DC
There is much truth in what you say. The majority of collectors are decent and honorable people. Likewise, the majority of debtors and decent and honorable people. It is always the extremes that create the problem.
The collection industry is out of control. They cannot control their image and can't control the cowboys in their midst. Those cowboys are eventually going cause some sort of rewrite of FDCPA -- I think to increase the statutory punishment from $1000 to something that stings -- say $20,000.
There are three structural problems in the industry.
The first is that the "big boys" are all public companies now -- that means a constant and crushing pressure for earnings every month, over and over and over. That pressure rolls downhill to some guy sitting in a grimy cubicle with a headset wishing he were home with his kids instead of staying on the dailer an extra two hours to make his number (which he thinks is ridiculous).
The second problem is closely related. The industry, by and large, pays lousy wages but creates commission/bonus schedules that induce the selfish to do things they know are wrong and rationalize it because "everyone does it" or "no one will find out" or "no one cares" or "if I get caught, I'll go to work for the CA across town".
The third problem is unrelated but in some ways more signifcant. The reality is that collection is an exercise in psychology. For most collectors, the psychology they use is one of creating fear. I can motivate people though fear. But, there is a big problem with using fear as a motivational tool. It requires a constant reapplication in every larger doses to obtain the same result (google Frederick Herzberg and read his classic study on motivation). Weak collectors who use fear as the primary motivational tool will inevitably cross the line because they must escalate continually.
Personally, I believe in the exact opposite approach (google Daniel Goleman and his work with emotional intelligence). My guess is that every debtor owes 10 people and has the ability to pay four. How do I get to be one of those four? Fear is probably not the most constructive emotion.
Anyway, here is a brand new FTC press release that is symptomatic of the systemic problems I see in the collection industry. Perhaps the FDCPA should provide for criminal punishment in addition to civil?
Debt Collectors Agree to Settle With FTC for $150,000
July 6, 2006
A debt collection agency that allegedly used lies and threats to collect debts has agreed to settle Federal Trade Commission charges that its tactics violated federal laws. Under the court settlement, the company agreed to a $150,000 judgment and to refrain from illegal practices when collecting debts, including “time-barred” debts – debts so old they are no longer legally enforceable.
The government’s complaint alleges that Whitewing Financial Group, Inc. bought and attempted to collect on very old debts, many of which were beyond statutory limitations and too old to appear on credit reports, and many of which had been discharged in bankruptcy. As required by law, Whitewing sent “validation notices” informing consumers of their right to dispute the alleged debts, but its statements in phone calls allegedly often contradicted those notices. The statements pressured consumers to make payments before they had received the validation notice, and confused them about their rights, including who had the burden of establishing the validity of the debt. Under the Fair Debt Collection Practices Act (FDCPA), if a consumer disputes all or part of a debt in writing within 30 days of receiving a validation notice, the debt collector must cease collection efforts until it has provided the consumer with written verification of the debt.
The complaint alleges that, because there is no legitimate method to enforce payment of time-barred debts, the defendants often misrepresented the status of the debts, leading people to believe that legal proceedings had begun, that lawsuits to collect debts were not time-barred, or that the defendants had documents showing that the debts were valid when, in fact, they did not. The complaint also alleges that the defendants misrepresented that if the consumer did not pay the debt, the defendants would take actions that they never intended to take, such as reporting the debts to credit bureaus or initiating legal proceedings.
Whitewing, based in Houston, Texas, and co-defendants Christopher B. Badger, Lynda J. Badger, and Jon P. Badger are charged with violating the FDCPA and the FTC Act by, among other things, misrepresenting the character, amount, or legal status of debts, threatening to take actions that cannot legally be taken or that are not intended to be taken, using false representations or deceptive means to collect or attempt to collect debts or to obtain informationconcerning a consumer, contradicting the notification of consumer rights contained in the validation notice, and communicating with consumers without prior consent or court permission, at times or places the defendants knew or should have known were inconvenient for the consumer, such as their work place.
All but $30,000 of the $150,000 judgment has been suspended based on the defendants’ inability to pay. The Commission vote to refer the complaint and proposed consent decree to the Department of Justice for filing was 5-0. At the FTC’s request, the DOJ filed the complaint and consent decree in the U.S. District Court for the Southern District of Texas, Houston Division. Judge Lynn N. Holmes entered the consent decree on June 23, 2006.
Source: Press Release
