January 22, 2010

By: Michelle Grinberg, Esq.

The Federal Trade Commission (“FTC”) has ordered the nine largest debt buyers in the nation to turn over certain specified information.  The information which the FTC gathers will be used to conduct a study in order to better understand the debt buying industry and reasons why the number of consumer complaints against the industry is so high.  The FTC recognizes that there are flaws in the way consumer debt information is transmitted among creditors and collection agencies.  When a creditor is unable to collect a debt, they often will sell the debt to a debt buyer who may, in turn, re-sell it to other debt buyers. Since a consumer debt may be sold several times, incorrect information is commonly transmitted from the original creditor to each subsequent debt buyer, causing debt collectors to try to collect the debt either from the wrong consumer or attempting to collect the wrong amount. The FTC, which is responsible for enforcing the Fair Debt Collection Practices Act, understands that the industry has defects and hopes this study will improve future policies and enforcement of the industry.