Debt Collectors Don Sheep's Clothing

“[Debt] Collectors actually care about consumers… They want to teach consumers how to get out of debt. They’re trying to put themselves out of business.” – Rozanne Andersen, general counsel of ACA International (formerly the American Collectors Association) as quoted in this morning’s NYT article, “Debt Collectors Try to Put on a Friendlier Face.” As times get tougher and the options for borrowing from Peter to pay Paul shrink, more accounts are becoming delinquent. This means booming business for debt collectors, but increased activity could bring scrutiny from politicians and regulators, as well as consumer backlash. So, infamous for harassing debtors with abusive and threatening language and incessant calls (all violations of Federal regulations), the industry is trying a new tactic: playing Mr. Nice Guy. They’re conducting personal finance management courses, writing columns about how Abraham Lincoln couldn’t pay his debts, and opened a full-time lobbying office in Washington DC this month.

(Thanks to George!) (Photo: Getty)


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  1. picshereplz says:

    Most debt collectors nowadays actually do want to keep their operations in line with federal regulations because it sucks to get hit with an FDCPA lawsuit. It sucks hard.

  2. arch05 says:

    @picshereplz: Speaking from personal experience?

  3. Erwos says:

    I guess playing good cop, bad cop works better than just playing bad cop… maybe. I’m sympathetic to both sides here, but probably more so to the debt collectors: playing nice just doesn’t work with some people, and there’s a genuine obligation here.

  4. thirdbase says:

    @ picshereplz: No they don’t, they have already figured the cost of the lawsuit into their business model.

  5. ARP says:

    @picshereplz: I disagree. Paying some minor fines (they may start out major, but our current administration’s attitude about enforcing heavy penalties is not good) is a cost of doing business. If their abusive techniques can net them more money than the fines, they’ll do it. That’s why they’re USUALLY not egregious, just unlawful. Egregious gets them more damages and makes it not worthwhile to do it.

    They know that the debtor is unlikely to do anything about the practice (like sue) because they’re often in a troubled financial spot anyway and a few hundred dollars for even a small claims case is probably a big deal.

    Now, if you up those fines, or give consumers a streamlined approach to complaints (e.g. an administrative court) you might get something.

  6. humphrmi says:

    the industry is trying a new tactic: playing Mr. Nice Guy … and opened a full-time lobbying office in Washington DC this month.

    OK, fine, offer some classes, good for them, whatever. Sorry, tell me again how lobbying congress is “Playing Mr. Nice Guy”? So they’ll go lobby congress for less regulation, and that’s good for consumers how?

  7. zentex says:

    These guys? place nice? What kind of utopian dream (nightmare?) did I wake up to this morning? Will the next story tell us Hillary will be McCain’s running-mate? and Obama will be appointed Secretary of State?

  8. bohemian says:

    It is nearly impossible to do anything other than turn them in via a form. Nothing ever seems to get done with there being much larger burning issues going on. So they violate the laws, the odds play in their favor that nothing significant will ever happen. The laws need serious streamlined teeth like being able to put them out of business with the stroke of a pen.

    BTW, South Dakota is starting to become a debt collector haven. They are popping up all over the place because we have virtually no state laws on debt collection in the state.

    Too many collection agencies are totally untrustworthy. Your better off either disputing the debt the entire way or trying to get the original creditor to get the debt back and work it out with them.

  9. Coelacanth says:

    How dumb this woman was in the NYT article:

    Debt Collector: “This is kind of old, isn’t it?” he said, holding a folder with a six-year-old bill for $2,644 from a Citibank credit card. “We’d like to see if we can settle it.”

    Ms. Savage said her only income was her unemployment check. Mr. Markoff set up a payment plan of $100 a month and went away, satisfied with his new customer. She sat there a while longer, seeming more resigned than anything else.

    If this woman was SIX YEARS delinquent, she should have just allowed the statue of limitations to expire and not have to pay any of it off.

    Yes, she’s doing the responsible thing, I guess, but I doubt that personal responsibility was much of a priority during those six years’ delinquency.

  10. nadmonk says:

    Oh my god. I almost burst out loud laughing at that quote. Yeah, I’m really sure they want to put themselves out of business. I know the debt collectors I’ve talked to in the past could give a crap about recovering my credit (for something that shouldn’t have even been on my credit no less). True they don’t want the hammer coming down on them, but it isn’t becaue they care about us, it’s just in the interest of self preservation. It’d be nice if they could just be honest about it.

    In otherwords: Don’t fart in my face and tell me it’s a cool breeze.

  11. picshereplz says:

    @arch05: Kind of. I deal with debt collectors everyday in my line of work and I see a lot of FDCPA suits.

    Congress really hammered debt collectors with the FDCPA by awarding statutory damages and attorneys’ fees to the plaintiffs. It’s basically a windfall for plaintiff’s lawyers.

    @ARP: The FDCPA has nothing to do with this administration. It’s a law which was passed several years ago (actually, during the Bush administration when the Republicans held all of Congress) which sets very low standards of proof for plaintiffs and awards big damages. It’s all in the courts now, but most debt collectors settle even when they haven’t done anything wrong because plaintiff’s attorneys in FDCPA cases are infamous for bill-inflation, and the FDCPA awards plaintiffs attoneys fees.

