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Bullying the innocent

Regulators say collection agencies increasingly are harassing innocent people and badgering consumers into paying money they don't owe. More people complain to the Federal Trade Commission about debt collectors than about any other industry, and consumer attorneys say a booming trade in old, poorly documented debts is fueling the problem.

Consider:

  • The FTC charged that as much as 80% of the money collected by Capital Acquisitions and Management (CAMCO), a large debt-collection firm, came "from consumers who never owed the original debt in the first place." These consumers typically paid the company to stop its harassment of themselves, their families, their friends and their co-workers. CAMCO agreed to a $300,000 civil penalty in March 2004, but in the ensuing eight months the problems continued. The FTC received more than 2,000 additional consumer complaints about the company -- three times more than the agency received in the two years prior to the settlement. The FTC eventually succeeded in shutting CAMCO down.

  • In July 2005, the FTC won a record $10.2 million court judgment against National Check Control after accusing the debt collector of illegally threatening consumers with arrest and wage garnishment. Again, many of the consumers targeted by National Check Control didn't owe the original debt, the FTC said.

  • Allied Interstate, the company that contacted the Burks, was sued by the Minnesota attorney general for repeatedly calling innocent consumers despite requests to stop. Allied eventually agreed to a settlement that prohibits it from contacting such consumers after being orally told that they don't owe the debts in question.

  • Applied Card Systems hassled relatives, neighbors and employers with repeated phone calls in its efforts to track down debtors, according to the FTC. The company ignored requests to stop calling, and its representatives sometimes used obscene language when its hapless targets protested that they didn't know how to contact the debtors. The company agreed to a consent decree that prohibits it from harassing consumers.

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