The very day I posted my previous note about Dell Financial Services and their unscrupulous collection practices, I picked up a copy of the previous Thursday's (4/24) NY Times and found this article on debt collection outsourcing to India, focusing in particular on Encore Capital Group, the very company that services Dell and is apparently responsible for most of those junk calls I've received. The article, unfortunately, is essentially an apology for these vipers. The author, Heather Timmons, paints debt collection outsourcing as some sort of growth industry. She apparently thinks it's a wonderful thing that these folks have "a sophisticated automated system that dials tens of thousands of Americans every hour". You get the impression that she is smiling as she depicts the lengths they go to track down their victims. J. Brandon Black, who is identified as the CEO of Encore, is quoted uncritically, as in the following:
Although the stereotype of a collector may be “some guy with chains and a cut-off shirt,” Mr. Black said, collectors in India are “very polite, very respectful, and they don’t raise their voice.” He added, “People respond to that.”Another promoter of this scurrilous business tells us how lovely it is to be chased down by an Indian collector:
In the past, the prevailing wisdom about wringing money from late payers has been “if you’re calling the Midwest, you want someone from the Midwest to twist their arm,” said Mark Hughes, an analyst with Sun Trust Robinson Humphrey who covers the industry. That theory is changing as the pool of trained phone professionals in India and other locations deepens, and companies look outside the United States for lower costs.This is definitely one of the most uncritical and least-researched articles I've seen in the Times with regard to something that is obviously an ethically questionable business practice. Ms. Timmons tries to paint it as a fascinating cultural and business phenomenon and does not want to sully the reputation of the industry by bothering to look into the numerous complaints about them that can be found on the web (see my previous post).
Ms. Timmons states that Indian debt collectors are trained in qualities like "sympathy"; but no example of such sentiments is provided. Instead, we find examples of how they handle "abusive" clients by telling them, "This attitude is not going to get you anywhere." This exactly mirrors my own experience with these agents. When I answered the phone and was asked for a person who does not live with me, I told them that, and added that they had better stop calling me or I would take action. "This will not help" came the reply; and indeed, it did not - only the agency was the abusive party, not me. The calls continued, hundreds of them, day and night, even though I had given them all they had a right to know: the person they were looking for is not at my number.
Talk about a great sucking sound - the article documents how the offshore collection agents have been trained to use the U.S. tax rebate, which is meant to jumpstart the ailing U.S. economy, as a weapon against recalcitrant debtors. "This gives you an advantage so you can increase your wallet share", a collection team leader says. Bye-bye, stimulus, hello trade deficit. These companies are, as I suggested, paid by commission. Encore also "files sheaves of lawsuits against customers who do not respond".
All this is very disturbing material is neither is not not even delivered by Ms. Timmons in a tone that is cleared biased. For example, she manages interviews a U.S. debt collector who states some specific problems with overseas debt collectors, like the added annoyance of having someone who does not speak understandable English harassing you for money. But the same person is then alleged to have said that he "had not run into any specific problems with overseas debt collectors" and that they "are very well spoken". Can anyone believe that this was not coaxed for the sake of legitimizing the offshore vampire approach to debt collection? What sort of reporting this is, I don't know; I'm a mere blogger, unskilled in the journalistic ways of Times correspondents.
One of "Encore's best collectors", a gum-chewing 27-year-old, is said to be one who "wheedles work and cellphone numbers out of debtors' relatives to track them down". If this isn't enough to make your skin crawl, you have to read the article and get a load of the self-congratulatory spirit of these collection teams, which operate like sales forces and applaud each other when they elicit a commitment - relishing the thought that someone halfway around the world who can't pay their bills will be lining their pockets with commissions. Still not enough? These people make only $425 a month, plus commissions; sounds like all told their incomes range to about $300 a week - about 20% of what U.S. collectors are said to make. It's a tried and true technique: get the exploited to do the exploiting for you, and don't forget to give them a sense of purpose and a belief that they are doing a good thing. And if you can keep them 12,000 miles from the people they are abusing, so much the better.
People should pay their debts, or not incur them in the first place. But aside from the impossibility of predicting a disaster that will render you unable to do so, or the lack of alternatives when you cannot afford basic necessities, there are the usurious interest rates still charged by credit card companies, the exploitative schemes built into the structure of debt (the right of banks to charge you up front for the interest due on a long-term loan, for example), and outright mistakes, such as the ones that many customers say Dell made in their billing. In my experience, a great many so-called debts referred for collection are simply charges that the customer disputes or has already paid, and result from either aggressive billing practices or careless record keeping. None of the collector's concern, though; they get a referral and start cranking out the nuisance calls on their wonderful high-tech automated calling system. It seems to be part of the financial system that you are responsible for taking the time and effort to prove that you paid something, even though it is the company's fault that they do not have a record of it. This is why I don't feel like debt collection is a completely legitimate business. Outsourcing it makes it even worse, adding a glib disregard for ethical norms of conduct and the frustration of dealing with automated calling systems and heavily accented staff. This is not a charming cultural phenomenon to be viewed as a growth opportunity amid stagnation. It's a depressing deterioration of both the moral integrity of U.S. business practices and the ability to reign in the outflow of capital. Why the Times would see fit to do anything but lament this is beyond me.
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