National Papers Take on Debt Collectors Over the Weekend

Two of the largest and most well-respected newspapers in the U.S. ran articles focused on the ARM industry this weekend, both very negative in tone.

A columnist for The Wall Street Journal wrote a piece titled “Rein In the Debt-Collection Racket” in which he details various abuses by collectors and debt buyers, without really calling for definitive action. The article itself is not terribly shocking; anyone in the ARM industry has seen plenty like it. But the fact that it was published in a business outlet like the Journal raises an eyebrow, especially when the headline calls an entire market a “racket.”

The other piece is a different story altogether. The Washington Post ran a feature-length article aimed squarely at one company: Midland Funding (the consumer-facing unit of debt buyer Encore Capital Group).

The story, titled “Taking on the country’s biggest debt buyer, Midland Funding,” is an account of the company’s practices in the legal collection channel, mostly focused on a data analysis of cases filed by Midland in Northern Virginia over the past 10 years.

The article’s author did reach out to the company and others in the industry for input. And unlike the Journal piece, the story did focus on possible solutions to issues like documentation information flow under new forthcoming rules from the CFPB.

Interestingly, the Post article noted that out of nearly 17,000 cases filed by Midland in Northern Va. since 2003, only two consumer defendants won when their case went all the way to a judicial decision. Midland won 1,664 such cases.

Rather than argue solely that the legal system is stacked against consumers — which in many cases is actually true — why not also allow that when presented with actual evidence in these types of cases, judges overwhelmingly side with the collector plaintiffs?

The two weekend articles present nothing new for the ARM industry, as we’ve been down this road countless times. But the high level of exposure in these two specific publications should serve as a warning for the ARM industry as it gets ready to comply with new rules.