CNN Money Runs Hit Piece on Debt Collectors

Debt collection agencies are “buying up debt from companies and actively trying to recoup losses and collect commissions” leading to months of harassment, according to an article on CNNMoney.com.

Entitled “Debt Collectors on the Rampage,” the piece looks at two anecdotal examples of consumers that say they were harassed by debt collectors that were seeking to collect legitimate debts.

CNNMoney.com is an online joint venture between cable news network CNN and financial magazines Fortune and Money.

The article uses as examples the experience of two consumers who fell behind on their bills and whose accounts were referred to third party collection agencies. The first example was of a man who had $5,000 outstanding on a business credit card after his business closed. He claimed that debt collectors demanded a wire payment of $1,900. No further threatening behavior was cited in his case.

The second story came from a man that had $20,000 in medical bills after an accident. Not able to pay the bills, he tried to work out a payment plan with the hospital, but his account was eventually placed with a collection agency. He claims that the agency called at off-hours and threatened him with jail, both violations of the Fair Debt Collection Practices Act (FDCPA).

The piece also mentions that complaints against collection agencies rose 20 percent in 2006 and 26 percent in 2007, according to the Better Business Bureau.

But the article does credit the debt collection industry with returning $39.3 billion to U.S. businesses in 2005, citing a study conducted by ACA International. ACA recently released an update to that study that reported collection agencies returning $40.4 billion to clients in 2007 "ACA Study Shows Collection Agencies Recovered $40 Billion in 2007," June 26.