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Author: Sergei Lemberg
Is a Collection Agency Legitimate?
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General Rule: Collection Agencies are third-party debt collectors that handle past-due debts. While this is a legal profession, be aware of illegal tactics and debt scams.
A collection agency is a legitimate type of business, as long as they are complying with required federal and state laws. A collection agency manages past-due accounts for creditors and attempts to collect on those debts.
However, not all collection agencies act legitimately. Some will resort to unethical and abusive tactics. This includes harassment and deception in an attempt to collect a debt. In addition, some individuals and companies may not be legitimate debt collection companies at all.
Fortunately, as a consumer, you have various protections under the Fair Debt Collection Practices Act (FDCPA). Below you will learn how to identify when a collection agency is not legitimate or otherwise violating the law. This article will also provide you with steps you can take to stop this illegal behavior.
Identifying Questionable Collection Agencies
Third-party debt collection is a legitimate activity. However, you must be aware that there are plenty of companies that are not operating legally. Some of these companies are not actually a collection agency. As a result, you must know how to identify both unethical and illegitimate collection agencies.
What is an Illegitimate Collection Agency?
A fraudulent collection agency may obtain your contact information through a variety of ways, such as a public database. Sometimes, criminals will illegally purchase your personal information from data breaches. They will then try to use this information to take advantage of you.
With this information, a person or company may pose as a collection agency. They may do this in an attempt to get you to pay a debt you do not owe. In fact, there may be no actual debt at all.
They may also pose as a collection agency to get additional personal information. This may include your social security number, address and other personal information. This information is sought by criminals to steal your identity and commit identity fraud.
Legitimate Collection Agencies
If a collection agency is legitimate, you should be able to find their company information through various means. This includes state registration, the Better Business Bureau and general internet searches.
Just because a collection agency is legitimate, it does not mean their actions are in compliance with the law. A legitimate collection agency is still bound by the requirements of the FDCPA. This means they cannot engage in various forms of deception, harassment and abuse.
How Can I Confirm They Are a Legitimate Collection Agency?
There are a few different ways you can identify if you are dealing with a fake collection agency. Some examples include:
- You cannot locate their business information online.
- You receive repeated calls from the same person. This is odd considering most collection agencies have a large number of employees making these calls.
- The collection agency refuses to identify itself. Debt collectors must identify themselves and the company they work for. They must also provide you with the name of the original creditor and the amount due.
- They will only accept odd forms of payment.
- They request personal financial information from you.
How To Stop a Rogue Collection Agency?
While the collection agency profession is legitimate, not all debt collectors operate legally. If a purported collection agency violates the FDCPA or other law, you have options to stop them. Here are the best options for addressing an unethical or illegal collection agency:
| Situation |
Action |
| You have proof that the person contacting you is not a legitimate collection agency |
Contact law enforcement and file a criminal complaint. |
| A collection agency is calling you at unusual times. |
Send a cease-and-desist letter. This will put an end to all debt collector communications. |
| The debt collector is telling others about your debt. |
You can submit a complaint to a federal agency. One option is the Federal Trade Commission (FTC) which enforces the FDCPA. Another option is to submit a consumer complaint to the Consumer Financial Protection Bureau (CFPB). |
| You lost your job after a collection agency contacted your employer. |
Hire an attorney and file a lawsuit. If successful, the court will put an end to the illegal behavior and compensate you for any losses. |
| You have proof of a violation but you still owe a large debt. |
Discuss settlement options with the collection agency in lieu of filing a lawsuit. |
| A collection agency is contacting you about a debt that is not yours. |
Dispute the debt immediately. If they send you a validation notice, dispute the debt within 30 days of receiving it. |
Conclusion
While third-party debt collection is a legal activity, not everything they do is legal. Sometimes, the person contacting you may not even be a legitimate collection agency.
If you think you are dealing with a debt scam, request a consultation from a consumer rights attorney. They can provide you with advice and guidance depending on your situation.
Additional Resources
About the author:
Sergei Lemberg is a consumer rights attorney, practicing since 2006, whose practice focuses on consumer law, class actions and personal injury litigation. He is known for a United States Supreme Court case (Facebook v. Duguid) defending consumers from autodialers under the Telephone Consumer Protection Act of 1991 to send unsolicited text messages. He is also the author of Defanging Debt Collectors, a book that teaches consumers how to battle debt collectors and win.
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