YOYO: Debt Collection
Mon Jul 10, 2006 at 09:02:06 PM PDT
YOYO is, of course, Jared Bernstein's description of our current economic culture:
You're on your own. Bernstein's is a more succinct way of saying that, under republican rule, we've adopted the philosophy of privatizing the profit and socializing this risk.
Under YOYOism, whatever economic challenges we face as a nation--globalization, health care, inequality--the best solution is for people to fend for themselves. Its central goal is to shift economic risks from the government and corporations onto individuals and their families. You can see this beneath the surface of almost every recent conservative initiative: Social Security privatization, personal accounts for health care, attacks on labor market regulations, and the perpetual crusade to slash the government's revenue through regressive tax cuts--"starving the beast"--and block the government from playing a useful role in our economic lives.
Please follow me below the fold to look at the YOYO theory and debt collection.
In an era that disdains regulation, and with bankruptcy relief further out of reach, it should come as no surprise that debt collectors are increasingly engaging in unseemly tactics. The New York Times ran a
story about a week ago detailing some of those tactics and, citing the number of complaints to the FTC, reported that complaints about debt collectors are up
almost 600 percent since 1999.
In its most recent annual report on the act, the [Federal Trade] commission identified tactics that have become particularly common: misrepresenting the nature, size and status of a debt; making constant harassing and abusive phone calls at all hours; contacting a debtor's relatives, employers and neighbors; failing to investigate claims by consumers that a debt is paid, expired or fraudulent; and threatening to sue or seek prosecution. (Such threats are illegal unless the collector has both the legal basis and the intent to take such action.)
Another story gave some vivid examples of what debt collectors will do:
"I've had them call my clients and call them every name in the book, you bitch, you (expletive) whore, you need to get on a boat and `go back to china' to `go back to Africa'," said Sonya Smith-Valentine, a consumer law attorney.
In one outrageous example, a collector for a funeral home threatened, to "rip the bodies" of the plaintiff's parents out of the ground, "put them on his lawn..." and chop their heads off.
The NYT piece also makes reference to a suit Eliot Spitzer brought last month against "a national debt collection company, accusing it of trying in thousands of cases to collect on debts that could not be verified." It's likely they're referring to the action against Boyajian Law Offices and JBC & Associates, which has been calling me, even though I don't have a single unpaid debt.
But I don't live in New York, so Spitzer's actions will do me little good. I live in Ohio, a state with an attorney general who moved for sanctions against attorneys who brought legal challenges regarding the 2004 election.
Indeed, many states are either in denial about aggressive and fraudulent debt collection activities or have, implicitly, embraced them.
There's an alarming increase in the privatization of bad check prosecution. Called "check diversion" programs, local district attorneys are contracting with private debt collectors to chase down citizens who wrote bad checks. These outfits go after not just the unsympathetic folks who knowingly write rubber checks, but also people who've just made a mistake -- a mistake for which they might pay dearly. And at the federal level, the IRS has begun the process of hiring private collection agencies.
If government at all levels is depending on privatized debt collection, what are the odds they'll protect us from the unscrupulous? The New York Times piece cited above gives a clue because it falls into line against the people suffering from this bad behavior:
Eric M. Berman, a lawyer in Babylon, N.Y., and an officer of the National Association of Retail Collection Attorneys, whose members represent creditors, said complaints filed with the government were not always legitimate. For example, he said, some debtors complain when debt collectors will not accept partial payments on the same installment terms that the original lender provided, a practice that may be frustrating to the debtor but is legal.
"People need to get much more education about credit accounts and what they're getting into," Mr. Berman said. "In addition, there are a small minority who are scammers -- people who will run up credit with no intent of paying it and then try to negotiate their way out of it.
Yes, like the endless laments that our bankruptcy laws had to be reformed because of all the deadbeat filers, the Times gives credence to the notion that it's not the debt collectors who are bad, but the alleged debtors, all of whom, apparently, are on their own.
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