A local debt collection company has been going after people who don't owe the debt.

(WXYZ) - A local debt collector has been hounding people to pay debts they say they don't owe. The problem is some people pay anyway, and that puts them on the hook for lots more.

The company Asset Acceptance is based in Warren, but calls on people in nearly every state. The company buys old debt from other companies.

7 Action News has found hundreds of complaints against the company and how their collection practices have gotten them in trouble with federal authorities.

During our investigation, we talked to a Taylor mother of three who had companied to the Better Business Bureau about the way she was pursued by Asset Acceptance.  

Kathy Garnet told us how she handled the first phone call from Asset Acceptance.

"I said I can't make the payments, but they kept calling the house, everyday day, three to four times, maybe five times a day," she says.

Then it hit her that the old phone bill Asset Acceptance was calling about belonged to her former husband, and he had passed away years ago.

"Then I realized, I don't owe the debt anyway. So I kept saying I don't owe this debt," says Garnet.

Some of the debt the company tries to collect is very old. But if unsuspecting people pay just a little, by law the debt collection period starts up all over again - and they are on the hook for the balance.

Southfield Consumer attorney Adam Taub warns, "Consumers need to know that if they make a payment on a debt that has become obsolete, they're breathing new life into that debt."

"In Michigan, they're adding another six years of life to that debt, generally speaking," says Taub.

For now, Taub is suing Asset Acceptance for another issue. He filed a class action lawsuit alleging the company overcharged interest on debt it is trying to collect.

The Better Business Bureau gives Asset Acceptance a B-plus rating, despite the 772 complaints filed against the company in three years. The BBB says they resolved most of the complaints.

Michigan's Attorney General has also received 77 complaints about Asset Acceptance. The AG says only 26 have not been resolved.

The Federal Trade Commission went after Asset Acceptance with a nine-count complaint after years of looking into their business practices. The company settled the complaint, without admitting guilt. It paid a $2.5 million-dollar fine for suspected violations of debt collection and credit reporting laws.

"Probably $2.5 million is a slap on the wrist," says Taub. "However it's a start. It's refreshing to know that the FTC is actually looking at this kind of practice because it was the norm."

7 Action News went to the Asset Acceptance offices in Warren to ask about the FTC fine and settlement agreement, but no one would talk.

Instead, the company CEO Rion Needs, in a written statement referred us to the settlement agreement.

It says, in part, that the company was suspected of "misrepresenting that consumers owed a debt, when it could not substantiate the claim. It also failed to disclose that debts are too old to be legally enforceable… or that a partial payment would extend the time a debt could be legally collected."

Needs says in a written statement that, "This agreement gives consumers even more visibility into how we will work with them and sets new standards for the industry."

Taub suggests that consumers not make payments out of fear or shame to debt collection companies. He says to demand proof that the debt belongs to you, and that the amount and age of the loan are correct.

He also says to call an attorney if the company takes you to court, but make sure that the lawyer is a member of the National Association of Consumer Advocates.

Taub also says some collection companies are responsible for "ghosting" or making phantom payments. It's the practice of putting just a few dollars in an account to make it look like you made a payment. They do so to give life to obsolete accounts, so they can sell the debt to another company, which then tries to collect from you on a debt that's obsolete.

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