CNN Highlights Debt Collection “Horror Stories”

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Cable news network CNN is running a piece today on its CNNMoney personal finance section chronicling recent regulatory actions against debt collection agencies.

Titled “Debt Collection Horror Stories,” the article is a roll-up of the most egregious stories about debt collectors, or people pretending to be debt collectors, over the past year or so.

The piece starts off with last week’s announcement that the FTC is shutting down a Texas collection agency. Using the allegation that the collection agency posed as a law firm to collect from consumers, CNN rehashes the saga of Unicredit, the collection agency that went so far as to set up a fake courtroom to trick people into paying.

Although the article contains a brief quote from ACA International noting that a few bad actors tarnish the entire debt collection industry, the piece presents some of the worst actions as “popular” in the ARM industry.

Among other stories, the article references the fake California collection agency that used call centers in India to call U.S. consumers and one that threatened to dig up a debtor’s dead dog.

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Posted in Collection Laws and Regulations, Debt Collection, Featured Post .

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  • avatar Bill Lindala says:

    This article is great, because it is so ridiculous. Granted, there are facts in the article, but as always, it is written as though this is the entire industry.

    Not that I am saying this is anything political, but the Republicans are against the CFPB and the latest appointment of Cordray and CNN leans to the Democrat side (I believe?), so maybe they are providing proof as to why the CFPB is so important and needed?

    Either way, the article is almost laughable.

  • avatar John Nemo says:

    I would argue that until/unless we give reporters a different narrative to use, this one will remain the typical story you see in many outlets.

    In my mind, the best way to approach this is to leverage the fact that your agency isn’t like this and show you are the polar opposite of what the media thinks is “typical” or “popular” behavior.

    I believe that if you’re willing to put yourself out there a bit and not be afraid to do media interviews, reporters will consider covering your agency if your pitch is, “Hey, here’s something you don’t think of when you think ‘Debt Collection Agency,’” and then tell your story about how you win customer service awards, get thank you notes from debtors, employ soccer moms, win BBB Integrity Awards, etc.

    And you don’t have to take on CNN – instead you can leverage today’s story in your own local market by writing an Op/Ed or Letter to the Editor, or pitching a local TV station to come out and meet your collectors, share advice with consumers on how to handle debts, how they can best leverage tax refunds to pay bills, etc.

    Reporters love a story that is different than the typical narrative – so give them something different than the typical “all debt collectors are bad, can you believe this outrageous behavior” type stories! Most important, do it in your own backyard, and have a news hook or peg that you can tie the story to. The more you can do a reporter’s job for him or her, the more likely you’ll get coverage. If you can show them how a story on your agency is not only interesting/different, but that their audience would benefit from the story for reasons XYZ, you’ll get great coverage!

    When it comes to running a successful agency and generating sales leads and winning new clients, the biggest thing you need to do is humanize your agency and stand out from the competition.

    Getting PR is a fast/easy way to do that, and then in turn you can take that positive publicity and leverage it with your marketing materials. You can include those newspaper clips or videos in your sales pitches. Any time a positive story comes out that you’re featured in, it gives you an excuse to email or call clients and prospects and chat them up about it. For clients, you can reassure them they made a smart move in partnering with an agency like yours that does things the right way. For prospects, you can pitch the idea that since you do things the right way (and this news clip proves it!), they won’t have to worry about unwanted, negative attention or publicity as a result.

    The key, though, is getting out there and DOING it. Otherwise nothing changes!

  • avatar mike-kaufmann says:

    Let’s be honest the news media either talks about: Sex, Crime, or other sensational things to sell airtime. This type of article will never dissapeer because as people we are all rubber neckers trying to get the best view of the car crash.

    We as responsible and ethical debt collectors have to ensure that our agencies do our jobs with dignity and professionalism and through our actions represent the true nature of our industry.

  • avatar Bill Lindala says:

    John: I went on a personal mission about 10 years ago and emailed every author of every negative article that I read for about 6 months and offered “our” side. Not one person contacted me back for any comment, information or even offered a sliver of interest.

    I was active with this site at the time, writing a monthly article and offered to print whatever back and forth that we had honestly and completely and even offered to solicit other agency members to join in. Once again, no one called or emailed.

    What Mike said it true and basically the good, reputable collection story doesn’t sell for them, but this type of garbage does.

  • avatar todd bean says:

    Who cares about a debt collector getting a good mark with the BBB. It’s a lot more interesting and sells more when you can highlight some debtor that takes on the big bad collection industry and stands up for the little guy.

    I’m in a federal lawsuit with an agency right now, I can win by summary judgement, it’s a 100% guarantee even using only the evidence they provided in discovery, however, they want to keep fighting. When it’s over I’m going to contact the media, probably after I wrap it up with summary judgement, and hopefully they will do a story on how the agency would not just do the right thing and pay their FDCPA violation but wanted to try to run me out of the game. However, they got beat at their own game.

    Now which one of those sells the most, a debt collection agency getting a good mark with the BBB or a collection agency going deep into a federal lawsuit against a pro-se debtor and getting beat when the lawsuit should have never had to been filed in the first place.

    These type of stories just go with the territority. It’s the same reason a police officer getting a DWI makes the headlines when five thousand other DWI’s don’t. There is a preception, when somebody is in authority (and yes debt collectors do have that power or preceived power) that you’re held to a higher standard and when you screw up it makes the news, deal with it or change professions.

  • avatar Linda Almonte says:

    Yes there is good and bad in every industry from collections, banking, police as we are sadly watching unfold in LA, even doctors or priests. The one thing we all know is there is good and bad everywhere. Yes, often times cases in extreme are highlighted in the media and it is no longer that they are the one in a million you are seeing more and more because of the sheer volume. I know financial institutions where the training, processes and controls are the best in the business. This is what I can guarantee you because I have personally been a part of so many investigative stories. Major media outlets they don’t go out and find a few to highlight as the norm they do an unbelievable amount of research with hundreds or thousands of cases before they highlight a few. They sometimes spend months on one story and they wouldn’t get editorial or legal approval to run it unless their was an unbelievable amount of back up. First of all there is no such thing as 100% good or bad in any company or industry. Some of the reporters out there that write about the arm industry they have so much time into the research they can speak to and about the arm industry down to systems and acronyms better than a lot of collection managers. A letter to an editor or op ed with the defenses above usually received in either disgust or laughter because they have the mountain of examples across multiple companies to the contrary. If you want to stand out as the leader and the responsible agency make sure you can say the following in addition to your training and some happy customers and employees. Every account we work on we have the entire account history for, I do not collect or call on any accounts that were purchased without a full account history, chain of title, and media and not one statement from six years ago, I won’t purchase accounts where they put “as is” in the contract and any defective accounts I immediately have the creditor buy it back, I have a strong vendor management team and process I fully know where all of my accounts are with third parties and the activities performed by the third parties, if you utilize litigation in your organization for recovery you know that there is a complete attorney review on each account and you provided all of the correct documentation and history to meet the rules of discovery in each and every case, you know exactly which firm and have access to review and monitor the accounts that are with third parties, the number of times I have heard “well I sent it to legal” and the person has no idea what that means if the account is with a firm with a direct relationship or an attorney network with hundreds of attorney who in many instances they have their own network of vendors. I know in collections it is difficult to look at every dispute or customer complaint and know what is valid and what is an excuse. I wouldn’t recommend just having in your operating instructions to tell the customer to complain in writing we all got that supreme court decision I think in 2007 or 2008. Invest in the technology and proper quality control team and processes if you don’t have or can’t afford the proper foundation and tools you shouldn’t be in the game end of story. Track those complaints and disputes and I don’t mean glance at a screen and say ok I researched it unless you are the original creditor and there has never been any aquisitions portfolio or platform or anything else merged in that does not research. When you start getting multiple customers saying the same thing especially within the same portfolio check it out right then. I guarantee customers from totally different locations have not conspired together against you. When you identify several defective accounts in a portfolio act proactively get them out of the judicial system and out of any third party hands and send them back to the original creditor. I will give you just a couple of personal examples at one point I was working for a major bank in their Enterprise Operations, we had and Enterprise Customer Care Call center with thousands of FTE and more than 100 million calls a year. One day a person in a quality position noticed in the ad hoc database created to tract customer complaints within the last couple of hours there had been only a handful of customers that all said the same thing their payment had just been returned in the mail. She shot me an email instead of looking at it and thinking it is just a couple out of millions I picked up the phone called the VP over the lock box vendor he called the vendor who then in turn said they had just changed the PO Box number but they were supposed to be transferred that person in turn called the post office and yes they had been sending them all back immediately stopped the problem right then and there. This whole process took only hours the impact that handful could have turned into literally hundreds of thousands of accounts this example was a portfolio of HELOCS. Major problem adverted and solved in matter of hours because someone paid attention to what the customers said and properly and quickly researched it. If you are a major debt buyer or any debt buyer for that matter if you find defective accounts or start getting lawsuits on a particular portfolio immediately look at that entire portfolio of accounts from that purchase and contact the original creditor and have them buy back the defective accounts. Do not just eat the cost of the law suits and call it (cost of doing business) the term I have heard from multiple executive level people and even a few COO’s of very large organizations. Because a lot of the employees at that creditor will not know or research anything and will assume everything is fine if you don’t tell them and vice versa. I have asked some debt buyers why they don’t utilize that buy back clause in the sales agreement or forward flow agreement the most common answer I get because then I won’t get the market share from that bank or creditor anymore. That thinking creates a domino effect throughout the industry one defective portfolio turns into thousands. And the majority of the people working in every part of these processes go to work every day thinking, believing and with the full intention of doing the right thing and being in compliance. As an industry we have become so digitized and reliant on only what a computer screen says The reason my reply here is so long is the last sentence above which I have heard from employees at all levels in multiple organizations they were told to “deal with it or change professions” I say find your gaps in your processes and systems, work proactively not reactivly or change professions. Especially if you are an officer or higher in a company. Review the law as to what you are accountable for because you can and may be held to a higher standard and when you make the news you better be able to speak to each and every decision you made to the media and regulators. The blame game against each other or “I didn’t know” isn’t really sticking anymore. If you are in a management or leadership role always take the time to listen to your front line employees and not just listen to a few calls. They are the one’s talking to thousands of customers and know all of those systems and screens better than any executive so