By Herb Weisbaum ConsumerMan
msnbc.com
updated 8/14/2008 9:00:26 AM ET 2008-08-14T13:00:26

Mariko Mudd knew the collectors would keep calling. They wanted her to pay off that $4,000 credit card debt she owed. But the 25-year-old who lives near Seattle was out of work and couldn’t agree to a repayment plan. “I didn’t have any money,” she says.

One day the caller crossed the line from aggressive to threatening. He told her that if she didn’t pay by the end of the day, he’d have her arrested and thrown in jail.

“How can you throw me in jail?” she asked him. “How am I supposed to pay off my debt if you throw me in jail?” He told her that’s the way the law worked.

Mudd was shocked and confused. She started to cry. Then she panicked. Afraid the police were on their way, she left the house. The debt collector kept calling and finally reached her father, convincing him to pay the $4,000 to keep his daughter from being arrested.

What happened here was illegal. “A debt collector may not make any false statements in the collection of a debt,” says Karen Hickey, an attorney for the Federal Trade Commission. “They cannot threaten arrest or imprisonment if the consumer does not pay the debt.”

Last year, the FTC received more than 70,000 complaints about debt collection agencies, the most complaints of any industry regulated by the commission.

The Better Business Bureau is also flooded with complaints. In 2007, more than 18,000 people complained about debt collectors, a 20 percent increase from the year before.

Not only are the complaints up, but more people report overly aggressive collection techniques. “They will call the person names, say you’re lazy or a horrible person,” says the BBB’s Alison Preszler. “People tell us, ‘I do owe the debt, but I shouldn’t be treated this way and called names.’”

Some people complain they don’t owe the debt or that the collector is asking for the incorrect amount. Others complain about unfair or deceptive practices. For instance, some collectors falsely claim to be with a law firm.

Karen Hickey says the FTC is hearing about some “pretty serious strong-arm tactics.” These harassment techniques include profane language, telling a third party about the debt and threats of “dire consequences” such as property seizure, wage garnishment or loss of employment, if the person does not agree to the repayment plan. All of these actions are illegal.

Why are you calling me?
Josephine Blake of Terre Haute, Ind., couldn’t understand why her phone kept ringing all day long. The automated message from a collection agency said, “It is imperative that you call immediately.”

Blake knew she didn’t have a past due account, but the calls would not stop. After three weeks of constant interruptions she decided to call back.

She says the agent never asked for her name, just her phone number. “I barely got the last three digits out of my mouth and she said, ‘it was a mistake and it’s already been taken care of.’” Blake tells me she still doesn’t know what was going on here.

The BBB files are full of complaints from people who get erroneous collection calls. They could be unfortunate enough to have the same last name as the person who owes money or their old phone number.

“We see this kind of problem when debt collection companies buy up old debt from other collection companies,” says the BBB’s Alison Preszler. “The farther away you get from the original debt holder it seems the more egregious the complaints are.”

It could be an honest mistake. It could be a scam. You could be the victim of identity theft. There’s no real way to know for sure without doing some legwork.

Why are there so many complaints?
“It’s a volume issue,” says John Nemo, spokesman for the Association of Credit and Collection Professionals. “There are going to be errors. There are going to be times where a consumer is contacted and it’s not the right person or the right number.”

Nemo says based on the millions of contacts between debt collectors and consumers every year, the percentage of problems is pretty small. He blames most of the serious complaints on “a few bad apples” in the industry. And he claims about 90 percent of the complaints are resolved to the consumer’s satisfaction.

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