Merchants of Debt
By FRED O. WILLIAMS
News Business Reporter
7/23/2006
Buffalo debt collectors are spreading havoc. Buffalo collection firms are part of an industry that too often uses threats and lies to collect millions in unpaid bills.
They coerced Sally Beckmann to pay $5,300 in credit card bills - and it wasn't her card.
They rained calls on Nadine Frankenfield as she tried to recover from lung surgery, then denied it.
And they told Barbara Roan to pay her ex-husband's $7,300 debt or go to jail. "I was afraid to open my door because there might be a cop there to arrest me," the Illinois grandmother said.
People don't get sent to debtors prison anymore. In fact, it's against the law for collectors to shake people down with false threats and harassment. But that's what some collectors - even law firms - are doing. And Buffalo, a hub for the collection industry, is prominent in debtors' complaints.
"There must be something in the water in Buffalo that makes people mean," said Dale Pittman, a Petersburg, Va., lawyer who has sued area agencies. In a six-month investigation into the debt collection industry, The Buffalo News found:
Agencies usually keep 10 cents to 50 cents of each dollar they collect, and their workers earn more the more they bring in. Collectors say that deadbeats file groundless complaints to wiggle out of paying and that real abuses are a tiny fraction of the calls they make.
The consumer outcry "is largely due to the fact that there's a tremendous amount of bad debt that's being referred to collectors," said Rozanne M. Andersen, general counsel of ACA International in Minneapolis, formerly the American Collection Association.
Consumer debts are up 16 percent since 2001, and last year's bankruptcy law changes will make it harder to erase them. Collection agencies have added almost 10,000 jobs in the past four years. But an increase in dunning calls isn't the whole story, consumer advocates say.
"When you compare the amount [collectors] pay for lawsuits compared to what they collect, it's a cost of doing business," Amherst consumer lawyer Kenneth Hiller said.
To continue reading this article, please click here.
News Business Reporter
7/23/2006
Buffalo debt collectors are spreading havoc. Buffalo collection firms are part of an industry that too often uses threats and lies to collect millions in unpaid bills.
They coerced Sally Beckmann to pay $5,300 in credit card bills - and it wasn't her card.
They rained calls on Nadine Frankenfield as she tried to recover from lung surgery, then denied it.
And they told Barbara Roan to pay her ex-husband's $7,300 debt or go to jail. "I was afraid to open my door because there might be a cop there to arrest me," the Illinois grandmother said.
People don't get sent to debtors prison anymore. In fact, it's against the law for collectors to shake people down with false threats and harassment. But that's what some collectors - even law firms - are doing. And Buffalo, a hub for the collection industry, is prominent in debtors' complaints.
"There must be something in the water in Buffalo that makes people mean," said Dale Pittman, a Petersburg, Va., lawyer who has sued area agencies. In a six-month investigation into the debt collection industry, The Buffalo News found:
- Complaints filed with federal regulators have quadrupled in four years - led by people who say they don't owe money. State regulators also see surges in complaints.
- Banks sell their old debts on a wide-open market and then turn their backs on illegal and unethical collection tactics.
- The $1,000 civil penalty faced by unscrupulous collectors has been the same for 30 years, making aggressive tactics profitable.
Agencies usually keep 10 cents to 50 cents of each dollar they collect, and their workers earn more the more they bring in. Collectors say that deadbeats file groundless complaints to wiggle out of paying and that real abuses are a tiny fraction of the calls they make.
The consumer outcry "is largely due to the fact that there's a tremendous amount of bad debt that's being referred to collectors," said Rozanne M. Andersen, general counsel of ACA International in Minneapolis, formerly the American Collection Association.
Consumer debts are up 16 percent since 2001, and last year's bankruptcy law changes will make it harder to erase them. Collection agencies have added almost 10,000 jobs in the past four years. But an increase in dunning calls isn't the whole story, consumer advocates say.
"When you compare the amount [collectors] pay for lawsuits compared to what they collect, it's a cost of doing business," Amherst consumer lawyer Kenneth Hiller said.
To continue reading this article, please click here.
