Report Distorts Student Loan Debt Collection: ACA International
ACA International, the Association of Credit and Collection Professionals, strongly disagrees with a recent report from the National Consumer Law Center (NCLC) on the student loan debt collection contract between the U.S. Department of Education and private collection agencies.
ACA said in a statement Wednesday that the report paints an inaccurate portrait of debt collection created to further NCLC’s agenda. In the report’s executive summary, NCLC notes that “a long‐term solution is that the Department should simply stop using collection agencies.”
“In recovering delinquent or defaulted student loan debt on behalf of the Department of Education, collectors are proud of their exceptional customer service and efforts to return tax dollars to American taxpayers,” said ACA CEO Pat Morris. “Our members have a fundamental belief that consumers, regardless of the type of debt being collected, deserve to be treated respectfully and lawfully.”
NCLC’s report focused mainly on complaints against ED debt collection contractors. Among its recommendations was to make the complaint system more accessible to consumers and base collection agency compensation on complaints received.
“We take consumer complaints very seriously and agree on the importance of protecting consumers against businesses that engage in deceptive, unfair or abusive practices,” said Morris. However, the report, which relies more on assumption and personal opinion than fact, fails to paint a clear picture about consumer complaints against the third-party debt collection industry.”
ACA noted that complaints against debt collection agencies are rising due to a number of factors. As more debt is entering the third-party debt collection system, collectors are making more contacts, leading to more complaints. This is especially exacerbated in the student loan market as education costs soar. New technology has also made it easier to make complaints, the result of which is complaints rising against all businesses, not just debt collection agencies.
“Collectors want to resolve consumer complaints,” said Morris. “Debt collectors want to work with consumers to resolve complaints but can’t under the current FTC model. ACA members plan to work closely with the Consumer Financial Protection Bureau to resolve issues presented through the bureau’s proposed complaint resolution system for debt collection complaints.”
According to the BBB, which has a complaint resolution model, debt collectors resolve 83 percent of the complaints received; significantly higher than other industries.
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Agreed. The source of the article, NCLC is using the standard argument that there are no good collection agency’s out there. On the contrary this group has shown, especially in the recent months, “Nice Guy” collectors recover more money. Companies that are concerned about respecting the consumer and following the letter of the law and companies that follow through on those concerns are the majority. We have to shout about those companies and address articles that focus on the “Bad Guy” collectors.
On the subject of basing collection agency compensation on complaints received I have to admit that I don’t believe it to be a terrible idea, IF it is done correctly. It should not be based strictly on the number of complaints received, but instead on the number of complaints in which an infraction can be proven. Why wouldn’t you want to strive for the best with a very solid goal line to shoot for?
My thoughts exactly. Just change it from “base collection agency compensation on complaints received.” to “base collection agency compensation on VALID complaints received.” And also give them a bonus if it is shown that there were invalid complaints are received.