12 ms·

'Bad Paper' Explores the Underworld of Debt Collection

79 points by thejteam 12y ago

jobu 12y ago
Planet Money recently did a show about this as well, called "The Buffalo Talk-Off" http://www.npr.org/blogs/money/2014/10/08/354591198/episode-574-the-buffalo-talk-off http://www.npr.org/blogs/money/2014/10/08/354591198/episode-...
- jordanpg 12y ago
  I think this is more or less the same story (by Jake Halpern) being double-dipped by NPR.
  - amha 12y ago
    Halpern seems to have been doing (or getting?) a huge press push. I don't mean that to criticize; everything I've read/heard related to this has been really interesting and I really want to read his book.
  - amha 12y ago
    whoops, book here: http://www.amazon.com/Bad-Paper-Chasing-Street-Underworld/dp/0374108234 http://www.amazon.com/Bad-Paper-Chasing-Street-Underworld/dp...
tsaoutourpants 12y ago
Collection agencies are incredibly easy to sue. Unlike the story says, there is a lot of regulation, but it's up to you to enforce it. If you can find a rule that they're not following (and they never follow all the rules, way too expensive), you can take them to court and get $1,000 per statutory violation. If ever a debt collector is fucking with you, google for collection agency lawsuits. :)
- diminoten 12y ago
  The story is about debt collectors selling to one another, so I imagine the "there's not a lot of regulation" line is in reference to the debt market itself.
adorton 12y ago
There are also a couple of interesting articles about this. Here's one that I think was submitted to HN a few months ago: http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?_r=0 http://www.nytimes.com/interactive/2014/08/15/magazine/bad-p... Fascinating stuff.
- mercnet 12y ago
  Also recommend that article. I couldn't believe there was a market place for trading collections between debt collectors.
- JamesSwift 12y ago
  That is the article they are discussing in the interview
diminoten 12y ago
The idea that there's a moral obligation, beyond any legal one, to pay one's debts is probably something that's invaluable to folks who do this collection. Do you guys feel debts are morally bound? I'm not sure how I feel about it, because on one hand you've given your word to pay, but on the other hand you didn't necessarily consent to this level of collection effort, and though I guess it makes sense that debt is transferrable, you didn't make your original agreement with the person actually collecting the debt, so it doesn't feel good to pay a stranger so they don't harm you (via your credit).
- randallsquared 12y ago
  Even if debt were non-transferable, the person with whom you signed the original contract, Alice, could separately contract with another person, Bob, to pay Bob when you pay Alice, and the credit reporting could be done through Alice in the bargain, which would have exactly the same effect as Alice being able to sell the debt to Bob directly, except with a little extra transaction cost which would factor into loan interest and availability.
- toomuchtodo 12y ago
  > Do you guys feel debts are morally bound? No.
- georgemcbay 12y ago
  Whatever idealistic moral obligation I would otherwise feel to virtually any for-profit corporation has been destroyed by the sum of common disregard for humanity that so many corporations display on a daily basis. IOW, you want fiduciary duty to be the overriding guiding principle when it comes to business? Fine, it is my personal fiduciary duty to not pay you a dime if I can legally get away with it consequence-free. Enjoy!
  - msandford 12y ago
    Right? Would people react any differently if it was one company's accounts receivable trying to get money out of the other's accounts payable and the one owing the money was going bankrupt? When you take out a loan the contract specifies what happens so long as you keep paying, and also what happens if you stop paying either out of choice or inability. I can't see how it's a moral matter in the slightest. You literally can't be violating the contract if the contract has language which addresses the situation you're in. You might be in default, but that's not a moral issue, it's a contractual one.
dlaz99 12y ago
As someone that has been involved on the IT side of the collections industry for about 12 years now, I feel like I need to point out some common misconceptions about the industry that this article highlights. One is there is a difference between debt buyers and collection companies. Some agencies do buy the debt (usually as a different division or a different corporate entity), but when you talk about collection agencies, they are usually working on a contingency to collect the debt. There are also 2 different ways that agencies work for debt owners, which are 1st party and 3rd party. 1st party they are calling as a contractor for the debt owner using the debt owner’s name, they usually have direct access to the clients systems . 3rd party they are calling you to collect on a debt and using their agency name and working entirely off their own systems. 3rd party collection companies are extremely easy to sue. Most of them would do criminal background checks and would not hire someone with a record (other than maybe DUI/DWI). They also fall under the FDCPA, which as a poster above mentioned, makes they incredibly easy to sue. The FDCPA is so out of date and open to interpretation that even if you do everything right, you still get sued. It is very similar to patent trolling in the software industry. The cost of litigation is so much more than the cost of a settlement that pretty much every agency is just going to settle. Now what the article does talk about with how the paper that is being sold to debt buyers is unfortunately true and the data from some of these is awful (I have seen some, but the companies I have worked for usually don’t work this kind of stuff). And the article is also correct that most of they will not have itemized statements that prove that you owe the debt. Most of the debt that is being talked about in the article would be out of the statute of limitations to sue (this varies state to state usually 2-6 years), and would also be considered to not be eligible to be reported to the credit bureaus (being over 7 years old). At that point there is legally nothing a collection company can do to you, except keep trying to contact you, and once you request them to cease contact they legally have to (if you do this verbal it is also best to follow up in writing by certified mail, it will make you lawsuit stronger). I will say that there are good people and good companies working in this space, but you never hear about them. The collections side of the industry does provide a valuable function and really does not need more regulation. They already have different laws in almost every state, the FDCPA (which does need to be updated for technology, its ancient at this point) which is enforced by the FTC, and now the industry is also dealing with the CFPB. What I do agree with is that there needs to be more regulation to debt buying. There need to be better controls in place to protect private data. Excel files (that often are mangled because some idiot didn’t import them right from a csv export) are passed around way too much. While the good agencies and debt buyers do take data security seriously, most of the smaller ones don’t. I can say that as someone that has worked in this industry, that I would not want my person data treated the way some of the companies I have worked with do (Not the collection agency itself, because I have usually been in charge of that side of the system, and I have always done my best to protect that data like it was my own).
billclerico 12y ago
We use a startup called TrueAccord at WePay - they're trying to disrupt this industry using data: https://www.trueaccord.com/ https://www.trueaccord.com/
- osamet67 12y ago
  Thanks for the mention, Bill! We're working hard to make a difference.
lyphorm1 12y ago
Is there a template for a letter or a tutorial to challenge the debt?

