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How Bill Collection Agencies Are Letting Themselves Be Played
A press release arrived in the Collection Agency Services' email inbox last week. The headline read: "File Just One Collection Complaint, and Never Be Pestered Again?" Although the headline ended with a question mark, the text seemed less equivocal. It encouraged consumers to avoid their debts by lodging a complaint against any collection service that they think has broken the rules.
Make Money by Not Paying Debts
It pointed out that a typical settlement for violations of the Fair Debt Collection Practices Act (FDCPA), and similar state and federal legislation, is around $1,500.
And it implied that collection services are so keen to avoid such costs that they are subscribing to databases such as WebRecon, and LexisNexis that record these complaints, and identify those who make them.
So, all a consumer has to do is file one complaint against a single bill collection company, and it--and all the others--are likely to steer well clear in the future.
The press release went on to sell even harder the idea of playing the complaints game: "First, you could receive a cash settlement from filing the collection complaint. Second, since they'll scrub you from future collection activity, you could be in for a peaceful future, free of irritating calls."
A Collection Service Can't Be a Pansy
Of course, it's understandable that bill collection companies pursue those who are most likely to pay. If a collection service didn't prioritize--but instead invested the maximum time and effort in every case--it would soon go out of business.
And it's easy to see why collection service agencies prefer to avoid dealing with those consumers who play hardball. Who needs the hassle and expense?
But the industry as a whole has to recognize three issues:
1. It can't reward bad behavior by leaving the most calculating debtors in peace
2. If consumers realize that filing complaints benefits them, there will be an (even greater) explosion in the number of litigation cases
3. Serious consequences result from agencies flouting the law
It's Not Just a Single Bill Collection Press Release
Awareness of this problem for bill collectors is spreading fast. Also last week, Edward Jamison, who describes himself as "a nationally recognized expert credit attorney," wrote a blog on the CreditCRM Web site. As a responsible lawyer, his remarks were a million miles from those in the press release, and he certainly didn't encourage any irresponsible behavior.
However, he did touch upon the subject of complaints against collection service companies. He pointed out that the number of FDCPA lawsuits this year is likely to exceed 8,500.
And he went on to say:
"Many collection agencies are finding it hard to avoid lawsuits despite a huge growth in outstanding delinquent receivables. Some are calling for a revamping of the FDCPA but any politician that chooses to reduce consumer protections at this time in history is asking to be voted out of office."
The Fundamental Challenges Facing the Bill Collection Business
Mr. Jamison's last point is especially relevant. Although--at least on an intellectual level--the American people still generally recognize that the collection service industry performs an economically essential function, they have issues with the business in other ways.
In the current economic climate, too many Americans have friends or family members or colleagues or neighbors who've got themselves into financial trouble through no real fault of their own. And they're in no mood to support lighter regulation of the bill collection business.
And, of course, the collection service industry continues to shoot itself in the foot. It's not just high profile cases (like the dozen--allegedly rogue--collection agency staff who were arrested last week in Buffalo, NY, and later charged with grand larceny) that are framing public opinion.
There's a widespread perception, which may well not be wholly unjustified, that all too many debt collectors are willing to stretch the law too far.
And, as long as that continues, those collectors will be asking for litigation. And for greater regulation.
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