Self-regulation and debt buying

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Last year the FTC received 280,998 complaints about questionable debt collection practices. We think consumers and responsible members of the industry can agree that number is higher than it should be. The FTC is fighting that battle on three fronts. We’ve brought dozens of cases – both on our own and with state partners – to enforce the Fair Debt Collection Practices Act and Section 5. We’ve fought to have 75 bad apples removed from the debt collection barrel. And we continue to educate consumers and businesses about their rights and responsibilities in the collections process. But there’s another important effort underway.

Recently I was a panelist at a meeting of DBA International, a trade association that represents many members of the debt buying business, and I was asked about DBA’s ongoing efforts to put together a program of industry self-regulation.

The FTC has always been an enthusiastic proponent of effective self-regulation. We think the benefits are obvious. Self-regulation can encourage compliance through an alternative dispute resolution approach that is far less disruptive than litigation. It can foster fair competition so that law-abiding companies don’t have to go head-to-head with competitors that cross the line. And especially in industries whose reputation has been tarnished by bad apples, it can be an important step toward winning back public confidence.

We’ve also learned that self-regulation is worth doing only if it’s done right. We’ve looked at a lot of self-regulatory set-ups over the years. There’s no one-size-fits-all approach, but the good ones seem to have some characteristics in common.

  1. Effective self-regulatory programs are transparent. They feature consistent, workable standards that are easily understood by industry members, consumers, and law enforcers. A key component of transparency is avoiding conflicts of interest. No sweetheart deals or smoked-filled rooms. Effective regimens are open, autonomous, and above-board.
  2. Effective self-regulatory programs are nimble.  For most industries, the innovation button seems to be stuck on fast-forward. The best programs stay ahead of the game with active industry monitoring and standards that respond to changes in technology and the marketplace.
  3. Effective self-regulatory programs have teeth. Self-regulation doesn’t work when there’s lip service, but no bite. An effective enforcement mechanism is essential – for example, referring to law enforcers those who don’t promptly cure their practices. 
  4. Effective self-regulatory programs have industry buy-in. Look at programs that have stood the test of time and what do you see? They all enjoy the widespread support of industry members. Businesses may not always agree with the result, but they respect the integrity of the process. And they put muscle behind it by actively participating and encouraging others to participate, too.

We’ll watch with interest as self-regulatory efforts continue in the debt buying industry and other sectors.



I agree self regulation is a good thing now if we could just get those payday loans guys to agree and practice self regulation

I had a debt buyer from Florida who bought some bad debts from Huntington bank in Ohio. The problems for them were that they filed lien on a home and tried to collect in court by filing foreclosure action without having a note .
So what they did was to forged documents,( signatures). When they could not produce a note, the courts dismissed their action(s).
The bank (Huntington Bank) had advised them (the debt buyer) through an affidavit that the bank had no Promissory Note, but that did not stop the debt buyer from commencing foreclosure action.

Debt buying includes mortgages. Citibank began buying small banks that held many FHA mortgages. I had a FHA mortgage with Source One, a midwest bank. Citibank started the proceedings to buy it which concerned me. They already tried to make me pay off my car twice, (cleared that up with a tantrum in a local branch) and they claimed that my Mother's equity loan was months behind, (it was not), and conned my brother into paying the loan off. Before they completed their takeover of Source One, they sent 3 of my payments back to me, claimed they were never paid and tried to foreclose. An office in the old federal courthouse, in Riverhead, NY, were extremely upset at this info, told me that Citibank had a habit of stealing homes and encouraged me to fight them. I studied for weeks at the law library in Riverhead, and filed ti dismiss the action and for compensation, to vacate the mortgage. The NYS Supreme court Judge answered that he wanted to hear from the bank's lawyers and then make his decision. Citibank's own lawyers did not fight my Motion #5, agreeing with me, in their Motion #6. It took the Judge almost a year to finalize his decision in my favor and file it in the County Records Office in Riverhead, NY. 3 years went by, living in peace with my daughters, sending the oldest off to college. Then, the worst happened. Citibank came after us and our 1908 farm/colonial house on a 1/2 acre. It had been a dream come true to buy it it, as I, (we, my daughters), were not falling into the greed causing families to buy houses they could not afford. The average price of US houses was 150,000.00 when I bought mine, and I talked them down to $144,000.00. But, Citibank,along with other big banks were illegally foreclosing on homes that may or may not have been behind in payments. Mine was not. I talked to the same employees at the old federal courthouse again, and they were shocked. They told me that they never saw Citibank go after anyone like they went after me. They advised me to sell and see what I could salvage. Talking to lawyers was no help in Suffolk County as this was in the beginning of the illegal foreclosures in the US and they just didn't understand what I was trying to tell them. I sold, Citibank stole most of the equity, and I sent my daughters off to college, and moved to Texas. After one year of working, I was diagnosed with a terminal illness, and the small amount of money Citibank left me went quickly. It was very disappointing that calling the HUD office on my mortgage papers did nothing to help, except admitting that they knew Citibank was taking over small banks with a lot of FHA mortgages, then foreclosing on them, behind in payment or not. The best case result would be, (and willed to my daughters), would be to get my home back. I believe it has sold at least twice since I was forced out illegally, and/or the money they stole at the closing, almost a quarter of a million USD, plus compensation for the fact they took my life savings.

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