Fight Back Against Unfair Debt Collection Practices: Lessons in Deception
Lessons in Deception
It is 7:45 a.m. on a frigid January morning. I circle well to the rear of the parking lot behind the blocky office building. Spots near the front door are reserved for higher-ups, I was told during my interview for this job. So I park in the back, alongside domestic compacts like mine. Hardly any of them are adorned with bumper stickers or vanity plates. Maybe debt collectors don't like to call attention to themselves. The parking spots nearer to the entrance are crowded with SUVs.
Inside, 20 of us new hires stamp the snow off our boots, trudge up the stairs, and file into the training room. The classroom is partitioned off to one side of the collection "floor," a vast expanse that runs the length of the building's second story. On my way in, I watch an experienced collector wearing a wireless headset pace up and down an aisle, gesturing as he negotiates with a recalcitrant debtor.
The "floor" is where we all hope to arrive after our training. But many of us—most of us—will not make it. After a week of classroom instruction, we will go to cubicles set apart from the floor for a period of on-the-job training. There we will each have eight weeks to bring in $2,500 in "fee," or revenue for the agency. The fee on each amount collected is determined by the commission rate on the account. We can be fired for showing up late more than once, or for other minor infractions—and if we miss the $2,500 goal, we're history.
Most of my fellow trainees are men in their 20s and 30s, some in low-riding jeans and hoodies, a few in jackets and ties like me. I have the few items that the interviewer told me to bring: pen, highlighter, and picture ID. The ID is necessary to complete personnel forms. At least one of my colleagues has to fill out an extra form for people with a felony conviction on their record. As explained during the job interview, a criminal record doesn't preclude us from getting a job at this agency, as long as we disclose it.
Call centers are like factories used to be in this Rust Belt area—places where practically anyone can show up and get a job. But these jobs are easier to get than they are to keep. Of the four female trainees present at the start, one fails to return after the midmorning break, marking the first of what will be many abrupt exits from our group.
The training room walls have recently been painted yellow from shoulder level up, and people keep poking their heads in to comment on the fresh, chemical odor. "Good learning color," says one manager, my future boss, as she looks around at us, taking our measure. I sit at a computer terminal of age-yellowed plastic on which someone has written "upgrade me" with a thick black marker. The yellow walls are decorated with motivational posters. The nearest one shows a single crooked tree, clinging to a rock that sticks up out of the sea. The legend under the photo says "Persistence."
Bart, a fast-talking veteran collector who will be our instructor for the week, reviews the company's history. The collection company was founded many years ago and now has several offices around the country besides this one in the Buffalo, New York, area.
Trevor, a stylishly dressed trainee sitting next to me, yawns widely. Having worked at two other collection companies, he is not easily impressed. He has jumped to this agency in search of easier money. There are literally dozens of collection offices like this one that operate in Buffalo and the surrounding area.
"It's all about the paper," he says, using industry jargon for past-due accounts. At one place where he worked, "the paper hadn't been worked at all yet—these people hadn't been called once."
Not all debts are equal, Trevor explains in a whisper while Bart writes on the board. Some accounts have been "beaten down," or called on by numerous collectors already. Lenders will send their delinquent accounts to one collection agency after another. Each agency sifts out the easier ones, leaving behind the tough nuts. Some accounts have been through three, four, or even five agencies already, and are several years old. The training material in the black binders that we've been issued states that old accounts aren't necessarily harder to collect. People's circumstances might have changed, putting them in a position to pay. Bad luck doesn't last forever. To me, however, this sounds like motivational rhetoric designed to encourage persistence.
Another experienced collector chimes in from behind us. "This place has a good reputation," giving it an inside track with major banks, he says. This is important for getting good-quality accounts. Trevor explains that with good enough accounts and a sharp enough "talk-off"—the spiel used on debtors—a collector can fulfill his monthly goal well before the deadline. This takes the pressure off to make goal. Better yet, it gives you a chance to earn bonus money. The bonus is based on the amount collected above the monthly goal. As the company's brochure promises, "We give you the ability to write your own paycheck," referring to the bonus system. "The harder you work, the more money you will make."
Once Bart has finished the paperwork for our ID badges and the like, our training begins in earnest. Topic number one is the U.S. Fair Debt Collection Practices Act, the consumer protection law that regulates debt collection. Our binders contain the full text of the law, plus page after page of hypothetical situations to illustrate the law's application. There's also an overview of various state laws, which sometimes set higher standards for collectors' conduct than the federal act.
This is impressive. To devote this much attention to consumer protection, beginning on the first day, is not what I expected. However, as we discuss how to apply the rules in hypothetical situations, a subtext to the official lesson becomes clear. Along with learning what the law says, we're also learning how to skirt it.
"Try to sound like a friend," Bart advises. When calling a debtor's home or office, adopt an offhand tone. Call people by their first name—or better yet, their nickname. Ask for Bill or Liz, not William or Elizabeth. Keep up the pretense long enough to get the debtor on the line.
