It started when an employee of a debt collection agency based in New York State pretended to be an attorney and asked to speak to Bryant’s wife about a small gas card debt his son owed. Bryant offered to take a message, but the collector had no interest in having a polite conversation. Bryant recalled: “The guy says to me, ‘Why don’t you mind your own fucking business and put your wife on the phone?’ I said, ‘I don’t know who you think you’re talking to, buddy.’ It turns into a shouting match between me and him. He hangs up. I get the caller ID. I call the number back.”
Things only went downhill from there. Said Bryant: “They said things like, ‘We know your father has been molesting you. Why don’t you have him take his cock out of your ass and stick it in your mouth? You know you like it. Why don’t you have your wife come over here and give us blow jobs? You’re a loser. Why don’t you jump in front of a train and kill yourself?’ I recorded all of it and sent it to my attorney, Joseph Mauro.”
Hoping that Bryant might be African American, the debt collector called him the n-word; hoping he might be Jewish, the collector said, “Shalom, motherfucker.” Bryant, a white male who was raised Christian, is neither African American nor Jewish. But the debt collector who made those remarks was looking for anything that might intimidate Bryant, and all he succeeded in doing was inspiring Bryant to fight back. With Mauro representing him, Bryant took the collection agency to court; a settlement was reached.
“These guys are sick and twisted and will do anything to make a buck,” Bryant said. “And when they made the comment about my wife, that’s when I had to call the police.”
Mauro, a Long Island-based attorney who specializes in consumer rights and has represented many victims of abusive debt collectors, said, “Bart’s case is fairly extreme. Unfortunately, it’s not isolated.”
From racial epithets to impersonating police officers to trying to collect debts from the wrong people, some debt collectors have become increasingly abusive in recent years—and in the economic downturn of the late 2000s and early 2010s, those abuses are only becoming worse. In March, the Federal Trade Commission (FTC) announced that next to identity theft, complaints about debt collectors were the most common complaints it received in 2010; last year, the FTC said, it received over 144,000 complaints about debt collectors, which was a 17 percent increase from the 119,609 debt collector-related complaints it received in 2009. The FTC said more than 4,100 of the complaints it received about debt collectors in 2010 involved threats of physical violence.
“The level of abuse and harassment in the debt collection industry is reaching epic proportions,” said Ira J. Rheingold, executive director of the National Association of Consumer Advocates (NACA) in Washington, DC. “For example, calling people at work inappropriately, calling neighbors inappropriately, people on the phone being particularly abusive—we’re seeing more of that type of abuse than we ever have before.”
In the United States, debt collection is governed at the federal level by the Fair Debt Collection Practices Act of 1977 (FDCPA), which is very specific about what debt collectors are and aren’t allowed to do in pursuit of a debt. Profane, abusive, insulting or threatening language is strictly prohibited, as are deceitful communications such as debt collectors pretending to be attorneys or law enforcement agents. The FDCPA also governs the communications that debt collectors may have with third parties; the FDCPA permits debt collectors to contact third parties (neighbors or co-workers, for example) to obtain information about one’s whereabouts, although they aren’t allowed to discuss the specifics of a debt with third parties.
And the FDCPA states that if a consumer sends a debt collector a letter asking him/her to cease communications, the collector must do so immediately; debt collectors who continue to call a person after they have been asked not to are violating federal law. But blatant violations of the FDCPA, according to Rheingold, are common, and he said that abusive debt collectors have concluded that violating federal law is simply the cost of doing business.
“The Fair Debt Collection Practices Act has been around for a long time,” Rheingold said, “but I think the debt collection industry has sort of felt like there is so much money to be made that whatever pain they might suffer from violating the law becomes less important.”
Debt collection horror stories are not hard to find, and in many cases, those who have been verbally abused have actual recordings of the abuse. Tammy Henshaw of Bellville, Missouri told KMOV-TV (St. Louis’ CBS affiliate) that she was hounded by a Los Angeles-based debt collection agency after the death of her daughter Angie. When Henshaw’s daughter died, she was left with a considerable amount of medical debt; as a result, Henshaw was unable to pay the funeral-related expenses. The funeral home sold the debt to that collection agency, and abusive messages were left on her answering machine. In addition to calling her “white trash” and a “deadbeat piece of crap,” one of the agency’s collectors threatened to dig up her daughter’s dead body and hang it from a tree if she didn’t pay the debt immediately. KMOV-TV played a recording of the collector telling Henshaw, “Are you going to pay this bill or not, or am I going to have to kill you?”
In 2009, the office of Andrew Cuomo (who was attorney general for New York State at the time and is now governor of that state) filed a lawsuit against a group of Buffalo-based debt collection companies (which were operating under the umbrella name Benning-Smith Group) for violations of the FDCPA that included impersonating police officers and repeated use of abusive language. One of Benning-Smith’s debt collectors, Cuomo told reporters, threatened to rape a person’s daughter if a debt was not paid. Cuomo’s office (which had received more than 900 complaints about Benning-Smith) also told the media that Rochester resident Dorothy Gilbert, an African American, was abused by a debt collector over a $187 bill she had already paid. The Benning-Smith collector left racist messages on her answering machine saying “You are totally ghetto” and “You might want to try to get educated enough to at least be able to say 'payment plan' instead of 'payment pan,' you uneducated reject.”
