Law bans harassment
in loan collection

A customer at Cash Man, a payday loan company, stands outside the business Oct. 29, 2007 [photo by Daniel Zollinger / Independent]

By Karen Francis
Diné Bureau

GALLUP — Despite laws that were passed to regulate the small loan industry in New Mexico, people continue to fall into debt using small loan companies, which make loans of $2,500 or less.

When the Independent was contacted by a woman who said she was being harassed to pay back a $100 loan, it went about trying to determine what she should do. The laws and regulations regarding loans are very complicated and depend on what type of loan was made and who is trying to collect, among other factors. One thing that the various professionals the Independent contacted agreed on is that consumers have a right to not be harassed.

“Financial products have gotten more complicated. It’s not that people are more ignorant. There’s so much more to be known,” Vicki Van Horn, certified financial planner, said. “It’s bad enough that people are in debt, but they don’t give up their rights.”

While harassment can be hard to prove, John Burnitz, assistant district attorney, said that if consumers feel they are being harassed by loan companies to repay loans, they should contact the police when the incident occurs and get police reports.

Those police reports can be submitted — though they are not required — with complaint forms to the New Mexico Regulation and Licensing Department, which regulates financial institutions in the state. The regulation and licensing department then has a process where it contacts the company in question to respond to the complaint.

In most cases, the problem is resolved at that level, Burnitz said.

“It gives them notice that they are being watched and they don’t want to lose their license,” he said.

Bill Verant, director of the NMRLD Financial Institutions Division, said that the division speaks to consumers and financial institutions regularly. He said that if someone has complaints, he or she should fill out the complaint form available on the division’s Website to get started.

Because of the complexity of the laws, if the complaint requires, the division forwards the complaints to the Attorney General’s office.

Van Horn also noted that when a debt goes to a collector, or collection agency, the Fair Debt Collection Practices Act applies, which is administered by the Federal Trade Commission.

She said in that case, if someone feels he or she is being harassed by a debt collector, he or she can report the collector to the Attorney General or the Federal Trade Commission.

The Fair Debt Collection Practices Act prohibits debt collectors from using threats of violence or harm, publishing a list of consumers who refuse to pay debts (except to a credit bureau), using obscene or profane language or repeatedly using the telephone to annoy someone, making false statements, collecting an amount greater than the debt (unless state law permits), and taking or threatening to take property unless it can be done legally.

While a consumer can request in writing for a debt collector to stop contacting him or her, it does not erase the debt, Van Horn said.

Complaints can be made to the state or the FTC if the complaining party does not have an attorney. The complaint form from the NMRLD is available at www.rld.state.nm.us.