Collect Calls: Talking about the cutthroat world of debt collection

By Rosette Royale, Contributing Writer

Working as a debt collector, journalist Fred Williams discovered the extreme tactics collection agencies use to cage the rights of those in arrears

Here’s a confession: In my younger days, I was an unrepentant shopaholic. I lived in Maine, working at Colby College, my alma mater, and twice a month I would drive 70 minutes in my brand-spanking new 1990 VW Golf to the outlet mall in Freeport. Ralph Lauren, Cole Haan, Wilson’s Leather, L.L. Bean. I tore a blue streak through those stores, rarely stopping to consider that my desire to look good was overshadowed by my ability to pay to look good. My favorite purchase from 20 years ago? A pair of tan suede-cordovan brown leather saddle Oxford shoes with brown metal eyelets. Cost: $195.

I don’t have a clue where those shoes are now, much less anything else I bought. But you know what I still have? Memories of the nauseated, heart-thumping sensation I got when a debt collector called. Because, with a salary of $18,500, purchasing a $65 raw silk tie adorned with ring-necked pheasants on a field of light purple fabric ain’t a wise idea. But I had VISA and American Express and others, so I reveled in my privileged membership and charged everything. And didn’t stop until my unpaid credit card bills, close to $5,000, went into collection, and the debt collectors came after me. Things got so bad, I wouldn’t even answer my work phone, for fear the ring heralded someone wanting the money I owed.

Finally, after years of running from my past shopping sprees by changing phone numbers and addresses, I realized I had to pay those bills. So I worked, mailed in meager checks every month and, somehow, cleared up the debt. To not have to avoid a phone call — what joy. But I often wondered, listening to their messages, what it took to be a debt collector. How in the hell could someone be so mean on the phone? That’s why I wanted to speak to Fred Williams.

Not that Williams is mean. On the contrary, he’s affable and accommodating. He also worked as a debt collector. To do so, he left his journalism job in upstate New York and in 2008 spent three months calling people on the phone, asking them to pay off their debts. He did so honestly — he wasn’t undercover and never lied to customers — but he did have an objective: to see how debt collection works on the inside.

What he found led to his 2010 book, “Fighting Back Against Unfair Debt Collection Practices: Know your Rights and Protect Yourself from Threats, Lies, and Intimidation.” Along with providing an intriguing narrative about what a debt collector’s day looks like, Williams also offers sound financial advice, such as how to read a credit report and how to negotiate a debt settlement. Since the book’s publication, Williams has appeared on CNBC’s “On the Money” and ABC’s “Good Morning, America.”

Williams no longer works as a debt collector. He’s now an editor with a financial news service called SNL Financial, where, he said, “We get a lot of calls for Saturday Night Live.” And while most people wouldn’t consider debt a laughing matter, Williams spoke compellingly, and with humor, about deceitful debt collectors, the cutthroat work environment, the unhealthy ties between collection agencies and credit card companies, and what consumers can do to stop those abusive calls. He launched into it all before I even asked him a question.

“So I was a reporter at the Binghamton Press, and debt collection is a pretty big business around there, for whatever reason. And we’d hear from people who had been called by them, saying they’d been threatened that their house would be auctioned out from under them or they’d be put in jail for reneging on debts. So I got the impression these businesses were using pretty harsh tactics. And of course those are illegal tactics. But without really getting inside the industry, the companies would just say, ‘Well, there’s always some bad apples, and people don’t want to pay their debts, so they make complaints’ and ‘Well, once in a while, we’ll get someone who goes over the line, but we’ll terminate them.’ But the volume of the complaints that were coming in, and the way financial incentives were set up made me think that maybe it was more than that. That maybe the practices were really widespread. So, in order to really check that out, I finally had to leave the newsroom and take a job as a debt collector at one of the mainstream collection companies operating in the Buffalo area, to see what really went on.”

Rosette Royale: How was it to be a debt collector?

Fred Williams: It was not what I expected. Well, maybe some parts of it were. It was pretty easy to get the job. I went right in with my regular resume, my real name and 25 years of journalism experience. They asked me why I wanted to work there. I told them the truth, which was that I heard a lot about collection, and I wanted to see what it was really like for myself. Then there was a week of classroom training. Lots of young guys, a couple guys had a record, other guys hadn’t quite finished high school. The training was all on the up and up. It was about what the Fair Debt Collection Practices Act says, what the rules are, what you can and can’t do. So that was kind of impressive. But the training kind of skewed toward pushing the line of what you can do.