It's an adroit maneuver that flips an important consumer protection on its head. To protect the debtor's privacy, the law forbids revealing the nature of a collection call to "third parties" like housemates or relatives. Collectors are supposed to be vague about the reason for the call until they have the debtor on the line. By taking this vagueness one step further and pretending the call is a personal one, as Brad instructed, we can gain an edge in our cat-and-mouse game with nonpayers.
Another minor deception along those lines is to withhold the name of the company. We're supposed to divulge it only when asked, again as a protection for the debtor's privacy. Brad has a way of turning this restriction to our advantage.
"When someone asks where we are calling from, say 'Buffalo' instead of the company name," he advises. "It's not the answer they're looking for, but they weren't specific. If you can act like a friend for as long as possible, great."
There's also a way to use the "mute" button on our phones to spy on debtors. The button allows us to hear what's being said on the other end of the line, while the debtor hears only flat silence. Thinking they're on hold, they might speak freely to whomever is nearby. We can listen in and glean information about their ability and willingness to pay.
By the time we break for lunch, it is already clear that the business operates with two sets of rules—one to show the outside world and one to live by. As we file out to the break room, the collector with the wireless headset is still on his feet, pacing his aisle of cubicles. He's arguing with a debtor who seems to be asking for more time. "As long as you wait, your credit just gets worse, and worse, and worse," he says, patting the air downward with his hands. It's my first glimpse of the performance aspect of the job, which some skilled collectors raise to an art form.
In the break room, a spiky-haired guy in his twenties describes a run-in he's had with our agency's compliance department. This department audits a fraction of the calls that are made and enforces adherence to our agency's rules as well as debtor protection law. The collector tells us he had left a message stating that, if the debtor didn't return his call that day, he would be forced to "make a decision on their behalf."
"They said I have to stop saying that," he tells the group of us sitting at his lunch table.
"What was the decision?" I ask. The guy, who is two or three weeks ahead of me in the training program, stares at me. "The decision you had to make," I ask again. He shrugs and explains that it is just something you say. He faced no penalty beyond the admonition.
The overall thrust of debtor protection law is simple: Don't harass, threaten, or deceive, and don't breach the debtor's privacy. The restrictions that stem from the general prohibitions are many. Don't call before 8:00 a.m. or after 9:00 p.m. Don't communicate by postcard, and on and on.
It takes us three days to get an overview of the federal law, plus a smattering of state laws that add more specific protections. Massachusetts prohibits taking postdated checks; Vermont, alone in the nation, forbids us to examine its residents' credit reports. Minnesota requires each of us to be individually licensed with its state regulatory office.
Bart emphasizes the exceptions to the rules. We can call after 9:00 p.m., for example, if we have the debtor's permission. We may also call their cell phone, talk to others about their debt, and even take a payment from someone other than the debtor, as long as we have permission. The key is to document the permission in the notes we file with every call. "If you have it documented, the burden of proof is on them," he says. "Most times, our notes will be the only record of what was said during the call," he continues. We get the point.
After three days of instruction, we take a one-page test. I'm relieved when my score comes back perfect, after all my research on collection abuses. Trevor nearly flunks, missing three of the ten questions. He dismisses the result. "All this doesn't mean anything once we get out there," he says. On the collection floor, "it's only about money." Bart goes over the correct answer to each question, and then administers a makeup test on the spot for those who flunked. It's the same test we just took. Everyone passes.
On a Thursday, we receive certificates for completion of classroom training, or "Part One." We take these with our coats, binders, and soda cans to our new desks in the training area. It's a miniature version of the main collection floor, holding several dozen cubicles in two rows. Each stall has a Formica desk flanked by fabric-covered dividers, with an ancient computer terminal and a telephone. We are split up and seated among slightly more experienced people who are a few weeks further along. This group, called "Part Two" training, is performing actual collection work as part of its on-the-job training program.
The stalls exhibit aspects of their occupants' personality, by chance or by design. One woman's desk is littered with empty bags of Cheetos and Evian bottles. Some of the older trainees have tacked up snapshots of their kids to the fabric walls. My space gets the all-business look with photocopies of telephone scripts and computer instructions thumbtacked to the walls. Prominently displayed over the phone is the official script for a phone message, its problematic "mini-Miranda" warning burnished with yellow highlighter. On the desk is a calculator, a notebook for scratch paper on which to write the reference numbers of hot prospects, and the binder of training materials with red and yellow page tabs at important sections.
The office itself is almost entirely without decoration. By the elevators are a couple of framed pictures that look as though they came from the same place as the desks and filing cabinets. It's clear that these touches are for visiting clients, like the ficus in its brass stand. The walls above our cubes are adorned by simple banners, white with a gold border, that trumpet the company's collection prowess. Each one exclaims how in a particular month the goal was some number of dollars, and the amount collected a somewhat larger figure. The dates go back to 2001. The usual rate seems to be about $2 million in monthly revenue, up from $1.5 million in 2001.
