SUNDAY, AUGUST 8, 2010
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G5 When debt collectors call — and keep calling tagging from G1
of Credit Bureau Collection Ser- vices, or CBCS. The company agreed to pay more than $1 mil- lion to settle charges that it vio- lated federal law by inaccurately reporting credit information and by pressing consumers to pay debts they often did not owe. Hard times for consumers
have meant boom times for debt collectors. And some can get their hooks into people who have never missed a debt payment. Sometimes, as in the case of
Hughes, they go after people with the same names as those who owe money. They might also relentlessly call wrong phone numbers, hoping to pry informa- tion out of whoever answers. Some finagle enough identifying information to make people seem liable for debts they never owed. In the uncertain economy, peo- ple are especially sensitive to anything that can hurt their credit rating. The FTC said it rec- ognizes that third-party collec- tors contact millions of people each year, and it receives more complaints about the debt-col- lection industry than about any other. In its 2010 annual report on
the Fair Debt Collection Prac- tices Act, the FTC said it received 119,364 complaints about third- party and in-house debt collec- tors in 2009, up from 104,766 the previous year. To be sure, people who receive mistaken calls from debt collectors don’t always re- port anything to regulators. In Hughes’s case, he contacted fraud resolution specialist Iden- tity Theft 911 to help repair the damage to his credit report. He said he hasn’t heard from collec- tors since. Mark Schiffman, spokesman for the Minneapolis-based credit and collection trade group ACA
International, said the FTC does not separate consumer inquiries from complaints. He added that his agency has always worked with the FTC to get more clarity on its complaint data, but that it hasn’t happened yet. “There are complaints, but we take them se- riously and are resolving them to the satisfaction of our con- sumers,” he said. J. Reilly Dolan, assistant direc- tor of the FTC’s Division of Fi- nancial Practices in Washington, said his team made a point of bringing the CBCS case. “It’s not an isolated incident,” Dolan said. “We want a case out there to make sure everyone un- derstands it’s not acceptable.” He said the FTC expects to continue challenging such practices. Kristin Mack Deuber, a spokes- woman for CBCS, said that the FTC’s allegations involved activ- ities that took place years ago, from 2005 to 2007, and the settle- ment didn’t necessarily consti- tute a finding or admission by the company that it violated the law.
Although the agency disagrees with the FTC, it said the best business decision was to make the settlement. “We have imple- mented appropriate practices to comply with the requirements” of the settlement and the laws governing the industry, Mack Deuber said. Even for those who aren’t hav- ing run-ins with regulators, ex- perts say tracking a debt back to its rightful owner can be compli- cated. Creditors can unload their debts onto others, sometimes for a fraction of the original value, and they don’t always pass on much information to debt buyers about who owes the money. The debt can change hands multiple times, or even back and forth, and each message from one own- er to the next is a new opportuni- ty for muddled information.
contacted,” she said. Hayes said debt collectors can err when the debtor has a differ- ent phone number from the one first used. Sometimes telephone companies assign debtors’ phone numbers to someone else. Or someone who moves into the home of a debtor might receive the person’s bills or other com- munications. Those seemingly random con-
nections can pay off for collec- tors. Some will pursue a person who might cave under pressure. Mark Fullbright, fraud specialist at Identity Theft 911, said CBCS called one of his clients, Molly Harrington, and managed to get her to divulge her Social Security number. Then Harrington, 75, got a bill for $4,197 from an elec- tric company for power at a home in Putnam, Conn. But she was from Chepachet, R.I., and had never lived in Connecticut; someone reported the debt un- der her name in her credit his- tory early this year. Fullbright ended up making the phone calls to remove the debt from her file. He said that he was put on hold about eight times. When he challenged CBCS for proof that Harrington owed the money, he said, the collection agency didn’t tell him much until he threatened to report them. “I don’t know how they let this go on for such a long time,” Full- bright said. Mack Deuber, the CBCS
MELINA MARA/THE WASHINGTON POST
Michael L. Hughes of Danville, Va., discovered when he read his credit report that he had been charged with someone else’s debt.
Valerie Hayes, general counsel
for ACA, pointed out that mis- takes cost debt collectors time.
