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Debt Collection & Debt Collection Scams
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.
Debt Collection & Debt Collection Scams
Michigan consumers are falling behind on paying bills for all types of reasons, including job losses, increased mortgage payments, or medical emergencies. Because dealing with debts and debt collectors can be frightening and overwhelming, this consumer alerts provides background on the do's and don'ts of debt collection, and tips on how to spot and avoid debt collection scams.
Debt Collectors - Is that Legal?
There are varying state and federal laws that govern how debt collectors operate in the State of Michigan. Here is a general roadmap of how debt collectors should legally operate:
The FDCPA covers the collection of personal, family, or household debts, but it does not relate to debts incurred while you may have owned or operated a business.
Debt collectors who call consumers at work are the source of many consumer and employer inquiries, so it is important to reiterate - in order to stop receiving calls from debt collectors at work, you or your employer should inform the debt collector by phone, followed up with notification by certified mail, return-receipt requested, that such calls are prohibited. Keep the return receipt for your records, and if they contact you at work after you provided this notification, report the debt collector immediately!
If you would like a debt collector to stop contacting you entirely, federal law allows you to demand that they stop contacting you. Send the debt collector a letter, certified mail, return receipt requested. Keep a copy of the letter for your files, along with a copy of the return receipt, in case you need proof that you sent a request to cease contact. After you send this letter, a debt collector may only contact you for one of two reasons: 1) to tell you they will not contact you again; or 2) to inform you that they intend to take further legal action against you.
Finally, it is important to keep in mind that even if you are able to stop a debt collector from contacting you, you will still owe a valid debt!
This list is non-exhaustive and if you believe you are being or have been harassed by a debt collector, file a complaint with the Attorney General's Consumer Protection Division, at http://www.michigan.gov/ag, or with the Federal Trade Commission, at http://www.ftc.gov.
All of these characteristics are tell-tale hallmarks of a fake debt collectors - but "legitimate" debt collectors, acting illegally, may use some of the same tactics at times to scare consumers into paying. So how can you tell a legitimate, but bad, debt collector from a fake debt collector? Legitimate debt collectors are required to follow up their initial phone call with a written notice of the debt within five days. If you don't receive a timely written notice, you will know that call you received was a scam.
If you have been contacted by a legitimate debt collector who uses any or all of the above-mentioned scare tactics, you should report them immediately to the Attorney General or to the Federal Trade Commission.
PAYDAY LOANS AND DEBT COLLECTION SCAMS
The Attorney General's Consumer
Protection Division is receiving an increase in the number of consumer calls and
complaints related to aggressive debt collectors attempting to collect on
outstanding payday loans. Generally, callers claim to be from law firms,
government agencies, or even law enforcement agencies. They demand payment on
outstanding payday or internet check cashing loans. Often, the callers use many
of the "debt collector don'ts" outlined above, and call consumers unceasingly at
all hours of the day and night at home or on cell phones, at work, and may even
These calls are especially frightening because they have accurate information about the consumers they target, including Social Security numbers, dates of birth, address information, employer information, bank account information - in some cases, they even have the names and will actually contact neighbors, relatives, or physicians.
The common thread among these vicious telemarketing scams is that the callers demand payment and refuse to send you any written proof of an outstanding debt and they often threaten legal action or physical violence if the consumer refuses to pay.
If you receive calls such as these:
CONTACT THE ATTORNEY GENERAL'S CONSUMER PROTECTION DIVISION OR THE FEDERAL TRADE COMMISSION
If you have been contacted by a debt collector whom you believe may be violating the law, consider contacting the Michigan Attorney General's Consumer Protection Division at:
Consumer Protection Division
Toll free: 877-765-8388
www.michigan.gov/ag (online complaint form)
Also consider filing a complaint with the Federal Trade Commission, at http://www.ftc.gov.
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