do collection agency use scare tactics

Do Collection Agencies Use Scare Tactics?

People don’t like collection agencies and debt collectors because they are known to be rude and sometimes illegal when they try to get people to pay their debts. Even though there are laws in place to protect people from some unfair debt collection practices, some collectors still use questionable scare tactics to get people to pay.

We’re sorry to say that the answer is yes, collection agencies do use these tricks. Even though not all debt collectors go to these lengths, many have been known to cross the line when they’re trying to get money back. Knowing the signs of common debt collector scare tactics can help you know what to do if you ever get a call like this.

What Is a Debt Collector?

Before getting into specific scare tactics it helps to understand exactly what debt collectors and collection agencies do. A debt collector is any person or company that regularly collects debts owed to other parties. This includes

• Third-party collection agencies that collect on behalf of original creditors
• Debt buyers that purchase delinquent accounts for pennies on the dollar and then try to collect the full balance
• Law firms and attorneys that collect debts through legal action
• Banks, credit unions, and other creditors that have internal debt collection departments

A debt collector may be trying to collect on all kinds of consumer debts including credit cards, medical bills, personal loans, utilities, rent, and more. Their primary purpose is to recover as much money as possible, either for the original creditor or for their own profits if they purchased the debt.

Why Do Collection Agencies Use Scare Tactics?

Collection agencies rely heavily on getting borrowers to make either full or partial payments on the debts they are trying to collect. Their methods stem from the understanding that people are often more motivated by fear than by reason. Some of the factors that compel collectors to use scare tactics include:

• They earn a commission based on how much they collect, so the more desperate the tactic, the more they stand to gain financially.

• There is a lot of turnover in debt collection, so collectors are under a lot of pressure to get things done right away.

• It’s important to act quickly because accounts that are past due are only with collectors for a short time before they are written off and sold.

• Many debts are old, time-barred accounts that are realistically uncollectible, leaving scare tactics as a last resort.

• Intimidation preys on the fact that most people find confronting collectors uncomfortable and want to avoid conflict.

While these reasons provide context, they certainly don’t justify collectors going beyond legal and ethical boundaries. Understanding what motivates them provides insight into the industry’s systemic flaws that enable bad behavior.

7 Common Debt Collector Scare Tactics

Collectors have all kinds of tricks up their sleeves to frighten and apply pressure to debtors. Here are some of the most prevalent scare tactics to watch out for:

1. Threats of Legal Action

One of collectors’ favorite threats is that they will take legal action such as filing a lawsuit or garnishing wages if the debtor doesn’t pay. However, in many cases, these are empty threats made to create a sense of urgency even though there is no intent or ability to follow through.

1. Harassment and Intimidation

Harassing the debtor through excessive phone calls or other contact is an unlawful but common scare tactic. Some collectors may even directly threaten or insult the debtor. Under the Fair Debt Collection Practices Act (FDCPA), collectors cannot harass, oppress, or abuse any person in the collection process.

1. Misrepresenting Information

Collectors may lie about the total debt, interest, fees, or other details to make the situation appear worse than it is. Or they may falsely claim that legal action is imminent when in reality the debt is too old to sue over. Lying or misrepresenting information to collect a debt is illegal.

1. Calling Employers and Family

Calling and disclosing details about a debt to third parties like an employer or family members crosses the line. Not only can this damage relationships, but it is also a violation of privacy rights. The law prohibits collectors from discussing debts with unauthorized third parties.

1. Failure to Verify Debts

Collectors often pursue debts without verifying that the person actually owes the amount claimed. Failing to validate and provide proof of a debt when asked is not allowed under the FDCPA. Collectors must have documentation to back up their claims.

1. Empty Threats of License Suspension

Some collectors falsely claim they can get professional licenses or driver’s licenses suspended to coerce people into paying. However, they do not have this authority in most cases.

1. Harassing With Mail

Collectors may bombard debtors with a barrage of mail including letters, legal notices, and court documents. While permitted to send required notices, collectors cannot overdo it to the point of harassment.

How to Respond to Scare Tactics
The best plan when faced with collector scare tactics is to remain calm. Do not let them pressure you into agreeing to anything on the spot. Take time to verify the debt, know your rights, and seek assistance if needed. Here are some smart ways to respond:

• Request written validation of the debt – Collectors must provide this if you ask.
• Know the statutes of limitations – Many debts are too old to be legally collectible.
• Send a cease and desist letter – This makes them stop contacting you.
• Lodge an FDCPA complaint – Report unlawful conduct to the CFPB or state attorney general.
• Consult with a consumer attorney – Get advice or legal help responding to the collector.
• Avoid payment agreements – This can reset statutes of limitations on old debts.
• Record calls for evidence – Check if legal in your state first.
• Turn the tables – Threaten to sue them for illegal practices.

While collectors rely on consumers remaining passive and uninformed, you can gain the upper hand by asserting your rights. Agencies are less likely to use scare tactics if they know you are willing and able to fight back.

Are Scare Tactics Effective for Collectors?

As unethical as they are, scare tactics tend to be at least moderately effective in collecting debts. One study found that 38% of consumers made a payment after receiving a call from a debt collector. The tactics work because:

• Many people don’t know their rights under the FDCPA.
• The tactics intimidate uninformed consumers into paying.
• People want to avoid the potential consequences like lawsuits.
• Some collectors unlawfully harass people to the point of breaking.

However, while collectors may see short-term results from scare tactics, their methods can seriously backfire through penalties, lawsuits, and damage to the agency’s reputation. And as consumers become more aware of their rights, the tactics are steadily becoming less productive.

How to Choose an Ethical Collection Agency

Not all collection agencies resort to questionable scare tactics. Ethical agencies focus on compliance, transparency and maintaining positive long-term relationships with both consumers and creditors. When selecting an agency, look for the following indicators of credibility:

• Membership in industry associations like ACA International – Indicates commitment to high standards.

• FDCPA compliance and consumer protection policies – Shows values aligned with the law.

• Clear communication and willingness to validate debts – Demonstrates legitimate practices.

• Positive online reviews and reputation – Suggests fair treatment of consumers.

• Alternatives like payment plans – Indicates flexibility and willingness to negotiate.

While an agency may still attempt to collect rightfully owed debts, they go about it in a lawful way that respects consumers’ rights. This approach proves more successful over time compared to short-sighted scare tactics.

Key Takeaways on Collection Agency Scare Tactics

• It is an unfortunate reality that some collectors resort to illegal scare tactics like harassment, threats, and misinformation in hopes of collecting on debts. However, many are moving away from these unproductive methods.

• Being aware of common scare tactics can help you detect and respond appropriately to them. Know your rights and don’t allow collectors to intimidate or manipulate you.

• While initially effective in some cases, scare tactics tend to damage collectors’ reputations and become less successful over time as more consumers learn to fight back.

• Selecting an FDCPA-compliant collection agency with a track record of transparent, ethical practices ensures fair treatment for both creditors and consumers.

Don’t allow unlawful debt collection scare tactics to intimidate you into paying a debt you don’t owe or cannot afford. Report abusive conduct, know your rights as a consumer, and seek help responding effectively. With an empowered and proactive approach, you can limit the stress and handle the situation strategically.