“They don’t want to contact the wrong person any more than the wrong person wants to be
spokeswoman, declined to com- ment on Harrington’s story. If consumers see inaccuracies in their credit files, they can dis- pute them, as Hughes did. The credit reporting agency will then take the information and go back to the source to ver- ify, according to Susan Henson, a spokeswoman for Experian, one of the major reporting agencies. “The onus is on the original creditor to provide the proof,”
she said. The process takes at most 30 days — usually less — and then Experian sends the cor- rected report back to the con- sumer. Jay Foley, executive director at
the Identity Theft Resource Cen- ter, said a person who feels ha- rassed by a collector should write the agency and request delivery confirmation. After the letter is sent explaining that the collector is contacting the wrong person, the collector should stop. If not, consult a lawyer. “Document ev- erything,” Foley said. Consumers can find lawyers in their state on the Web site for the National Association of Con- sumer Advocates. Unfortunately, you might have
to go through this process more than once. After getting phone calls for
many years about student loans that he didn’t owe, Kevin Pum- phrey sued a collection agency in August 2007 for harassment. The agency settled the case months later and left him alone, but other agencies started call- ing. This spring, Pumphrey re- ceived several letters from a dif- ferent collection agency than the one he had sued. Pumphrey, a teacher in San Antonio, figures that if he bothers with suing again, the agency will just sell the debt and another collector will come after him anyway. “Without knowing the details about this person’s credit history and what other agencies called, it’s hard to understand why other agencies would be contacting him,” said Schiffman, a spokes- man for ACA. Pumphrey was past the point
of trying to understand. “It’s un- believable,” he said.
rysts@washpost.com
Staff writer Ylan Mui and news researcher Meg Smith contributed to this report.
What this recovery probably needs is time
klein from G1 That is the catch-22 of the
recovery: Businesses will start hiring when the economy recovers. And the economy will start to recover when businesses start hiring. Recently, it has been popular to blame the tension between skyrocketing corporate profits and weak job growth on the White House and the Hill — hence the Chamber of Commerce and Weekly Standard quotes. Something must have gone wrong, right? And it’s probably Washington’s fault. In fact, no: A look at the
history of financial crises shows that our slow, halting recovery is right on schedule and the business community’s caution is predictable. Not all recessions are created equal. Recessions caused by financial crises take a lot longer to dig out of than their more common cousins. One is like the flu. The other, a car crash. When the flu goes away, you’re good. When a collision spins to a stop, that’s when the long, slow process of healing begins. In “This Time is Different: Eight Centuries of Financial Folly,” Carmen Reinhart and Kenneth Rogoff study every financial crisis of the past 800 years. It’s an exhaustive study, and its conclusions are depressing for a country that believes itself exceptional even in its suffering: We’re not special. If you consider
unemployment, housing prices, government debt and the stock market, Rogoff says, “the U.S. is just driving down the tracks of a typical post-WWII deep financial crisis.” In some areas, we’re even a bit ahead of the game: Economic output usually falls by 9 percent. We held the drop to 4 percent. Even the unevenness of our
recovery is predictable. “Housing and employment come back much slower than equity and gross domestic product,”
An uneven recovery Although corporate profits have rebounded to record levels in the past few months, consumers’ personal income has stagnated.
Corporate profits aſter tax Quarterly, seasonally adjusted
$1.36 trillion
why only 6 percent said this was a good time to expand. But that shouldn’t obscure what is, in fact, sort-of-good news (the frustrating stuff recoveries are made of): Businesses can expand; they’re just biding their time.
“If you’re running a business, $499 billion ’00 ’02 ’04 ’06 ’08 ’10
Disposable personal income Percent change from month one year ago
6.0% 4.4%
June 1.1%
you can’t start hiring on speculation,” says Joseph Kasputys, chairman of IHS Global Insight. “You have to wait until you see market signals that things are getting better. The smart businesses are looking for the early signs so they get the first advantage. They’re ready to move.” That’s a lot better than a world in which they have no capital and so cannot move. So what can we do to speed things along? More government stimulus — either through direct spending or further tax cuts — could offer some quick help, but Senate Republicans won’t allow anything large enough to make much of an impact. The Federal Reserve could step into the breach, but so far, it’s been reluctant to do so. The
’06 2007 2008
SOURCES: St. Louis Federal Reserve, Bureau of Economic Analysis
THE WASHINGTON POST
Reinhart says. GDP usually falls for two years and then recovers. Equity can move even faster, which helps explain corporate America’s rapid revival. But employment tends to fall for five years. And housing? That’s usually a six-year slide. So business may be back, but
customers aren’t. You can see this in a recent survey that the National Federation of Independent Business — a conservative small-business group — conducted of its members: Overwhelmingly, they said their “most important” economic problem is slow or declining sales. It’s easier to understand, then,
’09 ’10 –1.3%
Republicans want to see the Bush tax cuts extended and Obama’s health-care and financial-regulation bills repealed, but none of that will make a big short-term difference. Instead, we’re left with that
frustrating old standby: time. A financial crisis “is not
something that policymakers can undo quickly,” Reinhart says. “If you look at the big, historic panorama, deleveraging takes time. It’s not pretty. That’s not the answer people want to hear, but these [recoveries] are lengthy.” So businesses are watching consumers, consumers are watching businesses, and everyone is pointing at Washington. But given the history of financial crises — and in the absence of further government intervention — there’s not much left to watch but the clock.
kleine@washpost.com
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