Debt Collector Harassment: Coming To A Library Near You (VIDEO)
Since last November, the Tompkins County Public Library in Ithaca, N.Y. has received a "cease and desist" order from an attorney general or a lawyer in some faraway state every few days. All the letters said basically same thing: Stop your harassment.
"It just became overwhelming," library director Janet Steiner told the Huffington Post. "I have no idea why they chose us."
Apparently a debt collector had been giving the library's address to people from whom it was aggressively trying to recover debt, and those people were handing the address over to their lawyers and local prosecutors.
Call legal threats to your local library a peculiar byproduct of the nationwide economic crisis and a burgeoning debt collection industry. In 2005, debt collectors recovered $51.4 billion nationwide. Two years later, that figure reached $57.9 billion, according to a study by PricewaterhouseCoopers for ACA International, a trade group for the debt industry.
"The story in the industry is that there's more and more debt available. The problem is, it's harder and harder to collect," said ACA spokesman John Nemo in an interview with the Huffington Post.
As collectors work harder and harder to recover debt from strapped consumers, some get creative, like Sunrise Credit Services, a company that trains employees how best to persuade people -- within the limits of the law -- to pay their debts to their clients.
But not all collectors are members of a reputable trade group: Some are just bullies. Debt collectors that break the law make a brisk business for lawyers who sue them.
"We're busier than we've ever been," said Brian Parker, a Michigan attorney with a practice suing debt collectors. Parker told the Huffington Post that since he started his practice in 2005, he's added about 50 more cases every year. This year, he said, "is going to be a banner year."
The fastest growing part of the debt industry is in debt purchasing -- buying portfolios of bad debt outright, typically for five cents on the dollar or less, and trying to collect it for keeps, as opposed to recovering it for a creditor. Collectors recovered $6 billion in purchased debt in 2007, up from $2.3 billion in 2005. Ninety percent of the debt that collectors buy is in the form of charge-offs -- debt that credit card issuers don't think their customers will ever pay back. Charge-off rates hit a 20-year peak in April.
Richard Rubin is an attorney in New Mexico who is an expert on the Fair Debt Collection Practices Act.
"This whole idea of these credit card companies selling large portfolios of charged-off debt for a few pennies on the dollar and then putting these papers into the stream of commerce with people's names and social security numbers on them and the amount allegedly owed, and that's where most of the problems come in," Rubin told the Huffington Post. "They sell these accounts to these bottom feeders, and they get confused about who it is they're trying to go after. It's very easy to go after the wrong person."
ACA's Nemo said that the industry would benefit from regulation to prevent incomplete or incorrect info from changing hands. "We do want tighter standards and more regulation surrounding every debt transaction, meaning the creditor has to provide more information about the consumer," he said. (ACA membership includes both debt collectors and debt purchasers.)
Brian Parker said that debt purchasers are more likely to take shortcuts than normal collectors, even if they have accurate info.
"They seek and file on cases they know are bad with little or no info or proof the person they bug owes the debt," he wrote in an email. "Their model is to file on these knowing most debtors ignore the case, a default is entered and then the debt is resurrected as true because of the default. They lack the proof the person owes the debt or they may fudge it just to get the person on the hook. That happens a lot."
Jon Hann of Richmond, Va., has some experience with unscrupulous collectors. Hann got a call on his cell phone from an unfamiliar number last November. When a man introduced himself as "Officer Brian Smith of the ULPD," Hann was alarmed.
Officer Brian made some serious threats. Watch a video of Hann explaining what happened:
Officer Brian wasn't a cop. He was a debt collector with an outfit calling itself the "United Legal Processing Division," and he wanted Hann to repay a $500 online payday loan he'd taken out the previous February. For two months, the collector refused to give up, calling Hann at home and at work several times a day.
"It was a nightmare," Hann said.
The Fair Debt Collection Practices Act, among other things, prohibits collectors from making threats, harassment, misleading statements, and contacting third parties, like family members.
As far as Hann knew, he didn't owe any money. He said he contacted his lender, who confirmed that Hann had repaid the loan, along with its $90 fee, in two weeks. But the collector had every piece of personal information that Hann had given his lender.
A friend of Hann's wrote in a statement for Hann's lawyer that the collector had contacted him as well, saying that "he had tried to call [Hann] and got no answer and that he was going to be arrested that day and if I did not help because I was put as a contact that I would also be arrested and he would see me at the courts as well."
Hann did an internet search for "United Legal Processing Division" and found that it was under discussion at sites like ripoff.com. He got himself a lawyer.
Watch a video of Hann listening to threatening voicemails from his debt collectors:
The calls waned off after Hann began insisting that Officer Brian speak to his lawyer, Dale Pittman, who fired off a letter to the United Legal Processing Division at the New York address Officer Brian had given Hann.
"These folks realized Hann was not going to pay and just moved on to a more vulnerable person," said Pittman. "These are scofflaws that may not even be in America."
On Thursday, Hann called his former harassers to demand some closure. A man on the other end of the line made a half-hearted attempt to get some money out of Hann, then hurriedly hung up:
Pittman's letter to the ULPD arrived at the Tompkins County Public Library, where director Steiner and her staff either sent it back to the post office or threw it in the trash.
"I just can't imagine what these people are going through and thinking someone here at this address is going to sort this out," Steiner said.
HuffPost readers: Do you have a bizarre debt collector story? Do you work as a debt collector? Share your story with the Huffington Post. E-mail firstname.lastname@example.org.
Videos produced by Lagan Sebert of the American News Project.