Debt collectors are turning to increasingly aggressive and sometimes illegal tactics to collect money owed. As the economy continues to recover, the Federal Trade Commission (FTC) has ramped up efforts to crack down on these activities and inform consumers of their rights.
Household debt sits at $13.2 trillion. With such a bounty at stake, "debt collection complaints have been on the rise in recent years," reports Betsy Lordan, an FTC public affairs specialist.
Illegal practices include companies harassing consumers, threats of litigation or jail time, and demanding larger payments than the law allows. More recently, collectors are targeting people without debt.
Countering illegal acts
"More debt is being sold to debt buyers," says Tom Pahl, assistant director at the FTC's division of financial practices. "When that happens, accuracy of information isn't being passed down the line. The wrong consumers are being contacted or they have no factual basis for the amount of money they are trying to collect."
The agency has sued more than 30 collection companies for violating the law, banning some from the business, and making them pay steep penalties. To promote these cases, the FTC uses a multi-pronged strategy.
Every news release the FTC issues on debtor rights includes links to consumer education sites such as personal finance site Money Matters, or to a frequently-asked-questions page about consumer rights.
When the FTC believes a big portion of consumers being victimized in a case are Hispanic, it translates and releases a Spanish version of the document. Other languages are being considered.
To make it easier to gain media coverage, the agency has a resources page for debt collection reporters that houses news releases, reports, workshop information, congressional testimony and tweets related to consumer debt issues.
As for social media, the FTC does outreach to bloggers, tweeters, and on Facebook. Tweets are also bilingual.
The most effective outreach has been when the news releases generate earned media coverage. "The notion really hits home with consumers when they see the agency going after a debt collector who has targeted people like themselves," says Pahl.
Learning from other crises
The FTC's current efforts remind Stan Collender, a partner at Qorvis Communications, about the work done by the mortgage lending community when its crisis first hit in 2008.
His firm represented Hope Now Alliance, a group established by lenders and others to help consumers understand that lenders were on their side. The key to its ultimate success was that the firm helped change the conversations happening in the media. For instance, the alliance would release the amount of homes saved from foreclosure.
"Our headline each month is about solutions offered rather than foreclosure data," says Faith Schwartz, executive director of the alliance. "Our message is about staying accountable and transparent."
Despite its efforts, some in the PR industry feel the FTC hasn't gone far enough to promote debtor rights.
"The FTC doesn't do a good job of publicizing its website," says Mary Reed, founder of MRPR, an Austin, TX-based firm. "These days, people are so busy you need a balanced, continuous media strategy."
Reed has cofounded a site, debtcollectionanswers.com, with finance guru Gerri Detweiler. Reed's dogged media outreach strategy has gotten the site coverage on MSN, ABC News, and in US News & World Report. The site, which is also promoted via a blog and Twitter, is constantly updated to ensure high place-ment on Google searches.
The FTC hasn't felt the need to launch a formal campaign when it comes to debt issues because "it is continually alerting consumers about their rights with regard to a myriad of consumer protection issues," notes Lordan.
Advocacy group Consumer Action promotes its efforts through various newsletters, as well as through events organized with more than 8,000 community partners including the Northern Virginia Urban League and China Town Legal Aid. Social media and lobbying also play a part in its strategy.
"When you are struggling and dealing with debt, it's even more important that you are informed so that you don't continue to slide down financially," says Michelle De Mooy, senior associate of national priorities at Consumer Action.
Stan Collender, partner at Qorvis Communications, admits reaching those in debt isn't easy.
"The hardest thing about communicating in such a case," he explains, "is that the people you need to communicate with - the borrowers - often are doing everything possible to avoid dealing with the situation."