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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

by 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 The FDCPA is so out of date and open to interpretation that even if you do everything right, you still get sued.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).

adebtlawyer 12y ago
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. Nah, it's the exact opposite. The FDCPA is clear and violations are obvious. That is why the collection agencies settle. Litigation would not only be costly, it would be costly and futile when the collector inevitably loses. The FDCPA, formally, 15 U.S.C s. 1692 et seq., is abundantly clear about what activities are forbidden. There is some legal jargon in it, but it is clearly written. If anyone cares to read it, it is less than 20 pages long. The FDCPA does not leave violations open to interpretation. It explicitly lists false representations and unfair practices that are unlawful, including such unambiguous things as 1) Claiming the debt collector is affiliated with the government, 2) Claiming the debtor has committed a crime, 3) Claiming that a debt that the statute of limitation ran out on can still be sued on, 4) Not putting certain notices in collections letters; said notices are provided using the exact words that are compliant (enabling cut-and-paste compliance), 5) Threatening to sue when you do not intend to sue, etc. Mostly, obvious things like this are the kind of violations that debt collectors actually commit. Note that they are often the most efficient collection methods, because they terrify people or leave them ignorant of their rights. Without the law, every collection agency / law firm would be forced to use these techniques in order to compete. That would mean many consumers would be terrified out of their wits, instead of having the mildly unpleasant experience of interacting over the phone with used-car-salesman types. I think most collection agencies and collection firms are aware of the law and actively avoid doing this stuff. The ones that violate the FDCPA are not doing so because the law is outdated and hard to understand. Their behavior is an intentional choice or willful ignorance. You want outdated and hard to understand? That would be the various patchwork of laws regulating telephone calls.
- osamet67 12y ago
  And that's why FDCPA litigation is decreasing and TCPA litigation is growing. Path of least resistance. Though, you have to admit, practices and law governing UDAAP isn't as clear as the FDCPA examples you bring here.

by dlaz99 12y ago

adebtlawyer 12y ago

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. Nah, it's the exact opposite. The FDCPA is clear and violations are obvious. That is why the collection agencies settle. Litigation would not only be costly, it would be costly and futile when the collector inevitably loses. The FDCPA, formally, 15 U.S.C s. 1692 et seq., is abundantly clear about what activities are forbidden. There is some legal jargon in it, but it is clearly written. If anyone cares to read it, it is less than 20 pages long. The FDCPA does not leave violations open to interpretation. It explicitly lists false representations and unfair practices that are unlawful, including such unambiguous things as 1) Claiming the debt collector is affiliated with the government, 2) Claiming the debtor has committed a crime, 3) Claiming that a debt that the statute of limitation ran out on can still be sued on, 4) Not putting certain notices in collections letters; said notices are provided using the exact words that are compliant (enabling cut-and-paste compliance), 5) Threatening to sue when you do not intend to sue, etc. Mostly, obvious things like this are the kind of violations that debt collectors actually commit. Note that they are often the most efficient collection methods, because they terrify people or leave them ignorant of their rights. Without the law, every collection agency / law firm would be forced to use these techniques in order to compete. That would mean many consumers would be terrified out of their wits, instead of having the mildly unpleasant experience of interacting over the phone with used-car-salesman types. I think most collection agencies and collection firms are aware of the law and actively avoid doing this stuff. The ones that violate the FDCPA are not doing so because the law is outdated and hard to understand. Their behavior is an intentional choice or willful ignorance. You want outdated and hard to understand? That would be the various patchwork of laws regulating telephone calls.

osamet67 12y ago
And that's why FDCPA litigation is decreasing and TCPA litigation is growing. Path of least resistance. Though, you have to admit, practices and law governing UDAAP isn't as clear as the FDCPA examples you bring here.