Banned Debt Collectors: What You Need to Know

Debt collectors are regulated by the Fair Debt Collection Practices Act (FDCPA), which prohibits abusive and deceptive practices.

Some debt collectors have been banned due to violating these regulations. For example, RGS Financial was shut down in 2010 for violating the FDCPA.

The FDCPA requires debt collectors to provide written notice of the debt within five days of initial contact. This notice must include the amount of the debt and the name of the creditor.

Debt collectors who fail to provide this notice can be held liable.

If you feel a debt collector has violated the rules, contact the Federal Trade Commission. You can also reach out to the Consumer Financial Protection Bureau (CFPB) and/or your state attorney general's office.

States have different debt collection laws, so it's essential to determine your rights under your state's law. Contact your state's attorney general's office to do so.

Debt collectors can't have you arrested for not paying a debt, but failing to show up to court on a debt-related matter can lead to a warrant for your arrest. You could also go to jail if you refuse to pay a court fine or taxes.

Debt collectors are not allowed to contact you by postcard, publish your name as someone who owes money, or discuss the matter with anyone other than you, your spouse, or your attorney. They can contact third parties to try to track you down, but only to ask for your address, home phone number, and place of employment.

In-house debt collectors aren't subject to the FDCPA rules.

Most in-house collectors focus on debts that are only a few weeks or months delinquent.

The original creditor usually hires a collection agency to collect on its behalf or sells your debt to a debt buyer once the debt becomes more delinquent.

In that case, the collectors would be subject to the FDCPA.

Debt collectors can't have you arrested for not repaying a debt. However, if you receive a legitimate order to appear in court and you don't show up, the judge could issue a warrant for your arrest.

You can't be thrown in jail for failing to repay a credit card debt, mortgage, car loan, or medical bill on time. Failing to pay a court fine related to your debt, or refusing to pay taxes or child support, could land you in jail.

Debt collectors are not allowed to contact you by postcard. They can't publish the names of people who owe money or discuss the matter with anyone other than you, your spouse, or your attorney.

If a debt collector contacts you, they can ask third parties for your address, home phone number, and place of employment, but only once in most cases.

Attorney General James has made a significant recovery of $1.2 million in restitution and penalties. This amount will be paid by Fanelli and his companies.

Fanelli's companies were involved in egregious violations of the law, including placing debts with other collectors that used call spoofing and impersonated government officials to collect debts.

The agreement permanently bans Fanelli and his companies from engaging in various consumer-related activities, including debt collection and payment processing.

Within six months, Fanelli is required to dissolve all of his companies.

In some cases, banned debt collectors have resorted to unconventional methods to collect debts. One such example is using fake law firms to intimidate debtors.

Debt collectors have also been known to use fake court documents and threats of arrest to scare debtors into paying up. This is a serious violation of consumer protection laws.

Some banned debt collectors have even gone as far as to use social media to harass debtors, making public posts about their debt or even sending threatening messages.

Debt collectors can call you at inconvenient times, but there are limits. They can't call before 8 a.m. or after 9 p.m.

Federal law restricts the number of calls debt collectors can make to seven times within a seven-day period. This rule applies to each individual debt, not each borrower.

If you don't want to be contacted, you can send a written request to the debt collector. You can use a free "stop contact" letter template from the National Consumer Law Center.

Debt collectors can also contact you on social media or via email or text message, but they must follow the same rules as phone calls. They must stop if you request it in writing.

If you have an attorney, you can ask the debt collector to direct all communications to your legal representative.

Debt collectors may try to squeeze more money out of you by charging interest, convenience fees, and other service charges. This is illegal.

Convenience fees are also called "pay-to-pay" fees because they're charged for things like being able to submit payment online or by phone. They're often charged without your knowledge or consent.

The debt validation letter is a document debt collectors are legally required to share with you when they first contact you. It includes details such as the original debt amount plus any fees charged by the original creditor.

Any fees or interest charges must be clearly stated in the debt validation letter, or permitted by law. If they're not, you can dispute the debt.

Unless there's a state law that expressly authorizes the debt collector to charge convenience fees, it's illegal to do so. This means debt collectors can't charge convenience fees and argue that it's okay simply because there isn't a law against it yet.

The FTC has expanded its list of banned debt collectors, and some are wondering if there's a connection to legitimate firms. The list, informally called "The Debt Collection Hall of Shame", now contains over 100 individuals and companies whose behavior was so egregious that courts have banned them permanently from participating in the debt collection business.

The FTC's efforts to crack down on debt collection practices have been significant, with over 180 companies and individuals sued since January 1, 2010. This has resulted in banning 63 companies and individuals from the industry, and securing more than $220 million in judgments.

The FTC has been actively working to stop deceptive and abusive debt collection practices. In 2014, they filed 10 new cases against 56 new defendants, resolved nine cases, and secured nearly $140 million in judgments. Some of the companies added to the list of banned debt collectors include Broadway Global Master Inc., K.I.P., LLC (Payday Loan Recovery Group), National Check Registry, LLC, and Premier Debt Acquisitions, LLC.

The law is clear: debt collectors can't use abusive, deceptive, or unfair practices. If you believe a collector has violated your rights, the FTC wants to hear about it. You can visit the FTC's list of banned debt collectors to learn about the lawsuits that resulted in the bans.

Here are some key statistics on the FTC's efforts to stop debt collection abuse: