By Charlene Crowell
For succeeding generations, retirement has been the time when older Americans reaped the benefits of their years in the workplace. Oftentimes at ceremonies, workers would receive a gold watch – a symbol of their entry into retirement and an era of “golden years.”
Today, few if any count on getting a gold watch. And what should have been the proverbial golden years are often tarnished by a struggle to keep pace with rising costs of living. These financial challenges are often worsened by aggressive debt collectors who hound older Americans about debts they may not even owe. Sometimes, these collectors threaten to garnish their limited benefits.
“It’s increasingly common for older Americans to carry debts into their retirement years, and consumers living on fixed incomes often struggle to pay off these debts,” said Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB). “Older Americans deserve to be treated with the respect they have earned.”
According to the CFPB, debt collection is a multi-billion industry with more than 4,500 firms nationwide. Moreover, consumers have submitted more complaints to the CFPB about debt collection than mortgages, credit cards or any other financial product or service. A recent analysis of complaints received by the CFPB from July 10, 2013 until September 30 of this year revealed that one out of three was about debt collection.
Threats to garnish federal benefits such as Social Security or Veterans Administration benefits are particularly distressing to older consumers when these items are their primary sources of income. Similarly, older consumers with memory loss or other cognitive impairments are particularly vulnerable to harassment and scams.
While some creditors may collect their own debts, others hire third-party debt collectors. To make matters even more complicated, a single debt may be sold multiple times to different debt buyers.
A third of the complaints received by CFPB revealed that consumers could not identify the original source of the debt. Regardless of the source of debt, many older consumers also experienced repeated attempts by collectors to pursue debts of deceased family members – despite them having no responsibility for the debt. For others, even after judicial probate was concluded, or the funds from the deceased have been exhausted, harassing phone calls still continued.
Medical debt, another frequently-reported complaint, involved collectors pressing for payments at the same time the consumer is trying to resolve medical billing disputes and questioning whether the item in question is eligible for insurance coverage. In other cases, debt collectors make repeated attempts to collect on bills already covered by insurance.
The confusion and frustration felt by consumers is also aggravated by collectors calling over bills appearing on their credit report when no prior attempt communicated the debt in question by the original creditor.
Earlier this year, in a separate report, the Center for Responsible Lending (CRL) found scant regulation allows profiteers to take advantage of financially-distressed consumers. Many times debt collectors secure court judgments for debts that may not even be owed. A 2009 Federal Trade Commission analysis of 3.9 million consumer accounts, found only 6 percent of the accounts came with any documentation.
To help older consumers to cope with debt collectors, CFPB released an advisory that includes specific things consumers should do when faced with a debt collector. It encourages consumers to verify a debt claim before promising or paying it. In instances in which a consumer knows a debt is not their own, CFPB’s advice is to dispute all inaccurate claims. The advisory also includes sample letters to help consumers formalize their concerns.
For CRL, the growth of debt collection issues is of particular concern.
“American consumers are profoundly and negatively affected by wrongful debt collection tactics on a daily basis,” said Lisa Stifler, a CRL policy counsel. “No one should be forced to deal with illegal collection activity, and debt collectors should not be allowed to exploit seniors’ vulnerability in order to make a profit.”
No one – and especially our older Americans — deserves to become financial prey. As families look forward to the holiday season, remember to help older loved ones remain free from profiteers. Love them enough to help them defend their financial rights.