Dealing with a Regulatory Complaint

Receipt of a subpoena or a civil investigative demand from a State Attorney General, a Collection Agency Board, or the Federal Trade Commission can cause total chaos for the recipient.  Collection industry members need to be aware of the fact that in the last few years state and federal enforcement actions against the collection industry have been on the rise. Collection industry members can prepare in advance for the day when they receive a subpoena or civil investigatory demand to make a response less painful and more complete in it’s’ responsiveness.

The FTC’s 2007 Annual Report to Congress will be out in the next few months, and the authors of this article expect that report to detail yet another increase in complaints involving debt collection.  While even the FTC has been unable to provide any analysis of the relationship between complaints to total debt in the marketplace and whether there has been a change in that ratio, the fact remains that last year’s annual report described 66,627 complaints involving third-party collectors, reflecting an increase of 14% during a year when total complaints to the Commission from consumers actually decreased.  Complaints to the Commission about debt collectors exceed the complaints regarding any other industry. Although the Commission acknowledges that third-party collectors contact millions of consumers each year and that the number of consumer complaints reflects only a small percentage of the overall number of consumer contacts it has stated to Congress a belief that the number of consumers who file complaints represent a relatively small percentage of the total number of consumers who actually encounter problems with debt collectors.

In the least few years, the collection industry has seen dramatic enforcement actions at the state and federal level.  FTC actions have resulted in civil penalties ranging from $240,000 against a collection agency, to $10,000,000 against a debt-buying company, to a significant fine of $40,000,000 against a mortgage servicer, all in cases in which there were allegations of abusive debt collection practices.