As part of an ongoing investigation, Propublica published a lengthy article today by Paul Kiel titled For Nebraska’s Poor, Get Sick and Get Sued. The article was co-published with The Daily Beast. The article has already been picked up by other publications and websites.

Kiel covers consumer finance for ProPublica. Recently, his focus has been on debt collection and high-cost lending. His work in 2013 was honored as a finalist for both a Gerald Loeb Award and a Best in Business award from the Society of American Business Editors and Writers.

This is not Mr. Kiel’s first high profile foray into debt collection. In October of 2015, Kiel co-authored the article The Color of Debt: How Collection Suits Squeeze Black Neighborhoods. That article was also widely referenced and reprinted.

The article discusses the practice of use of litigation to collect delinquent healthcare accounts in the State of Nebraska. It is clear that Mr. Kiel spent a considerable amount of time researching the story before publication. The story is less than flattering to the debt collection industry.

The sidebar to the story states this story is part of an ongoing investigation labeled Unforgiven: The Long Life of Debt:  The way lenders and collectors pursue consumer debt has undergone an aggressive transformation in America. Prior stories in the series include the aforementioned Kiel story, From the ER to the Courtroom, Old Debt, Fresh Pain, Unseen Toll, Debt Collection Stories, and Suing Soldiers Worldwide.

The article focuses largely on suits related to healthcare accounts filed by one specific Nebraska collection agency, Credit Management Services (CMS). To provide comparison, the author reviewed debt collection litigation practices in similar sized locales and states where court filing fees were similar to the filing fees in Nebraska.

Nebraska has some of the lowest court filing fees in the country. The article notes, “The cost to file a lawsuit in Nebraska is $45. In New Mexico, where suits are filed at about one-third the rate as in Nebraska, the fee for smaller debts starts at $77.”

While the article is generally critical of all debt collection litigation, it also paints CMS as somewhat of an outlier.

“In 2013, CMS filed almost 30,000 lawsuits in Nebraska, more than the rest of the collection agencies in Nebraska combined. That would be a staggering number of suits in any state. In New Jersey, with a population nearly five times larger, only one company, the nation’s largest debt buyer, filed more than 30,000 lawsuits that year.”

insideARM Perspective

This article should be read by all in the ARM industry.

These types of articles continue to dominate the general public’s view of the debt collection industry. The stories are never properly balanced. But, a balanced article is not on the agenda.

Kiel did include excerpts from a statement from the Nebraska Collectors Association (NCA) in the article. The select excerpt said collection agencies file suits as “a last resort,” after attempts by the original provider and the agency to resolve the debt have failed. “Cooperatively working with the consumer is always the preferred approach to the collection process.”

However, insideARM was able to obtain the full statement from the NCA. It would have been a more balanced article if Kiel had included more from the NCA. A copy of the NCA statement can be found here. insideARM commends NCA for going beyond the typical, extremely brief, response to provide additional context.

At last week’s insideARM Larger Market Participant Summit the keynote address was delivered by Patrick Hillman, Senior Vice President from LEVICK, a prominent public relations and communications firm.  Mr. Hillman also stayed at the Summit to participate in a second session: “On the Record” – A Discussion with National Consumer Finance Reporters.” (As it happens, Hillman filled in for Paul Kiel, who was unable to attend because of an illness.) After the Summit concluded, Hillman commented: “The reputation challenges to the industry as a whole are incredibly complex.” That may be the understatement of the century.

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