FTC Continues Its Fight Against Abusive Debt Collectors

The government's efforts to police debt collectors -- an ongoing battle that has drawn in countless ranks of cash-strapped consumers in recent years -- continued Monday, when the Federal Trade Commission announced that a Michigan-based debt collection company would pay $2.5 million to settle charges of misconduct.

That company, Asset Acceptance, faced a number of accusations, including charges that even after their statute of limitations had run out, therefore letting the borrower off the hook, employees continued to try and collect certain debts. The company was also accused of failing to verify whether some debts were valid, as well as pressing forward with collection efforts even when borrowers raised objections, according to The New York Times.

The debt collection industry has been the object of growing scrutiny lately, as law enforcement agencies respond to an increasing volume of complaints. Debt collectors have been accused of harassing borrowers, using vulgar language and threatening physical harm. With millions of Americans living paycheck to paycheck, household wealth still bruised by the recession, and consumer debt creeping back up to levels seen before the financial crisis, authorities are taking a more active role in protecting the rights of ordinary people whom debt collectors say owe money.

In October, the FTC froze the assets of Rincon Debt Management, a collection company based in California that allegedly had its employees lie in order to intimidate borrowers. The agency additionally alleged that Rincon hounded some consumers who didn't owe any money at all. The month before, the FTC also filed a complaint against another California company, Rumson, Bolling & Associates, whose employees allegedly threatened to kill debtors' pets and desecrate the bodies of their dead family members.

Other debt collectors have been accused of calling at very early or very late hours, harassing the relatives and former romantic partners of people who supposedly owed money, and promising to visit borrowers in person to extract payment. In 2010, Allen Jones, a black man from Texas, was awarded a $1.5 million settlement after a debt collector allegedly left him racially incendiary messages, including one in which the collector told Jones to "go pick some [expletive] cotton fields."

Thus far, the FTC has taken some of the most aggressive regulatory action against debt collectors accused of crossing the line. The Consumer Financial Protection Bureau may also be eyeing debt collectors as part of its broad-based effort to regulate so-called "nonbank" lenders, although the Bureau's operations continue to face intermittent opposition from some conservative lawmakers in Washington.