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Consumer Watch: Protect yourself from unscrupulous debt collectors

Apr. 2, 2014 - 12:41PM   |  
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In the military community, some creditors have long used deceptive and aggressive tactics against service members and their families. Now we’re getting a picture of the scope of that problem.

Since the Consumer Financial Protection Bureau started accepting complaints about debt collection in July, it has received about 3,800 from military consumers — troops, veterans and their families.

Debt collection complaints will soon become the largest category in terms of cumulative volume, surpassing mortgage complaints — and the CFPB has been accepting complaints about mortgages for much longer, since December 2011, taking in 4,700 from the military community.

The most common type of debt collection complaint from the military community is continued attempts to collect a debt not owed (39 percent). The CFPB says collectors trying to nick consumers on such “phantom debts” are extremely aggressive, often threatening the consumer with immediate arrest and/or alleging imminent court action.

“The sheer volume of debt collection complaints alone makes this an important complaint category” for the CFPB’s Office of Servicemember Affairs, wrote Holly Petraeus, the office’s assistant director. “Beyond the number, however, I have heard in my many visits to military installations about aggressive and deceptive tactics by debt collectors specifically targeting members of the military.”

Those tactics include contacting a service member’s chain of command, threatening punishment under the Uniform Code of Military Justice, threatening to have a member reduced in rank, or threatening to have a member’s security clearance revoked.

The Federal Trade Commission sees the same trend. The FTC enforces the Fair Debt Collection Practices Act, which prohibits debt collectors from using abusive, unfair or deceptive practices to collect money. In 2013, debt collection was the FTC’s second most common complaint, constituting 10 percent of all consumer complaints.

Another burgeoning trend in the civilian community that affects troops and veterans is known as “robo-suing,” where debt collectors can easily sue thousands of people at once, filing suits electronically to courthouses — sometimes with wrong information.

And separately, the Federal Trade Commission warns about criminals impersonating law firms, judges and court officials, sending out menacing letters and making threatening phone calls. The FTC advises looking up the phone number for the law firm or court office and calling the organization to check it out.

Some resources for troops:

■ On-base legal assistance offices.

■ Military OneSource (www.militaryonesource.mil has phone numbers and other contact information).

■ State attorneys general offices.

■ The FTC; file complaints at www.ftc.gov (click on “I would like to ...)

■ The CFPB; file complaints at www.consumerfinance.gov.

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