FTC Perpetuates Real Authentication Challenge for Collectors

Yesterday a Consumer Education Specialist for the Federal Trade Commission (FTC) published this blog post advising consumers how to identify and/or respond to scammers that call. The crux of the matter on this one is to warn people that scammers use fake caller ID numbers to trick consumers. These tips are provided:

1. If you get a strange call from a government phone number, hang up. If you want to check it out, visit the official (.gov) website for contact information.
2. Don’t give out — or confirm — your personal or financial information to someone who calls. (emphasis added)
3. Don’t wire money or send money using a reloadable card. In fact, never pay someone who calls out of the blue, even if the name or number on the caller ID looks legit.
4. Feeling pressured to act immediately? Hang up. That’s a sure sign of a scam.
5. If you’ve gotten a call from a scammer, with or without fake caller ID information, report it to the FTC.

I totally get it. These scammers are a huge problem. We all get the calls. Consumers, regulators, legislators, industry … everyone is fed up and working to do something about it.

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And, still, legitimate debt collectors have government rules they must follow that are in direct conflict with this advice from the government.

The Fair Debt Collection Practices Act mandates that you cannot disclose information about consumers to third parties. In order to do that, debt collectors must verify the identity of a consumer before sharing information about who they are or why they are calling. The exact procedure used to do this varies a bit from collection agency to collection agency, and is often influenced by the creditor client. No matter what the specific procedure is, today it will involve asking the consumer to provide some form of personal information that: 1) (in theory) only the consumer would know, and 2) is data the collector has been given by their creditor client.

So. This sets up a very difficult interaction between a collector and a consumer – one that is both required by law and discouraged by federal regulators.

There has to be a better way.