Harry Strausser Interviewed
Past ACA President and Pennsylvania collection Agency Owner Harry Strausser
III was quoted recently for an AP national story while in Atlantic City for a collection convention. See below:
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ATLANTIC
CITY, N.J. -- These are the best of times, and the worst of times, for America's debt collectors.
The prolonged economic
turmoil has created more opportunity than ever for the profession, even while making it harder than ever to get folks to pay
up.
A gathering of debt collectors in Atlantic City this week found many willing to work out payment plans with debtors
in which payments of as little as $5 or $10 a month are acceptable.
"It's harder to collect than ever because people
are in genuine hardship," said Harry Strausser III, president of the Mid-Atlantic Collectors Association, who has his
own collection agency in Bloomsburg, Pa. "With unemployment the way it is and the terrible foreclosures, people are having
a harder time making ends meet. There's more potential business, and we're having a tougher time trying to collect it."
Also
growing is the number of consumer complaints about debt collectors. The Federal Trade Commission says it receives more complaints
from consumers about debt collectors than any other industry. Last year, it received 140,036 such complaints, up from 119,609
in 2009.
"They called me three or four times a day, every day, asking all kinds of personal questions, like am
I married, do I have custody of my kids, can my kids pay this bill?" Scott Tillman III, a 53-year-old musician from Oroville,
Calif., told The Associated Press in a telephone interview. He said he was harassed over an auto lease for a vehicle he returned
to a dealership 15 years ago.
Businesses nationwide placed $150 billion worth of debt with collection agencies last
year, Strausser said. Of that total, agencies were able to collect about $40 billion, a figure that has held roughly steady
for the past three years.
There are 4,100 debt collection agencies in the United States, employing nearly 450,000 people,
and the industry expects to grow by as much as 26 percent over the next three years.
The industry averages about 20
percent recovery on delinquent debt, Strausser said. Several decades ago, it averaged 30 percent.
Sometimes that amount
is shared on a contingency basis with the business to which a consumer owes money. Other times, a debt collection agency will
buy debt from businesses at a discount and keep whatever it can pry from the debtor. That part of the industry has grown significantly
in recent years, collectors said.
The most common consumer complaints against debt collectors involved three big no-nos
under federal law: calling a debtor repeatedly or constantly; misrepresenting the amount or status of a debt; and failing
to notify consumers of their rights in writing.
About half the complaints dealt with repeated calls from collectors.
More than 20,000 people said debt collectors falsely threatened to have them arrested or seize their property, and more than
17,500 said collectors used profanity or abusive language on the phone. Nearly 4,200 consumers said a collector threatened
them with violence if they did not pay up.
"The way collection agencies try to get money from people who have less
of it is to get more aggressive," said Sergei Lemberg, a Connecticut attorney who represents debtors who feel harassed.
"We get cases every day from people who have collection agencies calling them six, seven, 10 times a day. My own mother
doesn't call me three times a day."
Tillman, one of Lemberg's clients, told the agency calling him that he did
not owe the debt on the vehicle he had already returned. Under the law, when a consumer disputes a debt, the agency is supposed
to investigate the situation and if the debt is not owed, halt further collection efforts.
"Then the threats started,"
he said. "They said, `We're going to take it out of your Social Security.' Because I'm black, they had someone who was
black call me as if they knew me, saying, `Hey Scotty, man, when you gon' give us our money, man?' One day one of them called
and said, `We're coming down there and we're going to put your ass in jail and take you for everything you've got."
Kevin
McNeill, 26, of Modesto, Calif., also got threatening calls for a $500 debt he incurred after a divorce. He was willing to
pay it in two monthly installments but said the collector insisted on everything up front.
"I get this call at
work, and this guy is just going off, calling me a thief, a criminal, and saying that the sheriff's office would be there
in 10 minutes to arrest me in front of my co-workers," he told the AP by telephone. "Then he threatened to call
the owner of the company and say, `Do you know you have a thief working in your finance department?'"
Collectors
interviewed this week in Atlantic City said such tactics, aside from being illegal, just don't work.
"Some agencies
are into the intimidating side," said Jeff Kotula, a manager with a Scranton, Pa., collection agency who trains others
in acceptable techniques. "They try to scare people into paying. We don't do that. We try to explain to people we're
helping them get their credit rating back."
Yet, collection agencies are quick to point out that unpaid debt is
never truly written off: Someone, somewhere, has to eat it. An industry-sponsored study says debt collectors save the average
U.S. household $354 a year in costs it otherwise would have been charged if businesses raised prices to cover losses instead
of recovering it through a collection agency.
"Say you own a small flower shop, and someone doesn't pay a $3,000
bill," Strausser said. "That's a big hit for a small business. So next year, you charge more for deliveries or add
$5 to the price of an arrangement to try to make up for that lost money."
Kotula said most collection agencies
will offer a debtor the option to slowly pay off the debt_ as little as $5 or $10 a month in some cases. Some agencies will
also offer settlements in which some of the outstanding debt can be forgiven if the rest is paid up front.
"We
have a lot of people who want to pay; they just don't know how they can do it and still be able to live their lives,"
said Hope Palmer, a Pennsylvania collections manager. "The most difficult situation is the person who has been unemployed
for several years and can't find a job and can't pay their bills. That's most of our calls."
In those cases, she
said, a collector is trained to look for alternatives: Do you have relatives who can help you pay? Do you have a 401(k) account
you can tap, or stock you can sell?
"We won't turn away anything," Palmer said. "There is always a way
to work something out."
Kotula said his agency never technically gives up on an unpaid debt.
"You never
want to count it out," he said. "People's situations can change in three months. They may get a job and they can
pay $25 a month."
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