The Media and Debt Purchasers

Everyone in the accounts receivable management industry should know by now that the media is not especially kind when writing about collectors. Rare is the occasion that a national or even local media outlet will have something positive to say about a collection agency. It now seems that a this trend has been extended to debt purchasers as well.

In the past two weeks, there has been a spate of negative articles concerning debt purchasers and the industry as a whole. It appears that it all started with an article in the Seattle Post-Intelligencer on May 30 entitled “Think that old debt’s settled? Just hope you’re right”. In the article, the author takes the industry as a whole to task, citing federal investigations and distraught consumers. The only problem is that the reporter could find only one example of a debt purchaser that was investigated and fined. And in that case, the company did not even admit any wrongdoing. The article failed to mention that debt purchasers like Asset Acceptance Capital Corp and Portfolio Recovery Associates are publicly traded companies held not only to scrutiny by federal and state regulators but also by Wall Street investors and fund managers. The story did have a brief quote from an ACA representative. But even that was hardly an excuse to call the article balanced.

On the heels of the Intelligencer article, San Francisco Bay-area newspaper The San Jose Mercury News ran its own story a week later called “Collectors Rile Residents”. Again, the article focused on the actions of one company and applied them to the entire debt purchasing industry. The article was also framed as a warning for California residents, mentioning that state official had reported an increase in complaints about collector harassment. The juxtaposition of the paragraph on debt purchasing to the one on increased complaints gave the illusion that the swelling number of consumer worries were due to debt purchasers.

The Wall Street Journal even got involved in the slam-fest. On June 8, the venerable financial daily ran a story on its front page entitled “Dunned for Old Bills, Poor Find Some Hospitals Never Forget”. As the title implies, the article’s focus was old healthcare debt and the companies that attempt to collect it. This writer chose to single out NCO Financial Systems as the meanie. We follow the tragic story of Juana Jimenez and her attempts to get rid of a $435 debt. While the WSJ article did not focus on the act of purchasing healthcare debt and trying to collect it, the theme was similar: companies are out there that are trying to collect debts that were accrued many years ago. And in all three articles the authors made a point of noting that this practice is perfectly legal.

Why would the government allow such atrocious acts to occur? Maybe it’s because the consumers ran up those debts and the creditors got tired of trying to collect the money. I’ve never seen a single article in the mainstream media that states, “this of course would not be a problem if everyone paid their bills and spent within their limits.” But I guess if that happened this web site — nay, this whole industry — would not exist. So I guess we should thank the consumers.

The point is that the media will never view the collection industry, and now the debt purchasing industry, favorably because the story is in the people. It’s much more interesting to find an elderly couple harassed at 11pm over a $76 debt than to state the truism that if collection agencies and debt purchasers did not exist, no loan would ever be granted to anyone that did not carry an interest rate of at least 15%. This industry is an important cog in America’s economic gears. And don’t let any newspaper writer or TV reporter convince you otherwise.

Patrick Lunsford is the Content Manager and Editor of insideARM.com. He can be reached at patrick@insidearm.com.