The Boston Globe recently ran a scathing 4-part special report on abusive debt collection practices in Massachusetts. Part One, “No Mercy for Consumers” describes the tactics of two area collection agencies that purchase old delinquent debts and enforce collection by filing lawsuits in small claims courts. The preferred method of forcing payment is the repossession of vehicles under court order, a tactic which often leaves distressed consumers at their wits’ end and is extremely disruptive to their lives.
Part Two, “Dignity Faces a Streamroller,” documents the incredible abuse of the small claims court system in Massachusetts. Originally intended to facilitate small disputes without need for lawyers and costly public trials, the small claims court system in this state has been effectively turned into an extension of the third-party collection industry. The complete and total abandonment of the debtor — as described in the eyewitness testimony of the Globe’s reporters as they sat through court sessions — is utterly appalling. Humiliation of debtors by collection attorneys, court clerks, and even judges is common in the hopelessly overcrowded system. The article notes, “At a cost of just $40 to file a lawsuit for any amount up to $2,000, debt collectors find a bargain in Massachusetts small claims. A victory in court lets them pursue a debt for up to 20 years, and earn 12 percent annual interest on it – a rate that’s matched or exceeded in only five states. The Legislature hasn’t adjusted that rate since the 1980s.”
Part Three, “Enforcers’ Might Goes Unchecked” reports on the use of “constables” in the debt collection process. A leftover and obsolete office created in the Colonial era, constables are used as the foot soliders in the debt collection war, as they serve legal papers, repossess vehicles in the middle of the night, and even threaten people with arrest. Alarmingly, many of the Mass. constables themselves have criminal records. No training is provided for constables, and no state agency keeps track of their activities. In effect, they act as hired thugs for the debt collection industry.
Part Four, “Regulators, Policy Makers Seldom Intervene” describes the complete disregard toward collection industry abuses on the part of elected officals. Time and time again, regulators and policy makers side with corporate financial interests over the struggling American consumer. Stung by such criticism, Massachusetts Attorney General Thomas F. Reilly has announced that he will push for reforms to protect consumers from abusive collection practices.
Predictably, the collection industry fired back with an editorial that takes the usual anti-debtor stance. (Note: also predictably, the ACA has since deleted the web link to this editorial.) The editorial exposed the ACA’s arrogance, cynicism, and total lack of compassion exhibited by this particular industry representative in response to the Globe series. To my mind, the Globe series does not absolve debtors of responsibility, as this editorial seems to imply. Rather, the series focuses on the abuse of the legal system in Massachusetts, where notices of small claims lawsuits are often intentionally mailed to obsolete addresses. Many of the debtors interviewed for the series had no prior knowledge that they had been sued. They only discovered a judgment had been entered against them when a constable came to repossess their car in the middle of the night. The usual cynical response that “this wouldn’t happen if people just paid their bills” is a facile, ignorant, and grossly inaccurate representation of the what’s really going on here.
One final point: The antidote to such abusive collection practices is INFORMATION. Consumers have rights. Creditors and collection agencies can be sued for violation of debt collection laws. The one thing I kept thinking about as I read this eye-opening series is that if only these debtors had been properly educated about their rights and their options, then the “debtor hell” described in the series could have been avoided. So the message is clear: Get educated about your rights and fight back against abusive collection practices.