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
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 alert provides background on the dos and don'ts of debt collection, and tips on how to spot and avoid debt collection scams.
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:
Debt Collection and Federal Law: The Federal Fair Debt Collection Practices Act (FDCPA) generally governs how debt collectors may legally operate nationally, as well as in Michigan. The law applies to individuals or businesses that regularly collect debts, including some attorneys, and companies that buy debts and try to collect on them.
The FDCPA covers the collection of personal, family, or household debts, but it does not relate to debts incurred through ownership or operation of a business.
Debt Collectors and their Contact with Consumers: A debt collector may not call you before 8 am or after 9 pm, unless you permit them to do so. And they may not call you at work if they have been notified orally or in writing that you may not receive calls at work.
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!
Disputed Debts: If you believe that a debt collector is demanding payment on a debt that you have a good faith belief you do not owe, send a letter, certified mail, return-receipt requested, to the debt collector disputing the debt. But you must send this dispute letter within 30 days of the debt collector's initial contact! Keep a copy of the dispute letter and the return receipt for your records. The debt collector must stop contacting you unless they provide you with written verification of the debt.
Debt Collector Don'ts: A debt collector may not do any of the following:
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, or with the Federal Consumer Financial Protection Bureau or the Federal Trade Commission.
All of these characteristics are tell-tale hallmarks of a fake debt collector – 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? Contact your creditor about the call, and find who, if anyone, the creditor has authorized to collect the debt. Also, 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, Federal Trade Commission, or Federal Consumer Financial Protection Bureau.
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 and bogus IRS tax debts. Generally, callers claim to be from the IRS, law firms, government agencies, or even law enforcement agencies. They demand payment on outstanding IRS taxes or payday or internet check cashing loans. They may make caller ID information appear as if the IRS or other government agency is calling. 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 contact neighbors and relatives.
These calls are especially frightening because they often have accurate information about the consumers they target, including Social Security numbers, dates of birth, address, employer, and bank account information, and even the names and contact information of neighbors and relatives.
The common thread among these vicious debt collection scams is that the callers demand immediate payment (often by prepaid debit card or wire transfer), refuse to send you any written proof of an outstanding debt, and often threaten legal action or physical violence if the consumer refuses to pay.
If you receive calls such as these:
Do not send payment or follow the caller's instructions! Also, do not provide any additional information, or confirm any information to anyone that calls you.
If you believe you are in physical danger, contact your local police department.
Contact your banking institution and alert them to the fact that your account may have been compromised.
Contact the three credit reporting agencies and put a security freeze on your credit reports. Carefully review copies of your credit reports and look for fraudulent activity.
File a complaint with the Attorney General's Office, the Federal Trade Commission, or the Internet Crime Complaint Center.
For IRS imposter calls, file a complaint with the Treasury Inspector General for Tax Administration on TIGTA’s website, or call TIGTA at 800-366-4484.
Consumers may contact the Michigan Attorney General's Consumer Protection Division at:Consumer Protection Division