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Independent Debt Collection Companies Are the Problem, Not the Solution

So a retailer sells too many goods to deadbeats and has trouble collecting? It sells the bad debts for pennies on the dollar to companies that specialize in collecting debts, perhaps using strong arm tactics.

In this case, the selling function has gottent divorced from the collection function. It's one thing for sellers to HIRE companies that speciallize in debt coolection.It's quite another for them wash their hands of their bad debts, which means that they don't have monthly reminders of how bad their debts are and how much collection is costing. And the worst part about transferring debts is that collectors are no longer agents of the seller, although they should be. That means the original seller can't be sued for the collector's malpractices.

The writer (a man) has gotten plenty of misplaced calls to people like "Patricia McCall" and "Pamela Franco." In a few cases, companies will agree to take the number off their contact lists when it's clear this not the target (nor one of her dates). In other instances, the company says "A phone number is a phone number."  But no original merchant would dare to (or allow its agents to) make such misplaced calls.

Collectors should be paid fixed fees; to follow standard debt collection practices legally, and collect within structured procedures. That includes readinng "debtors" a mini version of Miranda rights. In fact, collectors buy debts at a huge discount from sellers, and then use all sorts of tactics, both legal and illiegal, including sticking people with non-existent debts, or debts  of others of similar names, or expired debts (more than 10 years old, that can not be legally collected, or sold).Any of these shady practices would be voided in a court proceeding, but most people won't fight.

All the incentives work the wrong way when retailers can sell their debt to collection agencies. Retailers get too cavalier about underwriting standards. Then they sell the bad debts for too little. And the collection companies try to "settle" the debts for too much, including stale or non-existent debts.