79 points by thejteam 12y ago

jobu 12y ago

Planet Money recently did a show about this as well, called "The Buffalo Talk-Off" http://www.npr.org/blogs/money/2014/10/08/354591198/episode-574-the-buffalo-talk-off http://www.npr.org/blogs/money/2014/10/08/354591198/episode-...

jordanpg 12y ago
I think this is more or less the same story (by Jake Halpern) being double-dipped by NPR.
- amha 12y ago
  Halpern seems to have been doing (or getting?) a huge press push. I don't mean that to criticize; everything I've read/heard related to this has been really interesting and I really want to read his book.
- amha 12y ago
  whoops, book here: http://www.amazon.com/Bad-Paper-Chasing-Street-Underworld/dp/0374108234 http://www.amazon.com/Bad-Paper-Chasing-Street-Underworld/dp...

tsaoutourpants 12y ago

Collection agencies are incredibly easy to sue. Unlike the story says, there is a lot of regulation, but it's up to you to enforce it. If you can find a rule that they're not following (and they never follow all the rules, way too expensive), you can take them to court and get $1,000 per statutory violation. If ever a debt collector is fucking with you, google for collection agency lawsuits. :)

diminoten 12y ago
The story is about debt collectors selling to one another, so I imagine the "there's not a lot of regulation" line is in reference to the debt market itself.

adorton 12y ago

There are also a couple of interesting articles about this. Here's one that I think was submitted to HN a few months ago: http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?_r=0 http://www.nytimes.com/interactive/2014/08/15/magazine/bad-p... Fascinating stuff.

mercnet 12y ago
Also recommend that article. I couldn't believe there was a market place for trading collections between debt collectors.
JamesSwift 12y ago
That is the article they are discussing in the interview

diminoten 12y ago

The idea that there's a moral obligation, beyond any legal one, to pay one's debts is probably something that's invaluable to folks who do this collection. Do you guys feel debts are morally bound? I'm not sure how I feel about it, because on one hand you've given your word to pay, but on the other hand you didn't necessarily consent to this level of collection effort, and though I guess it makes sense that debt is transferrable, you didn't make your original agreement with the person actually collecting the debt, so it doesn't feel good to pay a stranger so they don't harm you (via your credit).

