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FTC and States Crack Down on Illegal Debt Collection

Sharon Edmondson, Washington Legislative Team Member | November 06, 2015

The Federal Trade Commission is joining forces with state and local enforcers to combat abusive debt collection practices in “Operation Collection Protection,” Chairwoman Edith Ramirez said Nov. 4.

The initiative is the first coordinated effort by 70 enforcement partners to protect consumers from unlawful and abusive debt collection practices and has resulted in 30 new actions, bringing the total this year to 115.

By the numbers the FTC receives more complaints about debt collection than any other industry with 280,000 complaints related to debt collection. Illinois Attorney General Lisa Madigan said the problem extends to the states, as it's also been the main source of consumer complaints among AGs since 2008. As part of the crackdown, the FTC has “filed 11 cases against more than 50 defendants, secured more than $88 million in judgments and banned 24 defendants from the industry” in 2014, Ramirez said, with many of the cases resulting from joint efforts with state and federal partners. Many of these complaints deal with “phantom” or “zombie” debt, where consumers already have paid off the debt or never owed it in the first place.

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