Once we got on the phones, we were making upwards of 100 to maybe 200 calls a day, usually credit card accounts. Most of these were accounts that had been delinquent for some time. And what I saw was that harsh threats and tricks were pretty pervasive throughout the office. It was pretty much the only way to get money out of these very old and difficult accounts. And even though the company didn’t, in my hearing, say anything explicitly about how to threaten or trick people, techniques were passed around by other collectors. (The) more experienced collectors, we’d see what they were doing. Even the trainees just a week ahead of you in the program would have all this knowledge that you would absorb, hearing them on the phones.

R.R.: What would be a trick that someone would use?

F.W.: Well, one of the most successful collectors — he was a week or two ahead of me — would call up and say he was a fraud investigator, which was blatantly untrue. He’d say, “I’m calling from VISA, and I need to speak to” who had the first name on the account. That was very effective getting people on the phone, because they thought their legitimate account was being accessed by somebody. Then, when he got them on the phone, he turned that around and accused them of fraud. “Well, you haven’t paid. Are you trying to commit credit card fraud?” And he’d emphasize, “You signed a legally binding contract,” and by playing up the legal aspects, he gave this impression he was connected with law enforcement. This worked pretty well for him: He graduated earlier from the training program.

I should have mentioned that the program was a do-or-die situation. You had to bring in a certain amount of revenue to make the cut, which was pretty hard to do. So it was a lot of pressure on the collectors to go with lying, because if they didn’t make a quota, they weren’t going to keep the job.

R.R.: So you write in the book, “On a day-to-day level, the job also tested my standards for reasonable and humane conduct.” What do you mean?

F.W.: You have to picture me sitting there, surrounded by this, and each day going into work with these folks. Our performance every day is posted on a whiteboard for everybody to see. And here’s the thing: Outsiders think, “Well, how could someone do something like that, threaten a debtor with false threats?” Not that I ever did. But as a collector, call after call, you’re dealing with people who really don’t wanna pay the bill. They haven’t paid it for two or three years. So you become inured, you get hardened to people’s excuses. We had an abbreviation when you type up your notes on a call: HLS. That’s where someone tells you, “Uh, my back went out, I’m out of work, and my wife is sick. The dog died.” You listen to all that and then you type in HLS: hard-luck story. So as a collector, it’s hard to resist the idea that debtors are trying to run scams on you. And that’s how collectors justify being less than honest on the phone and using tricks: It’s in retaliation. So I was trying to make my quota, as an employee in good faith, certainly feeling a pressure to adopt tactics that would work better than just calling up and saying, “Hi. Do you feel like paying this bill? No? OK. Well, we tried. Goodbye.” Because that doesn’t work.

R.R.: As a reporter, was it hard for you to turn off your investigative eye toward what you saw happening?

F.W.: Well, it didn’t really take much investigative skill to see what was going on in plain sight. I didn’t have any access to the decisions that were being made higher up. But you get a glimmer of that from time to time, based on the accounts we were sent. Using investigative skills, tracking people down: That is helpful if you’re trying to do debt collection. And I don’t think the job itself is without merit. If people were doing it like the industry says, trying to help people restructure and get out of debt, that’s not a bad thing.

Unfortunately, the collectors who were most successful are pretty adept at steering them (to think) that they need to pay, by whatever means, and steer (them) toward another source of debt. Back at the time I was doing this, you could still get home loans pretty cheaply, if you had any equity in a home. And — this was kind of pernicious — a pretty astute collector would steer people toward the kind of lender that would give them some money. And the debtor is happy because they’ll get this money, and there’ll be some left over. This lender is happy ‘cause they’re getting their commissions. And the debtor, that mortgage is going to blow up down the road. But nobody has to worry about that until later. So these were the most successful collectors I saw.

R.R.: How would you define yourself as a collector?

F.W.: I wasn’t very successful. My whole experiment was to see if I could succeed without using the illegal tactics. I would take it to the limit, be stern, tell them, “Well, this is a serious matter, and we need to have this settlement.” And I didn’t quite make the quota. I mean, I worked hard, made a lot of calls, but I didn’t quite bring in enough to keep the job. However, they let me graduate to full collector status because I was close and showed up every day. So I was not a good collector.

R.R.: I think I’d be terrible.

F.W.: (Laughs.) Well, you don’t know until you try. The financial awards were good. If you did well, you could get pretty lucrative bonuses. The top people in the office where I worked were getting over $10,000 a month via bonus, and I know this because everybody in the building knew it. Once a month we’d all watch the top people get their bonus checks, and it was a pretty clear message. The guys beside me, maybe just out of high school, can’t even afford a car, are seeing people pulling down over $10,000 a month on top of their salary. That’s like winning the lottery to them.

