Collectors, Consumers Disconnect at FTC Workshop

There was a mood of disconnect at the Federal Trade Commission workshop on the debt collection industry as consumer advocates on one side and industry reps from collections agencies and law firms on the other discussed the state of the industry.

The consumer advocates were joined by defense attorneys in charging the collection industry with violating the FDCPA and filing masses of lawsuits against consumers.

More than 90 percent of the law suits in a court of Broward County in Florida were filed by attorneys seeking to collect consumer debts, according to Robert W. Murphy, an attorney that represents consumers in Florida.

“We see an explosion of collection lawyers filing lawsuits against consumers,” said Murphy. Many of the suits are filed with little documentation to prove the consumer owes the debt, he said.

Ira Leibsker, an attorney with Blatt, Hasenmiller, Leibsker, and Moore, LLC, and president of the National Association of Retail Collection Attorneys, said that the vast majority of suits follow the rules. “Yes, we are seeing more suits but not less compliance,” said Leibsker. Leibsker said law firms have increased their communications with consumers in the last 30 years as they seek to work out a claim.

The National Consumer Law Center has said that a suit should include the consumer's proof of indebtedness; the date the debt was incurred and the last payment; the identity of the original creditor; the amount of the debt principal along with an itemization of all fees and charges; and the chain of the title of the debt if it was sold.

Murphy also charged collectors with routinely violating the FDCPA by continually contacting consumers despite pleas for the calls to stop.

Leaders of collection agencies said that the vast majority of agents act within the FDCPA rule. The idea is to help the consumer pay their bill and leave the collection process. The best way to do that is to work with the consumer, not abuse them, said Mark E. Davitt, president and CEO of Conserve. “We don’t like the cowboys either,” said Davitt. “This is a consumer service environment. We have to contact the consumer, work with them and do it in a consumer friendly environment.”

“There are a small number of violations. But more than 99 percent are in compliance,” said Robert L. DiGennaro, CEO, Collins Financial Services. “Let’s look at that instead of the less than 1 percent of violations.”

Christopher G. Wunder, president and CEO of Receivables Outsourcing Inc. and president of ACA International, noted that a 2006 survey by the Better Business Bureau found that of 280,000 inquiries on collection agencies, about 14,000 were complaints. When these consumers were asked if they were satisfied with the resolution of their complaints, 85 percent said "yes." In comparison, 73 percent of those that complained about other industries were satisfied with the resolution of those complaints, said Wunder.

The FTC has said it convened the two-day “Collecting Consumer Debts: The Challenges of Change” workshop to get a better understanding of a business that generated nearly 70,000 consumer complaints last year. The agency is also seeking to review the 30-year-old FDCPA in light of the revolution in communications technology of recent years.