you’re under collection assault for a debt you don’t owe, BBB recommends requesting written proof of the debt. A debt collection agency must provide you with a validation notice within five days of contacting you about the debt by law.

If you don’t actually owe money you need to correct any incorrect submission related to the debt captured on your credit report.

Check your credit report with the three major credit reporting bureaus every year. If you’ve been the victim of fraud or identity theft, you may also be eligible to view your reports for free.

A debt collector cannot continue to contact you if you tell them to stop, according to federal law. Notify the collection agency by certified mail and keep a copy of the letter and return receipt. Any further contact from the debt collector except to tell you there will be no further contact, or let you know the agency is filing legal action, is a violation of federal law.

Contact the FTC and familiarize yourself with the consumer protections provided under the Fair Debt Collection Practices Act. It is against the law to make false and deceptive claims in order to collect a debt. Also, contact the local office of the BBB.