  12. uberbucket says:

    April 1st comes earlier and earlier…

  13. picshereplz says:

    @ARP: Another thing – most plaintiff’s attorneys doing FDCPA work will work for no up-front fees, because they know their opponents will pay their fees.

  14. soulman901 says:

    Well apparently to Ben, all debt collection agencies buy their Debt(FALSE), Don’t follow the FDCPA as it was passed by the Carter Administration(FALSE) and are now all of sudden trying to play nice with consumers(FALSE).
    The facts are, Not All Collection Agencies buy their debt. Most of them follow FDCPA Regulation and try to stick to it very closely. And the fact that we have the ACA which sets and fights for the rights of the collection industry because hey, companies have a right to try and collect on folks that neglect to pay their accounts. Sure there are cases where the account is fraud or the company didn’t do what it was suppose to do but a good majority is people not paying them.

  15. picshereplz says:

    Welp, I guess it was a Clinton administration bill, actually, but the point still stands – it’s nothing the Bush administration can mess with unless Congress re-writes the bill or amends it.

  16. soulman901 says:

    @picsherplz – You’re pretty dumb. The FDCPA wasn’t passed during the Bush Administration. It was passed in 1978 under the Carter Administration.

  17. Tank says:

    @thirdbase: Ask the guys at Camco if they planned on having the FTC lock up their building, put them out of business or fine them a million dollars.

  18. bonzombiekitty says:

    @COELACANTH: Not sure the statute of limitations would necessarily apply in that situation. Wouldn’t it only apply if the credit card company had not attempted to collect on the debt for some time? Since someone is actively trying to collect the debt, I wouldn’t think the statute of limitations would hold.

  19. thirdbase says:

    @ Tank: My statement stands. With any projection there is risk. Besides Camco was an entire scam and a poorly run company otherwise there CFO would have been more apt to properly diagnose the lawsuit risk and cost factor. Face it lawsuits to the debt collection, insurance, and financial brokerage industries are simply costs of doing business and are factored into the liability reseverves of these corporations.

  20. jstonemo says:

    The statute of limitations starts to count down from the date of last activity on the account. The collectors will do anything to get you to make a payment so that it resets the countdown clock. It depends on the state of residency, but it usually runs from 3 to 6 years, and it just means that they can’t successfully sue you for the debt. They can try, but you show up with documentation that the statute has run out and you win.

  21. Coelacanth says:

    @bonzombiekitty: My understanding is that the statue of limitations goes into effect from the date of the last consumer activity.

    The debt can be resold and actively collected upon, but as long as the customer doesn’t acknowledge responsibility or make any payments, the clock doesn’t reset.

    This may vary state to state. At least this is true in California.

  22. ShortBus says:

    Just an FYI… I have a FDCPA/FCRA suit pending in small claims court. I’m seeking $2000 in statutory damanges ($1000 for FDCPA violations, $1000 for FCRA violations) because a bill collector sent me the intial letter claiming that I owed them on a very old $100 cell phone bill. Within 30 days of receiving their letter, I sent them a certified letter stating that I disputed their claims and wanted documentation. They ignored my request and started reporting a collection account on my credit report. I then sent another certified letter telling them that was a FDCPA violation and they had to immediately remove the information from my credit report or I’d sue. Again… no response.

    30 days went by and still nothing. So I directly disputed the accounts with the three major credit agencies. One of them deleted the account, but the other two came back “verified.” It was at that point that I filed my small claims suit, pro bono.

    The debt buyer is now tripping over themselves trying to settle with me. Their first offer was merely to delete the debt if I agreed to release them from all legal liability–past and future! I told them to go pound sand. They could delete the account without my signing the agreement and send me a check for $2000, or I’d see them in court. I’m still waiting to see what their next move will be.

  23. ShortBus says:

    @ShortBus: Pro se, not “pro bono”. ::hangs head in shame:: I was actually giddy once when I caught Judge Judy making that same mistake once.

  24. PølάrβǽЯ says:

    I call BULL$#!T !

  25. quail says:

    I think it matters how far down the line the debt has passed. If it’s been sold 2 or more times you’re still likely to face the collection agency goon who’s going to try to convince you to sell your TV and wedding ring at the pawn shop to pay the debt.

  26. Nytmare says:

    Out of curiosity, if a customer ignores a debt despite any hounding and credit score dings, how would it ever get collected? Would the collector have to take them to court before the statute of limitations runs out? And I bet they never do that unless the amount is much bigger than court costs.

    Yeah the quotes from the ACA spokesperson were quite ridiculous in that otherwise interesting article.

    Since the FTC is responsible for taking FDCPA complaints and reporting on them, it will be interesting to see if clearing out the current executive administration (next year) results in better funding and renewed heat on unfair debt collection practices. Also, telemarketing and product safety.

