There has got to be a stop put to this…incivility.

It’s been a bit over a year when I first wrote this blog, and I am sorry to say that nothing has changed.

I halt just short of using the words that really and colorfully describe the approach and tactics used by too many people in what we call the collection industry.

If anything, it may have gotten worse.  I post I wrote for the collection industry’s insideARM.com website suggesting a more ethical approach to collections was largely ignored – what a surprise (see here:  http://bit.ly/pDc2ny).

Over the past year for my book-in-progress, Written Off – America and Americans, I have asked people to relate their experience of either being in debt, or being the person chasing after those who are in debt. Some of the stories are enough to cause anyone – on both side of the equation – to break into hives!

We need to revisit the fashion in which debt collection is practiced here in the U.S.   If my year-long findings are correct, it will be necessary to move far beyond just observing the “letter of the law” required by the Fair Debt Collection Practices Act (FDCPA).  It is about living the golden rule.

“Do unto others as you would have others do unto you.”

Not only is this the basis of ethical and humane interpersonal dealings, it can be seen as the foundation stone of the idea of everyone’s right – that we have a right to be treated with respect. Yes, that includes the “deadbeat” up next in the collector’s call queue…

Somewhere along the way, we have lost the memory of how to treat and respect each other. The evidence of that is found in any number of human-to-human interactions, but in all industries (with the exception of banking and oil) not nearly so flagrantly as in the realm of “bill collecting.”

I have some solutions to offer, but let me first provide instances of what can modestly be called “excesses” that I have uncovered in my research.

“Pay your debts or your children will be taken away…”

…was one of the lines used by a Florida-based agency when collecting on accounts owed in southern Illinois.” “We will call the state child protection agency and have your children placed in foster care.” If that didn’t motivate (or, if there were no children?) they would pose as attorneys and threaten to have the local sheriff arrest them.

A now-infamous CNN online article “Confessions of former debt collectors” created a slideshow featuring former collectors who left their industry – and why – which really showed the industry in its worst light.

Example comments from the ex-collectors:

“I was absolutely ruthless when I first started out as a debt collector. I had a black heart…”

“Collectors I knew regularly held contests to see who could make the most people cry in one day.”

“I heard so many coworkers call people ‘good for nothing losers’ and tell them to ‘get off your fat a** and go find a job.’

“I learned that you can have a certain inflection in your voice or use certain words to belittle or demean people, and this is encouraged.”

“…there’s no point in telling a deadbeat that they’re a deadbeat. They already know it.”

What was not given equal emphasis in the photo-article was the abuse that the collectors often took from debtors…nor the fact that the preponderance of the people leaving that industry got into jobs that were socially responsible and in many cases found careers in fields in which they could help or counsel debtors.

One, Michelle Dunn, has gone on to write 11 books in her field, started the American Credit and Collections Association, and is a published columnist for almost a dozen newspapers and national magazines.  Oh yes – and acknowledged as one of the Top Five Women in Collections according to Collection Advisor and her peers.

Still, the damage is done.  What’s the effect?  Blowback, of course!

Few people outside the industry give respect to the importance of this work in bringing back money that otherwise would be lost by America’s businesses. Or, how many of those working hard in a tough job still demonstrate compassion and sympathy for the debtor.  Essentially, they are stereotyped.

As described by DebtPrison.net, “bill collectors are not your friend, and though they may appear concerned, they are really only concerned about their paycheck. Collectors work off of commission, often receiving 10 to 25% of your payment to the collection agency. So if they get you to cough up $100… they just made $25 buckaroos. These collectors also have a monthly quota to achieve. If they fail to meet the monthly collection quota they can be let go.”

The counter-industry has websites, books and seminars galore to help the afflicted debtor.

One example, “The Debt Machine: How the Collection Industry Hounds Consumers and Overwhelms Courts” released by the National Consumer Law Center presents a strong argument for stronger and updated consumer protections.

“The recession has thrown millions of consumers into the jaws of a giant collection machine,” said Robert Hobbs, NCLC deputy director and report co-author. “Existing laws and regulatory efforts have lagged behind what is needed to effectively monitor powerful, wealthy and ubiquitous collections companies.”

“Millions of American families have been subjected to debt collection abuses in recent years,” Hobbs said. “Some have been struggling to pay accumulated debts. Some who don’t even owe the debts have been targeted by a sloppy and over-aggressive debt industry.”

“The Debt Machine,” their press release declares, “tells the stories of consumers who have been dragged into a morass of annoying phone calls, false claims and harassment. It also identifies the financial links between debt companies and some of the nation’s leading banks, documents the buying and selling of billions of dollars of debts and describes the critical role played by hundreds of specialized law firms.”
The report is posted on-line at “www.nclc.org/images/pdf/pr-reports/debt-machine.pdf.

So, what is to be done?

It should seem obvious that the industry is being berated for pursuing the “gold” rather than practicing the “golden rule.” “Get the money” is the motivator behind every phone call made to the debtor, whether individual or corporate.  But, is that single-minded orientation really effective?

The industry’s own statistics seem to show that the industry makes money in spite of itself – simply by playing the law of averages.  If they are handed 100 accounts to collect at say, $1,000 apiece, they will have $100,000 to work with; they will be fortunate to collect 14 of these accounts and recover $14,000.  The original creditor, who will pay out contingency fees ranging from 15-25%, will be fortunate to see 9% of his original portfolio.

The agency, after subtracting costs, will still end up with a fair return on invested dollars.  In other words, “business as usual” is good enough – no matter the high turnover of collectors or the social blowback – so why change?

Eventually, someone will stop and take stock of this way of doing things.

I predict that they will put pen to paper and determine that – if debtors were treated with more respect – that collections would actually go up and the cost of collection (i.e., replacing burned-out collectors) would go down.

Will the rule of gold someday enjoy a marriage with the Golden Rule?

Whaddya think?