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This month was a tough one for the collections industry. Attorney Generals from New York, Ohio and Virginia all went after collection agencies and collection attorney firms. Each of these attorney generals claimed that the agencies were violating the fair debt collections act and even claimed fraudulent activity. The Minnesota AG literally shut down the arbitration business by closing down the National Arbitration Association’s credit card arbitration business, which was followed by the American Arbitration Association backing out of the debt collection arbitration business as well. AG’s settled with Bank of America on the foreclosure issues with its' Countrywide subprime division it bought. Even the rental business is not safe. Rent-a-Center is being accused of illegal collection practices in the state of Washington, including harassing customers with profanity during collection calls and scaring children by telling them that their parents would be jailed. Is it coincidence that all these items are happening at once or is there a pattern that is being set? Has the Attorney Generals had enough with the financial services industry or have they figured out a way to go after an industry that is not popular with the media and has deep pockets to gain a badly needed revenue source? The states are hurting for revenue and is our industry the target of a way to increase their revenues? Unfortunately our industry is a prime target for politicians. Lisa Madigan the AG from Illinois (who has aspirations of higher offices) has said the worst type of companies are polluters and collectors. Great, we have been categorized with those who damage our environment. Let’s face it; we do not work in a user friendly industry. I spent 10 years working for one of the credit reporting agencies, when someone heard that I worked there it usually was followed up with a “you ruined my credit” comment. How often do you get a positive comment when you say you work in the collections marketplace? “Thanks for collecting all those debts owed, we know it keeps our rates down!” If you consider that 90% plus of consumers pay their bills on time and have a serious issue in having to pay for someone else who does not pay their bill. If everybody paid their bills on time, interest rates would be low and borrowing would never be an issue.I know I would not want to end up in court in front of 12 jurors and explain that I think the 12 jurors should have to pay my bills because I can’t afford to pay my own bills. If a politician is looking to gain popularity ask them about debt collection agencies? Regulate them, enforce against them, and never support us publicly. The fact that our industry is very necessary to recover funds for businesses is a lost issue. Our industry certainly is not without its faults. We have created this two headed monster with a lot of bad business moves. Universal default will not go down as a smart business decision, profitable in the short run, devastating in the long run. There are rouge agencies out there that do whatever it takes to collect outstanding balances. And the main stream press loves that. Nothing better than getting a collector on tape (or better yet film) screaming and cursing at a poor little old consumer who happens to have the same name as another deadbeat bill dodger. Overzealous collectors can take your business from profitable to shut down if they are not closely monitored. You have such a fine line to balance, if you are overly nice, good luck getting paid. If you are over aggressive, good luck getting paid and expect an on rush of media, consumer lawyers and politicians. Taking the approach as a professional is the best approach. You need empathy for the consumers today, who with the current economic conditions are completely different than the debt dodgers of the past. Now you have middle and upper class debtors who have never experienced delinquencies. How you treat these individuals now, will have a lasting effect on the consumers and our industry. The concept of self regulation has been tossed around for a while but has recently taken on a new drive. Let’s face it, if we do not control the industry, the government will do it. And we all know how successful the government is in regulating an industry. The hardest part of self regulation will be the breaking of the bonds and codes that exist about supporting your brethren in the collections industry. If they are not complying with the laws then turn them in. Let’s clean up our industry before the government does it. And judging by the number of Attorney Generals and FTC complaints, it is just a matter of time before regulations take hold. New York, New Jersey and North Carolina already have pending bills and more states are looking at new laws.
People, lets clean it up now and take out our own trash before the government does it for us!
Your comments are welcome.
When a bounced check for $14 ends up costing a consumer nearly $300 to pay back and leads to harassment and scare tactics from the company trying to recoup the debt, somebody needs to say something. Our trade association, ACA International, has been doing exactly that for the past three years in an effort to get an unwise amendment to the Fair Debt Collection Practices Act (FDCPA) repealed. You don’t have to be a debt collector – as more than 3,500 of our member agencies are – to know that the check diversion program Congress agreed to exempt from the FDCPA back in 2006 spelled trouble from the beginning. Along with forcing consumers to pay more than $150 out of their own pocket to attend a financial management course, the amendment essentially gave collection companies like American Corrective Counseling Services (ACCS) a free pass when it came to adhering to the FDCPA. This is rather ironic considering the FDCPA was designed to protect consumers from the very type of unethical and illegal harassment ACCS has been repeatedly accused of by consumers in numerous lawsuits over the years. CNN.com’s March 2 story, Bounced-check collection deals draw fire, is only the latest example of why check diversion programs such as the one being run by ACCS should never have been exempted from the FDCPA in the first place. ACA International has stood in accord with consumer advocacy groups and others in opposing Congress’s 2006 decision to change federal law and allow district attorney’s offices to contract out bounced-check collections to private collection firms like ACCS. Not only does the current arrangement lead to mistreatment and needless financial hardship for consumers whose only crime may have been accidentally bouncing a check for a large pizza, but it also takes away the level playing field created by the FDCPA for ethical debt collectors. Our association will continue its efforts to ask Congress to repeal this ill-conceived amendment to the FDCPA, and in the meantime our association is unveiling a brand new, completely free consumer education Web site called Ask Doctor Debt. One of its many financial literacy tools is a free financial literacy Web course that district attorneys and companies like ACCS are currently forcing consumers to pay $160 to take. Contrary to the negative stereotypes so often associated with our industry, the members of ACA International – representing thousands of agencies and tens of thousands of individual collectors – strive to treat each consumer with dignity and respect, along with making available – free of charge – the financial literacy and education tools consumers need in order to make informed choices. It is our sincere hope Congress makes the same informed choice and repeals the check diversion program amendment to the FDCPA before more consumers suffer the same fate as those described in CNN’s recent story. Gonsalves is the President of ACA International, The Association of Credit and Collection Professionals and President of Action Collection Agency of Boston.
|Credit and Collection News
The FTC just released their report on the FDCPA. Go to:
to review their report.
What are your thoughts on the FTC's recommendations for the industry?
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