CONSUMER ALERT AND FACT SHEET ON COLLECTION AGENCIES AND

							   CONSUMER ALERT AND FACT SHEET ON COLLECTION AGENCIES AND JUNK DEBT BUYERS
                          By Springboard Non-Profit Consumer Credit Management www.credit.org 800-947-3752

“Junk Debt Buyers” are collection agencies that purchase bad debt – they are working for themselves as they
now “own” the debt. “Contingency” collection agencies work as agents for another company. A junk debt buyer
may also be in the contingency collection business OR they may contract with a contingency agency. Junk Debt
Buyers are a multi-billion dollar industry and are responsible for a large number of debt collection and credit
reporting violations of law. Some Top Industry Players (Some of these companies may be owned in part by others):
Asset Acceptance (AAC)*                          Sherman Acquisitions/Sherman Financial Group/Alegis
NCO Group*                                       Portfolio Recovery Assoc.*
Asta Funding*                                    Encore Capital Group (parent of Midland Credit Mgmt)*
Allied National/Interstate                       Risk Management Alternatives (RMA)
JBC & Associates                                 Arrow Fin. Svcs. (majority interest acquired by Sallie Mae 9/04)
RJM Acquisitions                                 CAMCO (Capital Acquisitions & Mgmt Co)*
Excalibur                                        Cavalry Portfolio Services
Unifund Group                                    Phoenix Asset Acceptance
First Select Corporation (part of Providian)     Collins Financial Services
Oliphant Financial Corp.                         OSI Portfolio Services
*These have been the subject of recent FTC legal actions and penalties for illegal/abusive collection practices.

Types of Fair Credit Reporting Act & Fair Debt Collections Practices Act Violations
        Re-aging accounts to attempt to force settlement on “time barred” (out of statute) accounts. The actual
        date that the debt becomes delinquent is supposed to be reported under FCRA. Re-aging is the practice of
        reporting a bad debt account as more recent than it really is. Re-aging causes the FICO score to drop
        dramatically since the scoring model interprets the re-age as a more recent default. JDB’s press for
        payment of some amount to bring the debt back under the statue of limitations after which they can sue
        you and have a chance of winning. Note – state statute of limitations (SOL) for collections are different
        from FCRA statues of limitations for reporting.
        Misreporting the legal status (e.g., an open chargeoff that was actually discharged in bankruptcy)
        Misreporting the “open date” and “date of last activity” on an account
        Various California Penal Code violations (e.g. consumers not being notified if their calls are being
        monitored or recorded)
        Multiple listings of the same debt: Junk debt buyers are often responsible for multiple reporting of the
        same debt as these change hands among buyers and sellers. Usually, these same debts are reported by the
        original creditor as well.
        Collectors pretending to be lawyers.
It does not improve your credit score to settle an old debt unless the item is completely deleted (not just
reported as “paid in full”) – it makes it worse since the delinquency/chargeoff will now be reported as more
recent!

Internet Forums and Resources:
www.artofcredit.com; Creditnet (http://consumers.creditnet.com/straighttalk/board/);
www.collectionindustry.com (here’s where to learn how debt collectors think); Creditwrench (URL is www.creditwrench.com);
Yahoo, AOL and other internet portals have various credit and debt message boards and forums.

What to Do:
- Don’t assume you are wrong - assume instead that your rights are being violated
- Keep all letters, account statements, and court records (even from years ago)
- Do not provide the collection agency/JDB with updated personal information. Never acknowledge a debt with a
collector or agree to any payment until the agency "validates" the debt (past billing stmts are not proof).
- Don’t accept credit card “offers” that come with an offer for settlement or request a payment in any other way
- Monitor your own credit report – call 877-322-8228 to get your free annual credit report (not available yet in
some states). Go to www.annualcreditreport.com but BEWARE of imposter websites that are “phishing” to steal
your identity. Opt out of unsolicited credit offers: www.optoutprescreen.com (JDB’s use these to find debtors).
- Contact an attorney that specializes in lawsuits for FCRA and FDCPA violations
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