Without admitting liability, Xerox settled claims that one of its subsidiaries mishandled student loans for $2.4 million. Allegedly, Xerox Education Services delayed debtor’s attempts to set up reduced payments, overcharged fees, and harassed borrowers including active-duty veterans which is a violation of federal law. Massachusetts Attorney General Maura Healey said in a press release, “(ACS) regularly undermined the opportunity for students to access appropriate repayment plans. This conduct increases the already high cost of education, damages credit, and prevents students and their families from achieving long-term economic security.”
Part of the settlement will be sent to borrowers as a form of restitution, with approximately 800 borrowers splitting about $400,000. The other $2 million will be earmarked to help struggling borrowers make payments on their loans. Xerox has also been working with the Attorney General’s office to implement changes to the way it offers loan services to avoid violating federal law in the future. Xerox is much more well known for their photocopy machines than their education loan services.
While it’s reassuring to see a company held responsible for bad loan practices, it’s discouraging that the Xerox settlement is not an anomaly. More and more companies are having problem with loan practices coming to light. This isn’t even the first problem Xerox has had with student loans; for instance, they had already lost a Department of Education contract previously. Since 2014, the federal government has been cracking down on rule-breakers as national pressure mounts against student loans.
The bad loan practices at Xerox may seem pretty harmful, but this is a comparatively mild example of how not to treat people you are lending to or collecting a debt from. While Xerox’s alleged practices created a hardship for a lot of borrowers, it’s nothing compared to the harassment and scare tactics that have been reported by student loan borrowers all over the country. Student loans are difficult to maintain, but there are certain rights that borrowers have. If you have student loans, it’s important to be aware of your rights so that you can tell when you are being illegally harassed and report it.
Federal fair debt collection practices require that agencies treat you with a certain level of respect. There are four main areas where you have rights as a borrower that your lender can’t violate.
Right to Privacy
If you have ever experienced a debt collector contacting third parties such as your coworkers, extended family, or other members of your community, then you have experienced your right to privacy being violated. Your spouse doesn’t count as a third party. The right to privacy also means that you can’t be called in the middle of the night, and debt collectors are not allowed to make calls to your job if they are told it’s against the rules. The right to privacy also includes the right to have an attorney represent you, in which case all telephone calls and letters will be conducted through your attorney’s office.
Right to be Free from Harassment or Abuse
Debt collectors are prohibited from calling you and being abusive towards you, including using obscene language, insulting you, or making unsubstantiated threats either with violence or with extreme investigation. Collectors are not allowed to call you excessively (although all phone calls end up feeling excessive when you have a debt to pay). Debt collectors are not allowed to insult you, or make judgements about whether or not they think you should be able to pay the debt.
Right to Accurate Information
Accurate information from a debt collector refers not only to information about what the debt is and how much is owed, but also the actions that will be taken against you if you don’t pay the debt. Debt collectors are not allowed to take money from you against your will unless they do so by a lawsuit. Lawsuits can garnish your payroll wages or your tax return, but will never garnish your bank account or take other property as payment for the debt. For example, your house will never be foreclosed on for a debt that doesn’t involved your home loan. If a debt collector is threatening that you will lose other assets or be fired from work, then they are crossing lines of intimidation, threats, and inaccurate information.
Right to Validate
You have the right to dispute whether or not the debt is valid which means you have the right to relevant information for that action. Collectors are required to give you information such as where the debt came from and the complete amount owed. Obscuring this information or giving you inaccurate information is prohibited. Also, if you have requested a validation, then they have to stop trying to collect the money from you until the debt is verified (no phone calls, no letters, no asking for payment of any kind).
In many cases when you are confronted with debt collection tactics like the ones listed above, you are not dealing with a legitimate debt but with a scammer. A scammer shouldn’t be able to successfully verify the debt, so if you have any reason to believe the debt may be a scam, then ask to have it verified. It’s not a bad idea to go through this process every time you are collected by someone or an agency that is brand new to you. Whether or not you legitimately owe money, these are just some of the rights that you have that debt collectors must respect.