Debt Collection

The regulatory bill is finally coming due for debt collectors. The Consumer Financial Protection Bureau has announced new rules that for the first time would place large debt collectors and credit reporting companies under Uncle Sam's thumb. This is the most far-reaching proposal so far from the agency that was a key agenda item for the Obama administration. “Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks,” Richard Cordray, the director of the bureau, says in a statement.

Here is a roundup of alleged cons, frauds and schemes to watch out for. Using ruse of debt collection There are few things more intimidating than a telephone call from a collection agency. Some scam artists have been using that fear to bully people into giving up their debit card numbers on the telephone, then draining their bank accounts, the Better Business Bureau said in a recent alert. In some instances, the callers have personal information about the target, including actual debts, making the call seem legitimate.

Two sheriff's deputies sat conspicuously in the lobby of the Wilshire Hotel in Koreatown on Thursday. They were there to collect a multimillion-dollar debt. In March, a Superior Court judge ordered the company that runs the hotel to pay the city of Los Angeles nearly $3.5 million for unpaid transit occupancy taxes, known as bed taxes. City officials say the company, Majestic Towers, never paid up. So they turned to the Los Angeles County Sheriff's Department, which serves court orders, to play debt collector.

Dear Liz: I had a mobile home that was repossessed in 2003 after I was unable to make the payments. In 2005, I was contacted by a debt collector saying that I owed $20,000. They were very aggressive and threatening, saying that they could sue me. I told them I did not have that money, and they kept harassing me, telling me that I could borrow it from my bank. I finally agreed to send them $50 a month. I just received a letter stating that I have not met my contractual obligations and if I don't take care of the balance, I could be sued.

Fast-money lender CashCall Inc.-- known for TV ads featuring faded child star Gary Coleman talking about his financial problems -- agreed Monday to pay $1 million to settle state prosecutors' allegations that the company ran deceptive ads and used "loan shark tactics" to collect debt from customers. CashCall specializes in making loans in as little as one day with only a signature needed to get cash. But the Anaheim company charges most customers extremely high interest rates while advertising that its rates are low, according to a civil complaint filed by the California attorney general's office.

Marissa Ruiz learned about debt collection the hard way. After struggling with credit card debt for years, the Pasadena social worker answered an advertisement from a debt-settlement firm last December. She followed its instruction to stop making minimum payments and to let the firm's representatives handle everything. That's when she started getting calls. "Debt collectors were calling every day, threatening to sue me and take my wages," she said. "There was no reasoning with them at all."

In late 2007, Centinela Hospital in Inglewood was losing nearly $1 million a month and had piled up $15 million in debt. Among the causes of the crisis: $25 million in overdue bills. Collecting that money would have given Centinela a measure of relief. But the bills went unpaid, and the century-old medical center was sold. The new owners slashed services, closed half the operating rooms and laid off a third of the employees. Who owed Centinela that elusive $25 million?

If you owe money to Tom Anderson's employee-recruiting company, don't expect to take your time paying. Every morning, his office manager checks to see which customers have paid their bills. Clients who promised that a check was in the mail get a personal call from Anderson a week later, instead of the nice letter he used to send out. "In the old days, like January through June of this year, I'd look at our receivables report once a month.

With her flowing, hot-pink Indian suit, jangling silver bangles and perky voice, Bhumika Chaturvedi, 24, doesn't fit the stereotype of a thuggish, heard-it-all-before debt collector. But lately, she has had no problem making U.S. debtors cry. For the last three years, Chaturvedi has been a top collection agent at her call center, phoning hundreds of Americans a day and politely asking them to pay up. As the U.S.