Debt Collection Agencies Gone Wild

[Donnachaidh]

http://www.newdeal20.org/2011/06/01/debt-collection-agencies-gone-wild-46617/

This week’s credit check: The debt collection industry made $11.7 billion in revenue last year. Complaints about collectors account for 27% of those lodged with the FTC.

As Elizabeth Warren says, “Nothing will ever replace the role of personal responsibility.” Just as the FDA doesn’t prevent overdoses, the point of consumer protection regulations isn’t to come to the rescue of people who simply don’t want to pay back the money they owe. But debt collection agencies have started using outrageous tactics to get payments on debt. These companies buy up bad debt from lenders — credit card companies, phone companies, health care providers, you name it — for cheap and then hunt down the money owed in order to turn a profit. And in doing so, some act more like organized crime than private businesses.

They harass consumers with threats and obscenities. Complaints about debt collectors filed with the Federal Trade Commission, the agency tasked with regulating these operations, rose by about 17% in 2010, which is nearly three times the number of complaints filed in 2002. They account for 27% of all those lodged with the FTC. And of the 54,147 consumers complaining to state level authorities in South Carolina, 4,182 said debt collectors had threatened violence. In 2005, 8,000 consumers told the FTC that debt collectors had used obscene or profane language, according to “Up To Our Eyeballs.” But it’s not always just about outright harassment. It’s also a mind game. A former debt collector has anonymously blogged about some of the tactics he used, describing how he would “sound educated enough to perform some sort of legal action” by dropping four important phrases: office, file, client, and flat refusal to pay. This careful use of language was often enough to scare consumers into coughing up some money.

Debt collectors put people in jail. The Minneapolis StarTribune reported that “the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009.” The Wall Street Journal found similar numbers:

More at the link --