their feedback should be a main focus of any organization. As an industry changing things going forward isn’t going to be good enough or what one person told me recently about a major lawsuit won “we will wait and see if it makes it through the supreme court before we change anything” that is just letting issues grow there is a big clean up to do within every part of this industry even with the “good guys” or people doing everything right to their knowledge. As long as I can, or any member of the media or regulatory agency or even a consumer attorney walk into any courthouse randomly grab default judgments and find every defect in them across multiple major banks, collection agencies, debt buyers and attorney networks the credibility of all will be further questioned and assumptions will continue to grow that it is industry wide. I spoke to an consumer attorney yesterday for a couple of hours and much to my surprise he was telling me about the stockpile of sales agreements, forward flow agreements, pooling and servicing and master trusts along with the collection processes at multiple banks and major collection agencies better than most bank executives can speak to. How many people on this board can speak to the securitization of credit cards? For a lot of years there was a huge gap in understanding and education between the arm industry and the judicial system. That gap is narrowing media, lawyers, consumers and judges are starting to understand every step and gap. The case law is building to the point it takes minutes to find with no effort. Too many calls or a collector being mean on the phone probably the least of the problems. I would be more worried about the person with a default judgment worse if there are post judgment activities and they walk into a lawyer with it and armed with their credit bureaus and the company that sued them is a shell company for one of the big guys and has not one employee and the account is being reported on multiple line items on their credit bureau screwing up all parts of their lives. Or the person that one account was sold to four places all reporting it. What is the response from that consumer attorney now? Jackpot! The examples above just in the past few months I have seen hundreds in multiple states with several major original creditors and the attorney’s in the different states are definitely sharing this information so are the consumers they can get this stuff now and a basic google search find hundreds more. Things don’t have to like this in this industry there are a lot of good smart people here. A great deal of the issues were not intentional I have worked on countless six sigma projects were the issues and defects were identified, measured, solutions developed and people fought for the resources to fix things quarter after quarter they got put off for some glamorous front end customer facing project like online or mobile banking. I remember an executive meeting I was in all the way to 2004 where I said don’t originate on the front end what you can’t handle on the back end. Some of the people in that meeting were the same that afterwards made the genius decision to buy Providian and dump it in something like 20 million accounts (which by the way I still see daily in all kinds of odd places and companies) we all know how well that decision played out. Another example in a meeting at a major debt buyer/collection agency/attorney network I said (why are we allocating so much market share to that firm they have the worst accuracy and compliance rates?) Answer “yes but the have the best liquidation rates”. I could give a hundred more examples and most come down to a poor decision made but when that poor decision equates to billions of dollars and tens of or hundreds of thousands of people you have a problem. The main thing lost in this industry seems to be the human factor we are so data and numbers driven too many people have lost sight that these are not just accounts they are people with families and when a mistake is made it impacts them from interest rates, to refinancing or purchasing a home or car, insurance rates, and as I am seeing more and more their ability to get a job and having offers pulled back. What is really dangerous is when it happens to people that have been worked in banking or the arm industry and I am seeing this all over the country now I have heard some of the depositions now they are interesting the consumer literally has a thousand times more knowledge than the collections attorney that is there with 20 data points and affidavit from who knows where and some old statement a couple of them I have heard the person not only immediately won the case they humiliated that attorney and really educated that judge at the same time. Some of those people can look at one account of their own or a friend or family member grab a consumer attorney and I am seeing more just sue them all and they map out the chain of title and every screw up by marrying up collections letters and judgments to a credit bureau and no collections attorney can go up against that they don’t have the knowledge or information. Another interesting one is they make it to discovery and get a full account history and without going into complexities just say one plus one does not equal two in what they are presenting. And with the blogs and debtor boards out there a lot of suing pro-se without and attorney and still not only winning but setting a standard and judges are learning a lot and the more counter suits they see and have to listen to this in detail review more documentation the more they start questioning every account. I know lawyers now that specifically target and work to get these cases into trial the one thing about a jury I can guarantee you there is no way to have a jury where each and every person has not had a credit card, a loan, a medical bill, mortgage or something or received a collections call at some point. What do you think goes though their minds when their are hearing one of these horror story cases? Easy that could just as easily happen to me or anyone I know. So if you tell an employee to “deal with it or change professions” better hope they don’t make that next profession an expert witness because you just made that employee a lawyers best friend times a thousand. And fantasies of calling the media or writing a letter for good pr the reputable one they will examine the good, bad and ugly and I have seen they do look and talk to all sides I have never seen any reputable reporter with one of the major guys run something at face value or on one or even a couple of peoples word they put a lot of effort into it. Now of course this I have seen different with smaller less reputable sources of news or bloggers who will write and exaggerate anything. If anyone has had a lot of dealings with the media in this industry it would be me the past couple of years and the majority originated with one of them trying to prove me wrong not right and looking for defects in my work. I turned out to be amazingly accurate the reason that if you google my name there are more articles than I could ever even read. @Todd Bean shoot me a message on LinkedIn I would be interested in seeing your Federal Case.

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