It seems too blatantly unjust to be true: You receive a debt collection letter stating that you owe money. The collection agency starts calling you, repeatedly, demanding payment. You tell them the account isn’t yours, but they keep insisting it is. Finally, your credit score takes a hit, and you spend months cleaning up the mess.

Unfortunately, “debt tagging”—when collectors target the wrong person for a debt—and a variety of other debt-related errors and scams happen…a lot. The Consumer Sentinel Network, a database of millions of consumer complaints compiled by the Federal Trade Commission, tallied debt collection issues as the second-most reported consumer complaint in 2010—second only to identity theft. Debt collection accounted for 11 percent of all complaints filed and saw a 2 percent increase over 2009.

According to the FTC’s Annual Report 2011: Fair Debt Collection Practices Act, of the 144,159 debt collection grievances filed, top issues included:

• Harassing and recurring calls

• Misrepresentation of the amount, kind or status of the debt

• Failure to send a written notice or to self-identify as a debt collector and

• Falsely threatening arrest, property seizure—even violence.

    In short, some debt collectors engage in unethical or illicit behavior in an attempt to scare money out of innocent victims.

    Who gets tagged? The Michael Browns of the world are susceptible because they have a common name. In fact, an Identity Theft 911 customer with that name endured hundreds of harassing phone calls from a collection agency that had tagged him with someone else’s debt. Eventually, his credit rating plummeted, his credit card interest rates tripled, and he was unable to secure a much-needed loan to help his business.

    Others get tagged because the real debtor’s contact information is outdated or when collection agencies purchase debt at a discounted price, then pursue multiple people for the same account. The more people they tag with it, the more likely they will pressure someone into paying.

    Though debt collectors are not required to verify whether they have the right person before assigning the debt to their credit report, they are required to comply with certain laws.

    Through its Fair Debt Collection Practices Act, the FTC is working hard to “curtail deceptive, unfair, and abusive debt collection practices.” While they pursue legal avenues, you can protect yourself by following these tips.

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