
'Bad Paper' Explores the Underworld of Debt Collection - thejteam
http://www.npr.org/2014/10/09/354846672/bad-paper-explores-the-underworld-of-debt-collection
======
tsaoutourpants
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
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
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-p...](http://www.nytimes.com/interactive/2014/08/15/magazine/bad-
paper-debt-collector.html?_r=0)

Fascinating stuff.

~~~
mercnet
Also recommend that article. I couldn't believe there was a market place for
trading collections between debt collectors.

------
jobu
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-...](http://www.npr.org/blogs/money/2014/10/08/354591198/episode-574-the-
buffalo-talk-off)

~~~
jordanpg
I think this is more or less the same story (by Jake Halpern) being double-
dipped by NPR.

~~~
amha
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.

------
diminoten
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).

~~~
look_at_me_
Morally bound? Ha. I once had debt collectors come after me while I was
unemployed and living off savings and unemployment checks -- counting down the
days until I would be homeless. The company in question attempting to collect
the debt made over a billion in profits that year alone, while I owed them not
even $200.

If anything, they were morally bound to forgive the debt in it's entirety.
They could easily absorb the loss without even blinking, while the money owed
meant the difference between being able to afford a few more weeks of food or
begging for it.

~~~
diminoten
I'm surprised by how few people on HN feel contracts have a moral obligation
aspect to them, but once you believe there is no morality in a legal contract,
then a whole lot of things become permissible, specifically related to
pirating and other kinds of legal trespasses.

Do you believe in individual responsibility, then? That is, if I, your friend,
promise to give you a ride to the store and then don't follow through, am I
morally culpable?

~~~
Ollinson
Individual responsibility cuts both ways. You are responsible for picking up
your friend. Your friend is responsible for assessing your reliability.

I would argue that most people who think they're talking about morality are
actually talking about risk.

------
billclerico
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
Thanks for the mention, Bill! We're working hard to make a difference.

------
dlaz99
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
_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
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.

------
lyphorm1
Is there a template for a letter or a tutorial to challenge the debt?

