In Defense of Debt Collection
The Federal Trade Commission is all ears when it comes to complaints about debt-collection agencies. They receive complaints all the time and then use muscle against people who are merely trying to recover stolen property. In fact, the institution of the credit rating rewards people for keeping their commitments and punishes those who do not. It is a way in which the free market helps form good character and improve the culture – all without government design. FULL ARTICLE
Comments (16)
While I agree with many of Mr. Rockwell's astute observations, I think perhaps he should go undercover and work for a few collection agencies some time. The scare tactics they will use in order to collect a debt is amazing. I have heard collectors threaten elderly people with jail time over debts that their children have not paid. They will threaten all sorts of illegal acts in order make debtors or their families pay up.
You may call it "retributive force" in defense of property, but just as it would be illegal for me to threaten harm to the parents of a child who had burglarized my home, there is no valid reason to threaten the family of a debtor. Fraud, libel and slander are not appropriate forms of "retributive force."
The government has a legitimate interest in protecting individuals from force or fraud. When those in collections step over that line, they should be held accountable.
Ironically, it is just the sort of people who make tough collection agents that also make good bureaucrats. They know how to read people and what buttons to push.
Published: July 5, 2006 3:21 PM
Cory:
Sometimes it works the other way as well. I have a friend, who, while primarily in the bail bond trade, also does collections on the side. He still has the scars from an assault made on him while repossessing a car. He has had dogs unleashed on him, things thrown, etc. It is a brutal line of work, so it doesn't exactly attract mild mannered people. It attracts people who have the ability to deal forcibly, unfortunately, some of these people take it over the line.
People have recourse to the civil courts if collectors act improperly.
Published: July 5, 2006 4:25 PM
While there are many fraudulent and abusive practices in the debt collection market, empowering the FTC as a monopoly regulator is a poor solution. Just today, the FTC announced an involuntary settlement with a debt collector accused of multiple fraudulent practices. The problem, however, is that the FTC's complaint presents no specific allegations, only general conclusions that fraud was committed. Because virtually all FTC cases are settled without trial, the agency can effectively squelch non-fraudulent business practices by making vague accusations that require no proof.
Published: July 5, 2006 5:42 PM
I am a victim of FDCPA. As a young associate I was given a routine assignment to defend a challenge to an out-of-state judgment being domesticated for collection purposes. I was successful at the hearing and judgment was entered. Then all heck broke loose as the debtors filed Federal FDCPA claims against me, my firm, my client and every lawyer who had ever worked on the matter. I immediately set about drafting a "killer" motion to kill the lawsuits (that's plural, the debtors filed one suit EACH against ALL of us). While drafting the motion I heard the bank catipulated immediately, PAID $10,000 and FORGAVE about $50,000 in 100% legitimate debt. Unbelievable. I feel pity for lenders in today's market.
Published: July 5, 2006 6:00 PM
If it weren't for the forceful tactics that collectors employed in the past, as well as those they employ today, it is no wonder the FTC is all ears about consu,er complaint. While creditors have every right to collect what is owed by a debtor, it is unecessary for collection agents to resort to unscrupulous methods that make it harder for everyone involved, be it a creditor or a debtor. In regards to the previous comment about the bank capitulating, I think it is necessary to understand that it is cost effective for a financial institution to write off losses incurred and stave off any future ones. Besides, uncle sam gets to reimburse that bank - worry not.
Published: July 5, 2006 6:56 PM
Yogi,
How does this : "Besides, uncle sam gets to reimburse that bank - worry not."-- work ?
Published: July 5, 2006 8:59 PM
"The government has a legitimate interest in protecting individuals from force or fraud"
Sure, put our faith in the most powerful crook to protect us from the lesser crooks.
What I would love to hear from the statists is why should the government be judged on a lower standard than the people in the private sector?
Government agents who commit the same crimes as private criminals have all sorts of immunities carved into law by design that are both procedural and substantive to insulate them from retribution. The higher the official, the more he can get away with such as murder and theft.
Federal crooks get away with far more harm than the state variety.
How is the IRS any different than a goon using violence to collect a debt? How is the President, when he takes an innocent life (pick among the many examples)any different from a private killer?
With the exception of the fancy rhetoric, their actions are the same: death, destruction and plunder. "We are all equal under the law" is another grand lie to go along with "checks and balances", and other fairy tales that blind us from the truth that the government is just another, admittedly sophisticated, criminal gang.
Published: July 6, 2006 11:36 AM
Reneging on a contract is not stealing, it's fraud, and only if the contract was entered into with the INTENT not to pay. This would be illegal an punishable.
But if the debtor intended to pay, but unforseen circumstances intervened, then it's not a crime.
(Now it may be the case that some debtors were stupid to get into the debt knowing their financial condition, but then the lender was also stupid enough to extend credit.)
Published: July 6, 2006 10:42 PM
I strongly disagree with some of his underlying assumptions from a libertarian perspective. I do not disagree with the principle of his argument, but in today's world, with such gigantic government, the credit rating is not a measurement of who is responsible and honest. In fact, I would suggest it is the opposite.
