The story, part of testimony before Congress in 1977, helped persuade lawmakers to outlaw false threats and harassment. Today, almost 30 years later, a surge of complaints about collection tactics has rekindled the debate over how to protect consumers.

Consumer advocates say that the collection rules have become toothless relics of an age when consumer credit was a novelty.

"I think [penalties] are inadequate," said Robert J. Hobbs, deputy director of the National Consumer Law Center in Boston.

To stop abuses, consumer advocates call for:

Higher fines. The $1,000 federal civil penalty for collection abuses set in 1977 has shrunk to a third of its original potency because of inflation.

Stronger enforcement. Collectors have little fear of being reined in by overburdened regulators.

More oversight. Patchwork state licensing requirements allow rogue collectors to thrive.

Collectors aren't licensed in most of New York State, although they have access to people's credit reports and other sensitive financial information.

Collectors dispute the need for a crackdown. They say that rising debt loads spur more gripes - some of which are baseless attempts to get out of paying.

Complaints, like the nearly 67,000 received by the Federal Trade Commission last year, are few compared with the 1 billion collection attempts that collectors make annually, they say.

"The 67,000 number is an atrocious number - it shouldn't happen," said Eric Berman, a Long Island collection lawyer and a director of the National Association of Retail Collection Attorneys. "But in the scheme of things, it's nothing."

Hobbs said complaints are only a fraction of abusive calls.

Forbidden tactics

The fair collection law covers collection agencies, not in-house workers at banks and other creditors. For agency collectors, it prohibits making false threats, barraging you with abusive language and late-night calls, damaging your reputation by revealing your debts or demanding extra fees.

The FTC, the federal cop for collectors, has the mandate to punish violators. It brings one or two of the nation's 6,400 collection agencies into court each year, according to its annual reports to Congress.

"We think we need to target our resources to collectors who have a pattern of violating the law," said Thomas E. Kane, a lawyer in the agency's division of financial practices.

The agency has 30 lawyers overseeing financial industries, including lenders, credit counselors, as well as collectors, so it can hardly check out all of the thousands of complaints it receives.

"They just don't have the resources to be an enforcement agency," said Hobbs.

Consumers can fight their own battles with collectors in federal courts. Under the fair collection law, collectors must pay the legal tab if wrongdoing is proved, plus a fine of $1,000 per violation. Debtors could band together, but awards in class actions are limited to 1 percent of an agency's net worth.

Consumer advocates say the penalties are outdated. Households that carry a balance on credit cards owe $5,100 on average, according to the Federal Reserve, up from an $890 in 1977.

"We have instances where collectors say, "so sue me,' " said Margot Saunders, Washington, D.C.-based lobbyist for the consumer law center.

The collection industry says it also wants to stop abusive calls but has different ideas of how to go about it. Collectors want the FTC to crack down on bad apples that cause gripes.

"If there are agencies [that are] willfully running afoul of the law, the rest of their peers would very much like to take action," said Rozanne M. Andersen, general counsel of the industry group ACA International.

Upping the civil penalty of $1,000 would only lead to more nuisance lawsuits, she said.

In any case, Washington isn't inclined to tighten the rules for collectors.

Instead of raising penalties, Congress this spring passed a bill exempting bad-check collectors from collection rules. Ohio Republican Michael G. Oxley, chairman of the Financial Services Committee and the author of the measure, referred questions to the FTC through a spokesman. Retired Rep. John J. LaFalce, who used to have Oxley's job as the former chairman of the Financial Services Committee, said the move isn't surprising.

"Since the election of 1994 . . . there's been almost no attention given to consumer protection," he said.

States step in

While the FTC is the industry's top cop, states can also rein in abusive practices. Some take more action than others.

New York is one of 18 states that allow unlicensed collection agencies. The exceptions are in New York City and Buffalo, which do license collectors. But most agencies are in suburban office parks outside city limits, and in Buffalo, at least, consumers appear to be unaware of the municipal protection.

In her 20 years at Buffalo City Hall, "I can't remember having a collection agency complaint as such," Supervisor of Licenses Mary Zizzo said.

Most states that license collectors require them to post a bond - in effect, a prepayment of fines. That gives the collector a financial incentive to avoid abusive tactics.

"Collectors we have most trouble with are located in states with little or no licensing," said William N. Lund, director of Maine's Office of Consumer Regulation.

Minnesota, a center for the collection industry, licenses individual collectors as well as the agencies where they work. That sets a high standard for accountability and bars recent felons from jobs that provide access to consumers' financial information, officials said.

"The [collection] agency may say, "Well, it's just a loose cannon,' " said Gary LaVasseur, director of enforcement in Minnesota's Commerce Department. "We want to establish some kind of accountability so the company understands people have to be monitored."

e-mail: fwilliams@buffnews.com