Alexander J. Douglas, Esq. | Attorney | (585) 568-2224 | alex@lawroc.com

Federal Trade Commission enforcement of Phantom Debt Collection

This week, the Consumer Financial Protection Bureau (CFPB) released its annual 2017 report to Congress about the Fair Debt Collection Practices Act (FDCPA). The CFPB reported that the Federal Trade Commission (FTC), who also helps to enforce the FDCPA, brought or settled 12 different lawsuits against debt collectors in 2016, which focused mainly on phantom debt collection and unlawful text messages.

Phantom debt collection refers to debt collectors attempting to collect debt that does not actually exist. Thousands of consumers are impacted by this unlawful practice annually.

In 2016, the CFPB obtained $39 million in restitution for consumers, with debt collectors paying an additional $20 million in civil penalties relating to FDCPA violations.

Debt collectors may also violate the Telephone Consumer Protection Act (TCPA) by sending text messages to the cell phones of consumers where they do not have the consent to do so. If a court finds that this law is violated, the debt collector could be liable for up to $1,500 per unlawful text message.

In 2017, the CFPB released two different studies on the debt collection industry, including a white paper about online debt sales, and a report on Consumer Experiences with Debt Collection, based on the CFPB’s reviews of consumer views on debt collection.

The CFPB also noted that consumer debt has continued to increase since 2013, and is approaching the peak that it once held in 2008. (Consumer debt includes debt for family and household purposes, including credit cards, student loans, and medical bills.)

As a consumer, you  should know that you have rights under the FDCPA to prevent debt collectors from using any harassing, abusive, or misleading communications when they are collecting debt. Consumers may be entitled to up to $1,000 for such violations, plus attorneys’ fees and costs required to bring the case. Because the law provides for attorneys’ fees, I can usually take these type of cases on contingency.

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