Debt collection can be an unpleasant business, but it's a big one.
The industry generates $12.2 billion in revenue for the roughly 4,500 firms chasing down borrowers who owe money on credit cards, auto loans and other accounts, according to figures from the Consumer Financial Protection Bureau.
Laws on the books and recent initiatives by the CFPB, a federal government consumer watchdog agency, offer borrowers ways to push back when firms call them multiple times a day or continue collection efforts without verifying that the debt is owed, among other illegal tactics.
Last week, the CFPB expanded its consumer complaint system to include gripes over debt collection related to any consumer debt, including auto loans, medical bills and student loans. The collection firms are required to respond to such complaints within 15 days.
Here are six tips for dealing with debt collection firms:
1. UNDERSTAND YOUR RIGHTS
Debt collection agencies typically buy accounts that have gone unpaid from credit card issuers and other lenders for pennies on the dollar. Recovering even a small portion of what's owed on an account can be profitable. That's one reason firms have an incentive to go after borrowers over debt that's several years past due.
How they go about doing so, however, is restricted by the Fair Debt Collection Practices Act, Consumer Financial Protection Act and other laws.
The laws don't resolve the underlying issue of whether a consumer owes a debt. They just address the proper conduct from collection firms.
"So many consumers are intimidated about the process and don't know their rights and don't know what to do," says Laura Udis, senior financial services advocate at the Consumer Federation of America, a research, education and advocacy organization.
Generally, collection firms are forbidden under the law from using unfair, deceptive or abusive tactics. That can include practices such as phone calls at all hours of the day or night, or using threats of violence or arrest.
For a broader list of debt collection agency no-nos: www.Consumer.ftc.gov/articles/0149-debt-collection .
2. FILE A COMPLAINT
Borrowers who believe they're being mistreated have several avenues to complain, including the Federal Trade Commission and their state's attorney general's office. Many states have their own debt collection laws that may differ from federal laws.
Another option is to complain directly to the debt collection company.
The law enables borrowers to ask a debt collector to cease contacting them. The FTC recommends sending the request via certified mail. Once the firm receives the letter, its representatives may only contact you again to inform you of a specific action being taken against you, like a lawsuit.
The CFPB has five sample letters that can be used as templates for raising a variety of issues with debt collection firms, including disputing the debt, or asking that they only communicate with your attorney.
You can find the letters and also file complaints with the CFPB on its website: www.Consumerfinance.gov/