Oftentimes, debt collection is a nasty business; however, the Federal Trade Commission sent a warning shot to debt collectors by asserting that they must adhere to federal rules when collecting on overdue student loans.
The Federal Trade Commission (FTC), headquartered in Washington, D.C., said on Tuesday, February 14th that a third-party debt collection agency, GC Services, must pay a $700,000 civil penalty for using illegal debt collections tactics for federal student loans and other debts.
The FTC said that GC Services left phone voicemails illegally disclosing information about a person’s purported debt without his or her permission. The calls were supposedly made to individuals who were unaffiliated with both the borrowers and debt. The Fair Debt Collection Practices Act asserts that debt collectors cannot disclose personal debt information with anyone other than the borrower and his or her lawyers without express permission.
Furthermore, the FTC said that the company’s employees continued to call these unaffiliated consumers despite being told that they had the wrong person, the person they were seeking could not be reached at that phone number, or the person who answered the call did not owe that debt.
Before this new development, GC Services claimed that it would install measures to prevent its employees from making unlawful calls to third parties in search of debtors, but that proved to be a lie according to the FTC. This time, GC Services will have to further revise its policies and practices related to contacting customers.
Debt collectors are notorious for doing whatever they can to collect on outstanding debts. More than 40 million consumers have outstanding student loans with an average balance of $28,000, so it’s no wonder that student loan collection is a large and growing business.
Author: Dave Rathmanner
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