In San Diego, an African-American woman named Romanda Lucas filed a lawsuit against a debt collector who left insulting messages on her answering machine that included repeated use of the n-word and the phrase “you piece of shit.” In 2009, Michelle Minton of Springville, NY told CNN that she was abused by a debt collector who falsely claimed to be an attorney and threatened to have child protective services take her child away. Minton told the media that although she didn’t actually owe the debt, the collector bullied her into giving him the number of her bank account—and she lost $900.
Representatives of ACA International, a trade association for the debt collection industry, have spoken out against abusive debt collectors and claim that collectors who resort to racial slurs, threats of violence and other violations of the FDCPA are not representative of the industry as a while. Rozanne M. Anderson, ACA’s former CEO and spokesperson, has claimed that no more than 10 percent of debt collectors resort to extreme or illegal tactics and that the 10 percent are giving the industry a bad name it doesn’t deserve. But Buffalo-based journalist Fred Williams (author of the book Fight Back Against Unfair Debt Collection Practices) has said that when he spent three months working undercover at a debt collection agency, his supervisors trained and encouraged employees to do illegal things. According to Rheingold, debt collectors who cross the line and blatantly violate the FDCPA are not anomalies—they have become the norm. “It’s not just a few rogue debt collectors,” Rheingold said. “I think the nature of the debt collection industry as a whole has grown more aggressive.”
Rheingold added that debt collection abuses have increased in the U.S. for a number of reasons. A record number of American consumers are buried in debt—and in the digital age, collection agencies are buying huge amounts of electronic data from banks, credit card companies and other businesses. Debts are typically sold for pennies on the dollar, which can make data collection extremely profitable but also extremely competitive. Further, Rheingold said, the fact that debt collectors often work on commission encourages them to turn up the heat.
“You have much more debt out there than ever existed before,” Rheingold said. “And so, if you’re a debt collector who is going after a consumer who has a lot of debt, how are you going to get them to pay the debt you have bought over the debt somebody else has bought? Being nice and kind isn’t the way that industry is trained to work. You’re not talking about really high-wage workers, and they are getting paid on commission based on how much they bring in. So aggressiveness works.”
Rheingold added: “I think this is an industry that’s broken. The level of abuses has reached all-time records.”
Attorney Mauro said there is both good and bad news for American consumers. The good news is that thanks to the Internet, American consumers are becoming more knowledgeable about their legal rights than they were in the past; the bad news is that abusive debt collectors are also Internet-savvy.
“I wouldn’t say that the Internet is leveling the playing field for consumers,” Mauro explained, “but it is making it more level. An uninformed consumer can become informed in a matter of moments by jumping on the Internet, which makes it easier to find the people who can help consumers. In the past, it would take a series of phone calls and a lot of cooperating people to get a consumer to the right place. And those phone calls would have taken a significant amount of time, during which the harassment would continue. At this point, consumers are able to access information about their rights and find somebody who can help them in a very short time period. To some degree, that is leveling things. Unfortunately, the Internet also helps debt collectors identify people and identify where people work and helps them identify people’s cell phone numbers and identify people’s neighbors. So the Internet has changed the playing field. I’m not sure who benefited the most, but there are certainly good points and bad points about the Internet as it relates to debt collectors.”
The economic downturn, Mauro noted, has been hard on both consumers and businesses—and the businesses that are struggling include some debt collection agencies. “Unquestionably, there has been an increase in debt collection harassment,” Mauro observed. “I think that some debt collectors themselves are strapped for money, like most people in the business world these days. And because of that, they have stepped up the pressure on consumers; unfortunately, that has led to unnecessary harassment."
Mauro said that ironically, some debt collectors have complained about being harassed by other debt collectors. “There’s less money to get out of consumers these days,” he said, “and if the collection agencies aren’t collecting, they are getting into financial trouble themselves. I have had numerous debt collectors through the years seek representation because they were being harassed by another debt collector.”
Asked to list some of the most common ways in which abusive debt collectors blatantly violate federal law, Mauro said, “It’s everything. False threats of lawsuits, false threats of freezing bank accounts, false threats of garnishing pay, outright harassment in terms of name-calling and profanities, debt collectors acting like they are lawyers, debt collectors saying or implying that they are law enforcement, persistent telephone calls multiple times in a day.”
Mauro cited some more things that abusive debt collectors are guilty of: “Threats of rape, threats of immediate arrest, threats of physical violence, racial comments, speaking to consumers’ children. Those are some of the more outrageous ones. I’ve seen a decent amount of cases where debt collectors threaten violence and where people would actually go to the homes.”