  27. ShortBus says:

    @nytmare: What they do depends on a whole lot of variables: the age and size of the debt, the amount of actual documentation they have, your payment history before defaulting, presumed employment status, various information on your credit report, even in some cases your ZIP code.

    If you completely duck all of their attempts, they have three options: give up, sell it to some other bottomfeeder, or sue you. Court costs are pretty negligible and are rolled into the judgment if they win.

    I’ve known of people who’ve been sued for under $300. The rub is that 95% of debtors don’t even bother showing up for the hearing so they automatically lose by default. So what happens is that a lawyer (typically a recent law school grad) will queue up a bunch of cases and then go on a traveling roadshow throughout the week. They’ll stop in a particular courthouse for the afternoon and run a couple of dozen lawsuits through the court, one right after another, spending less than 2 minutes in front of the judge for each case. The lawyer then collects his or her paperwork from the clerk and then drives to the next nearest court. They churn lawsuits just like they churn their other debt collection activities–it’s all a numbers game; the more you turn over, statistically the more money you make.

  28. @nytmare: My understanding is that collection agencies keep the legal cost-per-lawsuit low by filing in bulk. Debt collection lawsuits are basically fill-in-blank filings: Add the debtor’s name and amount, pay a cheap local lawyer to drop off the papers at the courthouse, then wait a few months for all the lawsuits to reach court. Since most debtors don’t show up for the court date, the local lawyer basically gets paid to hang around the courthouse all day winning default judgements.

    But otherwise, you’re right. By the time a debt’s reached the “lawsuit” stage, it’s probably been sold at a discount several different times. A $1000 dollar debt on paper might only be a $100 investment to a debt collector. That might not be worth pursuing, especially if there’s bigger debtors in town worth pursuing, and/or the collector can’t verify any threatenable assets (like a house) in the $100 debtor’s name.

    As an aside: I met a woman at a party last year who worked for a debt collection agency. (She wasn’t a collector; she worked in the department that verified debtor bankrupticies.) Last week, a mutual friend told me the woman was laid off because her employer is downsizing. There’s something weird going on in the economy when the debt collectors aren’t bringing in enough money to keep up with expenses.

  29. picshereplz says:

    The best way to get relief under the FDCPA is to sue. Take it from me as someone who works for the other side of consumers on FDCPA issues – debt collectors hate the FDCPA.

    @soulman901: Ad hominem attacks when you can’t talk about the substance of the issues. Sweet.

  30. JeffCarr says:

    I agree with the article, although in some cases, it might be becoming less of a facade and more of a reality.

    I worked with a very friendly debt collector last month, and paid off a $6,000 debt I’d had hanging over my head for the last few years. I’ve worked with a few agencies over the last few years due to a run of bad luck and bad decisions, and this guy was actually friendly, didn’t call repeatedly, understood the constraints I was working under, was willing to work within them without demanding anything more, and gave me a direct line and his work hours so that I could work with him more easily. Because of that, when I received a $5,000 dollar payment that was owed to me, the very first thing I did was pay him off in full.

    A+++ debt collector! would default again! …no… wait…

  31. azntg says:

    They should’ve thought of that BEFORE the victims (err.. the “customers”) got fed up and figured out how to hurt the CAs with a big fat FDCPA lawsuits or at least hold a genuine threat.

    I’m quite happy and proud that everyone in my family is not delinquent in debts and have clean credit files, but the next CAs calling our house to try to reach some schmuck with my same surname will get it. Geez, it’s not like all the Lees in the world live in my damn house!

  32. Rusted says:

    @Erwos:No obligation on my part.

    I’ve been getting called daily. Found out the number was from Global Vantedge and they have this Indian call center. Checked my credit report, nothing on it. At the moment, all I owe is five bucks, and not to them.

    Seems they break the rules, call people on weekends, Sundays, and after hours. They also have been known to call neighbors and friends of people. Wonder if some profit can be made from that?

    It’s those recycled phone numbers we get. The previous owner could have been a deadbeat.

  33. humphrmi says:

    I’ve been getting calls from a collection agency, it seems like they don’t care that I inherited a number that their debtor had years ago. So I got me a family full of lawyers, and one of them says he’ll take care of it. Pretty much after that, the calls stop. Yeah, they really care about the “little guy”, as long as he has a lawyer to set them strait.

  34. YouCanEatMe says:

    @picshereplz: Successfully sued two collection agencies. One payed for my cottage in fact. They are a cancer.

  35. Vickinlouisville says:

    I learned a lot working at a law firm as a debt collector. I learned that I should just run up all my credit cards to the max and just wait until the third party collections agencey sends all of my debt to a law firm for suit. Then I will just file bankruptcy. That’s what most debtors do. They are not all little old people that have had identity theft or on social security. Most people can set up payment plans, but nooooooooooooo..

    Let me tell you debtors one thing. Be cautious of collectors pretending to help you and they ask the name of your bank and employer. They are going to hit your bank accout and garnishe your wages. Most things that the law firm do to debtors are within the law, but very sneaky .So if you want to run from your debt , don’t give out any bank details let them do the skip searches. Cost the firm momeny.

    Pease out