Wrong ID by collection agency can hurt consumer

July 31, 2011 at 12:00a.m.

David Freedman isn’t burdened by debt, but that didn’t stop the debt collectors from calling at 8:30 a.m. some Saturdays.

“They appear to be a legitimate collection agency,” Freedman said.

But they’ve been trying to collect money from a man who doesn’t owe them any.

“When I do get a call, the person calling seems to believe me when I tell them they have the wrong person; they just can’t seem to get my phone number off their list,” he said.

Freedman, who lives in Oakland County, Mich., has checked his credit reports, which are in order. He has not received anything in writing from any collection agency. So he’s convinced that the agencies just have the wrong David Freedman and the wrong number. He’s worried that at some point, this case of mistaken identity could lead collection agencies to make trouble for him.

What happens if the debt collectors have your number?

If you’ve received a string of calls from debt collectors — even though you don’t owe money — you’re not alone. But that doesn’t mean you should just hang up, either.

What consumers need to do is make it clear they don’t owe the money — and follow some key steps to protect themselves from collectors.

Consumers who do not owe money should never hand over cash just to make the calls stop. Believe it or not, some people do pay when they shouldn’t just to get the collectors off their back.

So much information is available about people online, you would think the debt collectors could find anyone. But it seems as if the glut of data can lead to more confusion and misplaced identity in some cases.

The fact that people move a lot and change cellphone numbers regularly adds to the mix-ups for debt collectors.

“We are getting consumer complaints about these calls,” said Tom Pahl, assistant director in the Federal Trade Commission’s division of financial practices.

Debt-collection practices are on the top of the list for the new federal Consumer Financial Protection Bureau, which officially kicked off July 21.

The bureau has begun seeking comment on how it should supervise large debt collectors, prepaid card companies and other non-bank firms as part of the new regulations required under the Dodd-Frank Act.

Suggestions are being taken at the agency’s website, www.consumerfinance.gov/.

“This is a big problem,” said Gerri Detweiler, personal-finance expert for Credit.com.

Debt collectors may not have enough substantial information to find the person who actually owes the money, Detweiler said. Or collectors are burned by people who lie. So they keep calling.

Pahl said the collector has to have a reasonable basis for what they’re claiming, and the FTC has taken enforcement actions when that’s not been the case.

Several years ago, the FTC took on some debt-collection agencies that used aggressive, illegal tactics — and at that time noted that many consumers had paid bills that they did not owe just to get the calls to stop.

Some people, Pahl said, may have a lower “tolerance for pressure.”

Detweiler — who is a co-author of an e-book called “Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights” — said it is tough to get the calls to stop.

“Sometimes you get these calls, and sometimes there’s no option to talk to a live person,” Detweiler said.

The collection industry knows there can be problems.

“It can be incredibly frustrating for the consumer who is contacted because they don’t owe that debt,” said Valerie Hayes, general counsel for ACA International, the largest trade group representing collection agencies.

But she said consumers need to take some action — even if they don’t owe any money.

To make the misplaced calls stop if you don’t owe money, send a letter to the debt collector by certified mail, return-receipt requested.

It’s key to send this letter within 30 days of initial contact. Keep copies for records.

The FTC’s Pahl said consumers can send a letter to the collection agency asking to cease communication.

But a debt collector can begin contacting you again if they’ve sent you a verification of the debt — such as a copy of the bill for the amount you owe.

If a lawsuit is filed, Pahl said, the consumer cannot ignore it.

“You need to show up in court to say ‘It’s not me,’” Pahl said.

If the consumer does not show up, the collector wins by default and can start the legal process to try to garnish wages.

Again, it seems like a lot of paperwork for someone who didn’t borrow a dime.

The burden here is definitely on the consumer. Even if you aren’t really drowning in debt, you can’t ignore the debt-collection calls.

Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.

2011, Detroit Free Press

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