Replies

Almost all states regulate collection agencies in some form or another. The licensing process is extremely rigorous and does require background checks, etc. but only on the principles, not employees and it can be quite expensive to be licensed in some states.

You do need to investigate a wee bit more before making a blanket statement regarding credit reporting. There are penalties for malicious erroneous entries, failing to report payments, etc. and the onus for the original legitimacy of the debt is the responsibility of the client, not the agency. That is one reason why there is a 30-day period after initial contact to resolve any disputes prior to actively initiating any collection action, including derogatory entries on retail credit reports and why we carry an enormous fidelity bond.

is this the sort of rigourous licensing process you are referring to:

Collection Agency Laws & Licensing Requirements There are no licensing or bond requirements for governing collection activities in Alabama. However, there is a license tax that must be paid to the town and/or city location where the collection agency's place of business is. PER BUSINESS, VOCATION OR OCCUPATION PRIVILEGE LICENSES, Article 2 Each collection agency shall pay the following: License tax License Tax Information: Alabama Department Of Revenue $100.00 (towns & cities 20k or more inhabitants) $25.00 towns and cities of less than 20,000 inhabitants. [C.O.A. 40-12-80]
collection regulation

Excuse my skepticism but having had dealings twice with debt collectors for bills that were not ours I don't think the safeguards you're talking about do anything.

The worst case was a guy who lives in CA who has the same very common first and last name as my husband and his information going on my husbands report.

We pulled my husbands tri-merge credit report and saw that a national mortgage company was reporting a mortgage loan in default. In the section for judgments etc the same mortgage company had foreclosed on the house.

After contacting the lender, sending them copies of my husbands ID, birth certificate and social security card, they acknowledged the error. They could not explain how it was put on my husbands report however they removed the tradeline and furnished us with a letter acknowledging the mistake. Within 72 hours, it was removed from all three reports. All should be well, right?

Wrong. We started getting letters from a collection agency dunning us for the balance owed after the home had been auctioned. We also received phone calls. Within the 30 day limit, I furnished the collection company with a copy of the letter from the original lender, told them it was not my husbands account and to go find the guy who actually owed the money.

They kept calling, sending nasty-grams etc. One of the collectors claimed we'd forged the letter from the original mortgage company. That was enough for me. I called the original lender to let them know what was going on and demanded they fix it. They sent the collection agency a letter explaining the mistake, told them to remove the account etc. I was sent a copy of that letter.

Even AFTER the original lender became involved, they continued to call our home and send mail. They also placed the account on my husbands credit reports after being informed the debt was not his. To make a long story short, I knew nothing about my rights prior to this. After, I knew my rights. It took my states AG's office, a FTC complaint and the threat of a lawsuit to get this collection agency to stop coming after us.

Even after all of that, they didn't really "stop" trying to come after my husband, they sold the account to Asset Acceptance. I promptly sent them copies of all my documentation plus the results from my AG's office and FTC investigation. A few additional letters and we never heard from them again.

After that experience plus the harassment I'm getting from Bay Area Credit and a 38 cent bill (which dropped my score over 50 points)now on my report I don't have much good to say about your industry.

In my opinion, collection agencies have WAY too much power, not enough oversight and most could care less about laws passed by the feds or the states. They know most consumers really do not know their rights and take full advantage of it.