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Debt collectors aim to reshape a lowly image

EDINA, Minn. — As a longtime debt collector, Lesllie Rogers has been routinely insulted, pummeled with obscenities, crudely propositioned and threatened with violence by the people she calls.

"They want you to feel as small and insignificant as possible," said Rogers, who works for a collection agency in Rochester, Minn. "The guy who sits across from me just was threatened with getting his legs and arms cut off."

Debt collectors like Rogers are well aware that they are not a sympathetic lot. But now they are saying enough is enough. The trade association that represents them is engaged in an unlikely charm offensive to change their lowly image, while also trying to shape the rules that govern them as they face the prospect of a tough new regulator.

Debt collectors as human beings? It could be their toughest commission yet.

These are boom times for collection agencies, which have been swamped with work as many Americans gorged on debt and then struggled to repay it. But the industry has come under fire for pushing too hard. Last year, 140,036 complaints were filed against debt collectors, a 17 percent increase over the previous year, according to the Federal Trade Commission.

The complaints told of menacing late-night phone calls and threats of jail time or confiscating a house. In one instance a jury awarded a Texas man $1.5 million after a debt collector left voicemail messages using vulgarities and racial slurs.

Those are the exceptions, the industry’s trade association says.

Indeed, Mark Neeb, the association’s incoming president, insists that most debt collectors are the "salt of the earth" and are tired of being defined by the worst members of their profession. And it is they who are feeling harassed.

"There really ought to be a law on how consumers behave towards debt collectors," said Neeb, whose employees routinely use aliases on the phone to protect their identity from hostile debtors.

After several years in which the overzealous tactics of debt collectors have been the focus of regulators and media alike, ACA International has beefed up its lobbying operation in Washington to pursue a wish list of laws and regulations that it would like changed.

At the urging of the organization, debt collectors are traveling to Washington and state capitals, hoping to convince regulators, legislators and attorneys general that they are decent people who are doing an important but thankless job.

To more fully explain the profession to the public, the association has set up a website called Ask Doctor Debt that lets consumers ask questions in a "Dear Abby" style format.

The mission has taken on some urgency. Next month debt collectors will come under the supervision of a hard-nosed new regulator, the Consumer Financial Protection Bureau.

Until now, the profession has been regulated by a relatively toothless Federal Trade Commission, which had the ability to crack down on rogue debt collectors but could not write rules and regulations for the industry.

The new consumer bureau will have that authority, and it will share policing duties with the FTC. The new agency "has the potential to have a huge impact on our industry," Neeb said.

Foremost on the debt collectors’ agenda is updating the Fair Debt Collection Practices Act, which was passed in 1977, the era of letters and landlines, and has not been changed much since. ACA International, based here in suburban Minneapolis, wants its members to have the ability to contact debtors using modern technology, including email, cellphones and autodialers, all of which create problems under the current rules.

"Any functional difference between a cellphone and a residential landline has been eroded," the association says, in a blueprint of its proposed changes.

In addition, ACA International wants regulators to specify precise language that debt collectors may use when leaving a voice message, something that is now the subject of thousands of lawsuits each year against the industry.

"We can’t help consumers with their financial problems if we can’t get ahold of them," Neeb said.

The concern, with both emails and voice messages, is that a third party could see or hear the message.

A common criticism of debt collectors is that they pursue debts with little paperwork to back up their claim. As a result, the association is recommending that the law be amended so that creditors would have to maintain account information on their customers for at least seven years.

The debt collectors have found some allies, at least on some issues. Rodney L. Davis, a senior vice president at the Better Business Bureau, agreed that the Fair Debt Collection Practices Act needed to be updated to reflect changes in technology. And Margot Freeman Saunders, counsel at the National Consumer Law Center, said the group would be willing to discuss some of the proposed changes if ACA International supported increasing the amount of statutory damages for violating the act.

The penalty has remained at $1,000 since the law was passed, and Saunders maintains that it has little deterrent value. Mark Schiffman, ACA International’s spokesman, said the issue was still being negotiated.

The Consumer Financial Protection Bureau declined to comment. Thomas Pahl, the FTC’s assistant director for financial practices, said ACA International’s success might depend on how well the group can show that consumers would benefit from the proposed changes, as well as debt collectors.

Third-party debt collectors are typically hired by a store, cellphone company or a bank, to collect a debt that has become delinquent. Often, huge portfolios of delinquent debt are sold to a debt buyer for pennies on the dollar; the debt buyer, in turn, may hire a collection agency, or a law firm specializing in debt collection.

The leaders of ACA International said they supported efforts by regulators to crack down on debt collectors who do not follow the rules, however embarrassing it might be. The top complaints last year were for calling repeatedly, misrepresenting the amount or status of the debt, and failing to send consumers a required notice about the debt and their rights.

Linda Russell, the owner of a collection agency based in Wyoming called Collection Center, said it was simply more effective to work with consumers, "rather than yelling and swearing."

But the decorum needs to flow both ways, said Rogers, the Minnesota collector whom debtors know as Melissa Burg, a name she pulled from the phonebook.

"Instead of playing games," she said, "just admit that you don’t have money and we’ll go from there."

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