Mauro stressed that he is not opposed to debt collection per se and has no problem with collectors who obey the FDCPA. "Collections can be done civilly,” he said. “It doesn’t have to be harassing. The collection industry can exist and does exist based on completely legitimate collections. I think that if the illegal and harassing collections were eliminated, the industry would still exist....One of the purposes that is specifically explicated and laid out in the preamble of the Fair Debt Collection Practices Act is to ensure that debt collection companies that want to collect debt legally are not disadvantaged by competitors who are operating illegally. Collections can exist fruitfully, with all of the nonsense eliminated.”
Bart Bryant said that he once did collections for a Florida-based cable company, and he found that consumers would make an honest effort to get caught up with unpaid bills when they were treated with respect. “I found that I got a lot more money out of people when I asked for little bits over a long period of time and was respectful and explained to them what the implications would be to their credit and how they could repair their credit,” Bryant said. “And people who cared about their credit and getting ahead financially were usually grateful that I wasn’t being an ass. They would agree to send me 10 or 20 dollars a week, and before you knew it, the bill was settled—as opposed to, ‘You’re a no-good loser. Why don’t you jump in front of a train and kill yourself?’”
Sometimes, Bryant said, the consumers that unscrupulous debt collectors abuse aren’t even the ones who actually owe the debt.
According to Rheingold, cases of mistaken identity are not uncommon in the debt collection industry— which he said is full of sloppy, reckless behavior. All too often, he said, collection agencies that acquire large amounts of electronic data don’t bother to do their research and make sure they are going after the right people. Rheingold added that is it is also common for collectors to harass people for debts that have already been paid.
“If you have a John Rodriguez who owes a debt and lives in California, anybody in California named John Rodriguez may be fair game,” Rheingold said. “That’s how it often happens. Other times, the debt has already been paid. You get a lot of bad information in the system where you have millions of data points without the original contracts, without the right address—and when a debt collector is paying five cents or 10 cents on the dollar for this debt, all bets are off. A debt collector can go out there and file a complaint, and when no one shows up in court, they’re going to get a judgment against somebody whether they owe it or not or whether they can prove it or not.”
One well-documented example of an abusive debt collection agency failing to research the validity of a debt occurred when New Jersey-based New Century Financial Services went after Judith Guillet, a retired nurse who was living on disability in New York City. In 2006, the New York Times reported that Guillet’s ordeal began in 2003, when she received a $2,300 credit card bill from Chase Bank that contained charges she didn’t make (including charges at Amoco gas stations in the Bronx—although Guillet didn’t drive or have a driver’s license). Guillet immediately filed a police report, and Chase agreed the charges were not legitimate. But Chase sold the debt to New Century, which obtained a court order freezing Guillet’s checking account with Emigrant Savings Bank. A nonprofit legal clinic, MFY Legal Services, was able to get her Emigrant checking account unfrozen in 2006, and New Century eventually agreed to drop the case. New Century has refused to discuss Guillet’s case with the media.
Rheingold said that abusive debt collectors also cause a lot of misery by causing negative information—which may not even be accurate—to end up on consumers’ credit reports. “It may be old debt or debt that has passed the statute of limitations," he said. "Or they might put it on your credit report even though they don’t have much information. Someone goes to get a loan, and suddenly, they can’t get a loan because there is a debt sitting on their credit report.”
In 2010, some debt collection agencies were hit with seven-figure fines for their abusive actions. Last October, the Minnesota-based debt collection agency Allied Interstate, Inc. (a subsidiary of IntelliRisk Management Corporation) agreed to pay FTC a fine of $1.75 million to settle federal charges that it repeatedly broke the law by trying to collect debts that people did not owe. And in May 2010, a Dallas jury ordered the debt collection agency Advanced Call Center Technologies to pay plaintiff Allen Jones (who is African American) $1.5 million in punitive damages and an additional $50,000 for mental stress for leaving an abundance of racial slurs on his answering machine, including extensive use of the n-word; the company claimed that Jones owed $200 for a credit card debt, which Jones said he had already paid.
Rheingold said that while those seven-figure fines were a step in the right direction, a lot more needs to be done at both the federal and state levels to discourage debt collectors from breaking the law.
So what exactly will it take to rein in all the abusive debt collectors and force them to obey the FDCPA? “Real punishment," Rheingold said. "Making the fines much bigger, shutting down some of these places, having the FTC being more aggressive.”
Rheingold said because many unethical debt collectors think of fines as simply the cost of doing business, fines need to be increased to the point where violating the FDCPA in any way will be cost-prohibitive.
“You’ve got an industry that, as far as I’m concerned, is incredibly aggressive and is more often than not acting inappropriately,” Rheingold said. “We have not done a good enough job of policing the debt collection industry. I think the FTC is doing a better job now, and there are private attorneys who work with me who are doing the best that they can. But you’re putting your finger in a dike that has lots of holes in it.”