Let me explain. My step dad isn't all that disabled, but gets a 100% disability rating from the VA and collects a Social Security disability check on top of that. He hasn't worked in many years, but has plenty of money in the bank and a great credit rating. There are many government employees who likewise make a decent living, and I am sure have no credit problems. My mother never spent a single day in the military, but since she married a 100% disabled veteran after she divorced my dad, she gets healthcare paid for by the taxpayers and she had her nursing school paid for by the VA as well. She became an RN, getting a good salary, all courtesy of the taxpayer. She has no credit problems.
Don't forget that to the extent that the government turns the unproductive into consumers, it is punishing the productive, diminishing economic opportunity for many, who DO END UP WITH CREDIT PROBLEMS. The government is so huge, is it not reasonable for a libertarian to believe that many people are poor PRECISELY because of the government? In fact, I think libertarians could do a lot more to appeal to the common person if they remember this. And aren't many people wealthy PRECISELY because of government?
The government interferes with the market, destroying opportunity, in so many ways it would be impossible to enumerate them. It is funny how my mom has state credentials as a "healthcare" worker, but when she got cancer, her oncologist made her worse, while I WAS ABLE TO TREAT HER CANCER with naturopathic medicine. I can treat certain types of cancer safely and effectively with no surgery, no radiation, and no chemotherapy. Yet, I am not licensed by any government agency, and it would be a crime for me to make a practice of healing people. So, here is a BARRIER, created by the GOVERNMENT, to me being an economic participant.
Also, consider the people who have been convicted in the GOVERNMENT'S courts of some so-called "crime" against the state - i.e., a non-crime - and have been placed at a disadvantage because of that.
On top of that, as a libertarian, it goes against my morals to take government subsidies to go through government accredited schooling to get a government license to do something that likewise is probably highly controlled and protected by the government. Go to the web site of pretty much any college, and the ENCOURAGE prospective students to get taxpayer subsidies. That makes it very hard for the honest to succeed, placing us at a disadvantage because we choose NOT to steal. I have ended up with bills that I haven't been able to pay as a result of my position on the economic scale.
I have to strongly disagree with Lew Rockwell's latest commentary, as the honest are penalized. The credit rating isn't a measurement of who is honest or dependable, it is simply a credit rating. Many dishonest people have good credit, while many honest people have bad credit.
Published: July 12, 2006 3:39 AM
Probably the best defense of the debt collector and debt collection industry that I have ever read. Very thoughtful and articulate defense of a much needed industry.
Published: July 30, 2006 11:31 PM
I protest the use of the phrase "stolen property" when it comes to situations such as I was thrown into. I lost a good paying job because of 9/11 and not long after went into the depths of debt collection hell, unable to do anything about it. I still am unable to. So before some "nerd" goes shooting off his mouth in protest of the FTC picking on debt collectors, he should first live on "the other side" so that he may experience firsthand what things these a$$h#l#s do to people who didn't try and get out of paying on purpose. Quite frankly, debt collectors should be forced out of business and let the banks handle their own problems. At least that way "Zombie" debt collectors wouldn't exist. Otherwise, I don't think the FTC does enough yet.
Published: September 8, 2006 1:36 PM
I mark yet another in the long line in responsible, ethical citizens falsely accused by the largest collectors- Arrow Financial- for a debt which I never incurred.
Published: September 25, 2006 11:57 PM
I too am a victim of being falsely accused. I was never properly served and found out when it was too late. Now my wages are being garnished by Erin Capital Management for a debt that is not mine and they won't back off. They even duped the county clerk and judge! Of course when you have scum like Gregory M. Maurer of Wallet Recovery in NYC working for them, then you can understand. Personally, Erin Capital pulls a lot of fast ones and gets away with it. The FTC just lets them.
Published: November 5, 2006 4:39 PM
being in the debt settlement industry I speak with people every single day who are dealing with unscrupolous debt collectors. They constantly break the law, I have heard them threaten jail time, sueing (which is illegal to threaten with unless they are truly following through with it according to the FDCPA) I have even heard as crazy of threats as taking the first born, and I am being dead serious. They also use the power of law firms as scare tactics, I mean what uneducated debtor wouldn't be scared when they recieve a letter from a law firm for debt collection.
Published: May 31, 2007 11:00 AM
Translation of Stu's post: "It's not FAIR!!! It's just not fair that when I borrow someone's money, they expect me to pay it back plus interest! Don't they know I *need* money? How can they be so cruel? How could I possibly have been aware of the theoretical possibility of losing my job? I AM ENTITLED TO A JOB, DAMMIT! Because one agency hired me, they HAD to keep paying me, FOREVER unless I felt like quitting. How DARE they stop giving me money! I DESERVE to live an extravagant livestyle and borrow as much as I feel like without having to pay anything back. Where do they get off trying to make me adhere to the terms of the loan?"
Published: May 31, 2007 1:02 PM
Quote from the article:
"Sometimes people agree to pay, receive goods and services, and then refuse to pay. This is called stealing."
I wish you were a collecter on my account. This accusation would cost you $1,000 + damages + attorney fees under the FDCPA.
Published: July 30, 2007 12:18 PM