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FTC Orders Buyers of Consumer Debt to Submit Information for Study of Debt Purchasing Industry
The FTC has ordered information from nine prominent debt buyers as the regulator prepares to closely examine the debt purchasing industry in its sweeping ARM probe.
The Federal Trade Commission has ordered the nation’s largest consumer debt buyers to turn over information about their practices in buying and collecting consumer debt, which the FTC intends to use for a study of the debt-buying industry. Consumers have reported that debt collectors frequently try to collect from the wrong consumers or the wrong amounts, or both. The FTC is seeking information to determine whether buyers of consumer debt are contributing to these problems.
The FTC sent the orders to nine companies that are in the business of buying consumer debts and then trying to collect on those debts, either on their own or by hiring debt collection firms. These nine companies collectively purchase about 75 percent of the debt sold in the United States.
Creditors often sell debt they have been unable to collect to companies known as debt buyers. When debts are sold, the buyers receive information about the debtor and the debt from the sellers. Debt buyers try to collect on the debt they purchase, and if they do not get paid, they often sell the debt to other debt buyers. Many debts are purchased and resold several times over a period of years before all collection efforts finally cease.
Over the past decade, debt buyers have become a significant part of the debt collection system. In February 2009, the FTC issued a report based on an agency Debt Collection Workshop in which it found major problems in the flow of information among creditors, debt buyers, and collectors. Information the FTC gathers from the orders will allow it to determine how shortcomings in the flow of information affect debt buyers, debt collectors, and consumers. The agency has authority to issue the orders under Section 6(b) of the FTC Act.
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Comment from Anonymous on January 6, 2010 at 11:52AM EST
Who are the 9 debt buyers?
Comment from verity ventures on January 6, 2010 at 1:02PM EST
Debt buyers, debt collectors and their allies should use this opportunity to persuade FTC on issues that are of interest to them. Debtors most times are treated like innocent infants who were deceived into getting credits, using credits and defaulting on their payments.
Comment from Anonymous on January 6, 2010 at 1:19PM EST
About time. If the FTC had acted say, 10 years ago on this industry and their S.O.P., the problems could have been greatly reduced. We all know now what no regulation amounts to, greedy individuals running amuck. Obama then over-reacted to the FTC inaction by promoting a new bureacuracy to take over what the FTC didn't observe. Watch the # of complaints pointed at the ARM industry decline once this seperation is made between debt buyers and debt collectors.
Comment from bwilson@wcscredit.co on January 6, 2010 at 1:57PM EST
the flow of information is vital , i hope this results in a national registry of sold accounts . this would cut down on fraud,bad info, and debtors would have a place to check to see if they are paying the right party. Unfortunately we all know that expecting something rational coming out of this well get the wrong types of regulation and they will look at the consumers angle only.
Comment from Anonymous on January 7, 2010 at 1:58PM EST
It's time to stop threatening legal action and take it. Hedging bets on ability to collect judgments caused the growth of debt buyers who thought they could collect outside the norm...it WAS cost effective but those days are gone.
Comment from artisanland1@att.net on January 17, 2010 at 11:00AM EST
Some of the above comments are obviously made by folks working in the collections industry. I promise you there are debt buyers that abuse those who are honorable about their obligations as well as those innocent victims so arrogantly referred to by Verity Ventures. These are extreme economic times. There are people that have never been in debt trouble in their life that are now in that awful place. You folks in the collections industry need to stop rationalizing that your industry is clean, it is rampant with abuse, and even illegal activities. Wake up and do your job with class and a level head!