A Federal Trade Commission report has found that consumer debt buyers rarely obtain thorough documentation of the defaulted loans they purchase—a conclusion that could lead to greater scrutiny of how banks recoup charged off debts by selling them to collectors.

The report has been billed as the first comprehensive picture of the market for defaulted consumer debts. But industry attorneys, such as Ballard Spahr’s Christopher J. Willis, are questioning the FTC’s contention that the number of contested collection attempts is a “significant consumer protection concern.”

“My clients report routinely that they get a lot of those dispute letters downloaded off the Internet and mailed in,” said Mr. Willis. Many borrowers are simply trying to delay or stop collections by contesting the validity of debts, he said.

Related Practices

Consumer Financial Services
Mortgage Banking