ACA International Responds to Recent Report's Attacks on the Collection Industry

The Center for American Progress recently issued a report, “Reining in the Repo Man: The Case for Increased Regulation of the Debt Collection Industry,” attacking the debt collection industry. The report perpetuates false and outdated myths of an industry that today largely consists of professional, ethical businesses serving a vital role in the U.S. economy. ACA International, the Association of Credit and Collection Professionals (ACA), takes issue with the report’s flawed assertions, including:

• The report suggests the collection industry exists to “target” consumers. In reality, collection agencies often act as an extension of local businesses-like plumbers, local groceries and hardware stores-any business that accepts personal checks or extends credit to their customers. When customers don’t pay their bills, the collection industry can help these merchants stay in business. Considering this support protects jobs and holds down price increases, it’s unfair to brand the industry as anti-consumer.

  According to PricewaterhouseCoopers the industry returned $39 billion to the U.S. economy and saved the average American household $351 in 2005.

• Much of the report focuses on the increasing number of complaints to the Federal Trade Commission (FTC) regarding Fair Debt Collection Practices Act (FDCPA) violations. Although any instance of unfair practice is unacceptable, the rise in complaints reflects growing levels of consumer debt and the greater ease of filing an FTC complaint, rather than an industry out of control.

As the FTC noted in its 2006 report, “the Commission does not verify the consumer complaints it receives” and, as such, it “cannot determine the extent to which the complaints the Commission receives represent abusive debt collection practices in general.”

When put into context with the billions of consumer contacts made by the industry each year, the number of complaints is very small. ACA estimates the complaints filed with the FTC last year represented only one in every 95,000 consumer contacts made, a strong testament to the professionalism of today’s collection industry.

• The Center for American Progress report relies heavily on recent news articles as evidence of “over-the-line” collection practices. Sensationalized collection horror stories make for easy news. Unfortunately, by highlighting the small number of improper activities, news outlets send the false message that these actions are normal. This leads consumers to avoid working with collection agencies to resolve their debts, which can result in much greater damage to their financial well-being. Abusive practices are indefensible. They harm not only consumers, but the vast majority of collectors who professionally provide a vital service to our economy.

• The report takes issue with the FDCPA’s allowance for punitive damages of up to $1,000 per violation. However, it fails to note that the Act also allows for “actual” damages in addition to these statutory penalties. Monetary awards are often much higher that the report would have the reader believe. Consumers are able to recover out-of-pocket losses as well as damages for emotional distress. Courts also allow for the recovery of attorneys’ fees. Class action lawsuits are also allowable under the FDCPA, resulting in much higher awards than suggested.

• The report calls on the government to prevent collectors from using the courts to recover debts. Our legal system is sometimes called upon to make creditors whole when a debt has gone unresolved for months or years. It is typically the method of last resort for a collector and not the preferred tactic the report implies.

If a consumer is harmed by unfair practices, he should take advantage of his rights under the Act, and contact ACA International for redress under its thorough complaint resolution process. ACA was instrumental in passing the FDCPA in 1977, supports its enforcement 30 years later and holds members to a higher standard via its strict Code of Ethics.

The vast majority of collection agencies operate professionally and ethically, benefiting their clients, their communities and the U.S. economy. Hindering the entire industry’s ability to operate efficiently and effectively, and portraying all collection agencies in the same manner as those operating improperly is unfair to them, their employees and the thousands of American businesses they help every day.