randallsquared 12y ago
Even if debt were non-transferable, the person with whom you signed the original contract, Alice, could separately contract with another person, Bob, to pay Bob when you pay Alice, and the credit reporting could be done through Alice in the bargain, which would have exactly the same effect as Alice being able to sell the debt to Bob directly, except with a little extra transaction cost which would factor into loan interest and availability.
toomuchtodo 12y ago
> Do you guys feel debts are morally bound? No.
georgemcbay 12y ago
Whatever idealistic moral obligation I would otherwise feel to virtually any for-profit corporation has been destroyed by the sum of common disregard for humanity that so many corporations display on a daily basis. IOW, you want fiduciary duty to be the overriding guiding principle when it comes to business? Fine, it is my personal fiduciary duty to not pay you a dime if I can legally get away with it consequence-free. Enjoy!
- msandford 12y ago
  Right? Would people react any differently if it was one company's accounts receivable trying to get money out of the other's accounts payable and the one owing the money was going bankrupt? When you take out a loan the contract specifies what happens so long as you keep paying, and also what happens if you stop paying either out of choice or inability. I can't see how it's a moral matter in the slightest. You literally can't be violating the contract if the contract has language which addresses the situation you're in. You might be in default, but that's not a moral issue, it's a contractual one.

dlaz99 12y ago

As someone that has been involved on the IT side of the collections industry for about 12 years now, I feel like I need to point out some common misconceptions about the industry that this article highlights. One is there is a difference between debt buyers and collection companies. Some agencies do buy the debt (usually as a different division or a different corporate entity), but when you talk about collection agencies, they are usually working on a contingency to collect the debt. There are also 2 different ways that agencies work for debt owners, which are 1st party and 3rd party. 1st party they are calling as a contractor for the debt owner using the debt owner’s name, they usually have direct access to the clients systems . 3rd party they are calling you to collect on a debt and using their agency name and working entirely off their own systems. 3rd party collection companies are extremely easy to sue. Most of them would do criminal background checks and would not hire someone with a record (other than maybe DUI/DWI). They also fall under the FDCPA, which as a poster above mentioned, makes they incredibly easy to sue. The FDCPA is so out of date and open to interpretation that even if you do everything right, you still get sued. It is very similar to patent trolling in the software industry. The cost of litigation is so much more than the cost of a settlement that pretty much every agency is just going to settle. Now what the article does talk about with how the paper that is being sold to debt buyers is unfortunately true and the data from some of these is awful (I have seen some, but the companies I have worked for usually don’t work this kind of stuff). And the article is also correct that most of they will not have itemized statements that prove that you owe the debt. Most of the debt that is being talked about in the article would be out of the statute of limitations to sue (this varies state to state usually 2-6 years), and would also be considered to not be eligible to be reported to the credit bureaus (being over 7 years old). At that point there is legally nothing a collection company can do to you, except keep trying to contact you, and once you request them to cease contact they legally have to (if you do this verbal it is also best to follow up in writing by certified mail, it will make you lawsuit stronger). I will say that there are good people and good companies working in this space, but you never hear about them. The collections side of the industry does provide a valuable function and really does not need more regulation. They already have different laws in almost every state, the FDCPA (which does need to be updated for technology, its ancient at this point) which is enforced by the FTC, and now the industry is also dealing with the CFPB. What I do agree with is that there needs to be more regulation to debt buying. There need to be better controls in place to protect private data. Excel files (that often are mangled because some idiot didn’t import them right from a csv export) are passed around way too much. While the good agencies and debt buyers do take data security seriously, most of the smaller ones don’t. I can say that as someone that has worked in this industry, that I would not want my person data treated the way some of the companies I have worked with do (Not the collection agency itself, because I have usually been in charge of that side of the system, and I have always done my best to protect that data like it was my own).

billclerico 12y ago

We use a startup called TrueAccord at WePay - they're trying to disrupt this industry using data: https://www.trueaccord.com/ https://www.trueaccord.com/

osamet67 12y ago
Thanks for the mention, Bill! We're working hard to make a difference.

lyphorm1 12y ago

Is there a template for a letter or a tutorial to challenge the debt?