FTC Mulls Crackdown On Aggressive Postmortem Debt Collection


Debt collectors have become increasingly aggressive in hounding the next of kin of people who died in debt, reports the Los Angeles Times. To rein in the practice, the Federal Trade Commission is preparing new rules that would crack down on overzealous debt collection involving the deceased but also potentially make it easier for unscrupulous collectors to dupe the unwary into paying bills they’re not responsible for. Public comment on the proposed rules ended this week, and a vote is expected within a few months.

Aggressive debt collection is a perennial source of controversy, ranking second last year on the FTC’s list of most common consumer complaints. But the problem has been exacerbated by the economic downturn, said Joel Winston, the agency’s associate director of financial practices. He said the surge in unpaid bills has been accompanied by a surge in debt collection efforts, and many collectors ignore rules regarding who can be approached – and who’s on the hook – for the deceased’s obligations. Debt doesn’t disappear just because a person has died, particularly in states like California with community property laws that can leave a person on the hook for a spouse’s obligations. The Fair Debt Collection Practices Act of 1977 authorizes debt collectors to contact a dead person’s spouse, family members or related third parties, such as the executor of an estate.

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