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Debt Collectors, Consumer Advocates Look for Common Ground

By Linda Dobel
TMCnet Contributor

With the economy still tanking, debt collectors are certainly not complaining that they don’t have enough work. Indeed, just the opposite is true. What they are complaining about is laws that they feel hinder their ability to perform their work.

Despite their lack of popularity, an article in the Richmond Times-Dispatch says debt collectors really want to work out a repayment arrangement with people who have fallen into debt, even if it means they receive payments in nominal amounts. The article quoted Fran Fisher, past president of the Virginia Collectors Association and president of Revenue Recovery Consultants Inc., as saying, “We will take $5 or $10 a month. If they can’t pay that, they are truly indigent.”

Debt collectors are frustrated, however, by what they perceive to be outdated laws governing the practice of debt collection. Specifically, they point to the Fair Debt Collection Practices Act. When the federal government enacted this law in 1977, many of the technologies used today as common means of communication were not in existence. For example, there were no cell phones or answering machines or auto dialers, and no one ever heard of email. Nevertheless, the law has not been modified to reflect these changes in the world. For example, under the law, auto dialers can be used to contact people via landline, but not via cell phones (although cell phones can be manually dialed), and certain messages cannot be left on answering machines by debt collectors due to restrictions on third-party notification of debt collection actions.

Elizabeth Gerding, president of the Virginia Collectors Association and president of The Focused Group, a collection agency and medical billing firm, told the Richmond Times-Dispatch, “Like all businesses, we are trying to use technology to enable us to do a better job. Our clients want to be paid for goods and services they have provided. If we can operate more effectively and efficiently, we can reduce the cost of services.” She was also quoted in the article as saying, “We can all agree that the bills should be paid.”

Frustration with the Fair Debt Collection Practices Act has driven the debt collection industry to draft its own “blueprint” for what it believes are more fair practices that reflect the modern era.

On the other side of the fence, a spokesperson for credit counseling agency ClearPoint Credit Counseling Solutions, Bruce McClary, said in the Richmond Times-Dispatch article, “I can see where some in the industry would say it is time to freshen things up.”  He continued, however, saying in the article, “You can change the Fair Debt Collection Practices Act, but that doesn’t do anything to change the debt and some of the insurmountable challenges, given the economy.”

Irene Leech, president of the Virginia Citizens Consumer Council, a nonprofit consumer advocacy group echoed McClary’s thoughts that maybe there is a need to modify the debt collection law, but voiced concern that changing the law should not mean debt collectors should have free license to do whatever they want to collect unpaid debt. She said in the article, “There may be specific things that we might be able to agree to change, but the basic premise of when they can call [reportedly between 8 a.m. and 9 p.m.] and who they can tell [debt collectors are prohibited from making third-party disclosure] should remain the same. New methods of communications don’t change these basic protections.”

Since the consumer advocates appear to be at least willing to acknowledge that some changes to the Fair Debt Collection Practices Act might be in order, perhaps they will help advocate for a few of the proposals laid out in the debt collection industry’s blueprint. For example, providing clarification of what dept collectors would be allowed to say on answering machines and allowing dept collectors to use auto dialers to call cell phones just like they are allowed to use the technology to call landlines.

Fran Fisher from Revenue Recovery Consultants, Inc., summed it up by saying in the article, “Our contention is if consumers provide cell phone numbers, then we should be able to use that in whatever way is reasonable to conduct business.”

In other news, TMCnet reported, “President Obama may be butting heads with his own party soon, at least in his efforts to make it easier for private debt collection companies to call debtors' cell phones in some cases involving things like student loans, delinquent federal taxes and other billions owed the federal government.”