That’s the thing. The collections business is people in the same economic stratum as the people they’re calling on the phone. A lot of the collectors had debts themselves and were feeling financial pressures of their own. They were squeezed. So it was surprising to me they would take this attitude toward people in the same boat.

R.R.: What kind of links exist among credit card companies and debt collection?

F.W.: They’re really part of the same system. Credit card companies could do the debt collection themselves. The reason they don’t is because they don’t want to be associated with those tactics. So they get a contractor, and they wash their hands. It’s preferable for them to outsource, and when a collector does get into trouble, the card issuer is insulated from any wrongdoing. That’s where the regulations come in. The penalties for violation of the (Fair Debt Collection Practices Act) haven’t been raised since they were enacted in 1977. Meanwhile, we know what’s happened with the financial world. I was able to establish pretty firmly that that $1,000 penalty is really not much of a deterrent. (If a customer wins a lawsuit showing a debt collector violated the act, the customer can receive up to $1,000 in statutory damages, plus attorney fees, from the collector.) So there’s no reason not to avail yourself of harsh tactics, which do work better, because even if someone complains and they go all the way to the court — oh, my gosh! — the penalty is $1,000.

R.R.: Recently the Consumer Financial Protection Bureau, or CFPB, proposed a rule to supervise debt collection. Can you talk about how it would work?

F.W.: In my understanding, when they say supervise, it means (the CFPB) would have people on-site. I don’t know if that would mean on-site permanently or visiting. I’m hopeful that will clear up a lot of the practices that we see. However, I’m reminded of that New Yorker cartoon with these two suits, one saying to the other, “Golly, these new regulations will totally change the way we have to get around them.” Collectors, they’re pretty good at getting around the rules that are out there now.

The supervision will be applied to collectors with revenue of $10 million. So the larger collectors would (say), “Well, we’re not Company ABC. We’re now Company A and Company B and Company C, with a different set of owners.” So, I’m waiting to see how that supervision pans out.

R.R.: I don’t know if you’d be willing to answer this: Have you had any personal experience with debt collection?

F.W.: On the other end? Most was unfounded. I would get calls for people who had the same number as me, but not that I’m remembering offhand. I keep no balance on my credit card. I’m one of those people who hates being in debt. I think I might have disputed a phone bill, but I’m not sure that was with collections.

R.R.: This leads to my next question. What are some simple steps people can take to stop abusive collection calls?

F.W.: They have a lot of rights under the Fair Debt Collection Practices Act. And depending on what state they live in — Where you are in Seattle, I think they have a Department of Finance or the Attorney General’s office has debt collection regulation. So that adds another layer of protection. But the main layer of protection is the FDCPA.

First, it depends on whether you’re sure the debt is real, or if it’s some guy trying to get you for money you maybe owed a long time in the past. In that second case, you’re in good shape. You can just tell them, “Don’t call again.” Get an address, follow that up with a letter and keep a copy of that letter. Under the law it should turn off the calls.

Similarly, you have a right not be called at work. This is really important because, from what I saw, that was a main pressure tactic that people would use. They’d call people at work repeatedly, and if you’re sitting there trying to keep your coworkers and your boss from hearing this conversation, it puts a lot of pressure on people. You just tell them, “I can’t get these calls at work, don’t ever call here again.” And they shouldn’t do it.

If there is a debt that is owed, and you think you probably need to pay it, that gets pretty involved with how many assets you have. But if it is a debt that someone thinks they want to pay, they should do a negotiation. They should keep things in writing.

One thing to remember is to not opt for the first offer or bid. Keep in mind that toward the end of the month in the collection world is when you’re going to get the best offers, if you’re trying to settle a debt.

But abusive calls: I would record them, no matter what state you’re in. I’ve had this advice from regulators. Some states have single- or dual-party consent, where it’s technically illegal for you to record someone without their permission. If that makes some people uncomfortable, just say to the collector, “Well, I’m going to record this starting now.” That might have a real chilling effect on the threats you’re getting. And if not, they’ll have this recording they can take to a consumer attorney. It helps a lot to have evidence of the kind of threatening behavior that you’re alleging.

R.R.: Last question: Would you ever work as a debt collector again?

F.W.: Well, you’re not supposed to say never, right? It sure would be way down on my choices of things to do. But I’m not sorry I did it. It was the most interesting job I (ever) had.

Rosette Royale is the assistant editor at Real Change News, Street Roots sister paper in Seattle, Wash. Republished from Real Change News.

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