At the head of our training group, at the end of our two rows of cubes, stands a dry-erase whiteboard. It displays three columns of figures in green, red, and blue ink. Having obtained a payment, a collector goes to the board and writes the amount, the account number, and his initials. Blue ink is for future payments, such as postdated checks. Red signifies an overnight payment, such as a bank check or money order that will land in the FedEx drop in the morning. Green means cash—money today—usually a check-by-phone with today's date. The board shows at a glance how much money the training group has pulled in, and who is contributing.
Joe, the trainee across the row from me, is hard at work when I take my new seat.
"Ethel, listen to me!" he shouts into his phone. "You did this. YOU did this!"
It sounds like a retired woman on the other end of the line is trying to deny responsibility for a charge account that has been run up in her name. Joe browbeats her for several minutes, rejecting her excuses.
Finally, she hangs up without paying, and he slams down his phone. Gabe, our training group manager, swivels in his chair and publicly chides him for failing to get payment. Joe complains that the debtor was a hard case.
"That's why I gave you the account," Gabe replies.
I wonder why Joe dismissed the woman's denial. Identity theft is real, after all. I will soon learn that collectors hear the excuse so often that they're not easily taken in by it. Claiming ignorance of the debt is often a debtor's first line of defense. A quick check of the account record will tell whether the claim is supported or not. If the account was immediately maxed out and then closed for nonpayment, the circumstances point to ID theft—especially if the account address is inconsistent with those on the debtor's credit report. But if the account was open for months or years, with bills going to the debtor's known address, theft seems unlikely. "Someone made payments on that account; thieves don't make payments," collectors argue.
By hitting a two-key sequence, I pull up an account onto my screen and go to work. On this day, we're working a batch of accounts from a major credit card issuer. The main screen shows the debtor's name, primary and secondary phone numbers, the notes from recent call attempts, and a summary of the supposed debt—name of the creditor and how much is left unpaid. We are told to work the order of business: Get the debtor on the phone, demand payment, and rebut their excuses. If they won't pay in full, offer a settlement, starting high and working down. As a last resort, set up a monthly payment plan, starting with a down payment of at least 10 percent of the balance. It sounds simple, but we'll learn the art of rebuttals later, when we are tutored by collection pros on the floor.
For the rest of the day, I make call after call but do not reach a single debtor, at least not one who admits being a debtor. "Jason is in the hospital," a man says when I ask for the person whose name is on the account, using the friendly first-name ploy. "This is his father, I'm his guardian. He's been in the hospital since November—hit by a car—he's not right in the head." After hanging up, I look at the account record more carefully and realize that Jason must be in his 50s, going by his date of birth. Probably it was the guy who answered the phone, making up a story designed to get me to stop calling.
The fact that debtors are running deceptions on us all the time helps my coworkers rationalize the scams we run on them. Other trainees just a few weeks out of Brad's classroom readily share the tricks they've learned as we finish out the week.
For example, when offering a settlement, you might pretend to be filling out an application. Blandly ask the debtor for their work address and phone number, their spouse's work number, and annual income. You act bored as you fill in blanks on a routine form. In reality, there's not an application; it's a ruse to get more information for your own use. The settlement rates are preapproved. The additional facts and phone numbers could be useful later in the collection process. We must fill in the blanks on this screen before the computer will accept a settlement, so we broadly construe this as an application. If the settlement offer falls through, or the debtor stops making payments, it will be that much harder for them to avoid our calls. As the mini-Miranda warning states, any information we obtain will be used for the purpose of collecting a debt.
The sheets thumbtacked to my cube are full of instructions for quick reference. One sheet lists the standard abbreviations used in our notes on each account to describe common situations. OTB means "out to borrow," what we say in our account notes when we've convinced someone to pay their bill by borrowing from friends or relatives, or from a loan company—even from the equity in their home. NLE stands for "no longer employed," a common excuse for nonpayment. Our response is to ask about their unemployment benefits. If they say their benefits only cover basic expenses, we demand to know why they are paying these other bills, and not the one we are seeking. PTP means "promise to pay," meaning the debtor will be able to pay at a future date. Seen nearly as often as PTP is its corollary, PBK, which stands for "promise broken." PIF stands for "Payment in Full," the collector's Holy Grail, payment of the full balance due on the account. A more realistic goal is to shoot for SIF, "settlement in full."
Sometimes, a nonpayer will offer an array of excuses: Their job ended, their health failed, their spouse left, their car exploded, their house burned down, or the dog died. It might be necessary to listen to these tales of woe, but there is no need to repeat them in our notes. A three-letter code covers it all: HLS stands for "hard-luck story."
The other sheets worthy of being thumbtacked to my cube are scripts for calls. One is for messages left on an answering machine. Another is for speaking with someone who knows the debtor. Almost all the calls we make terminate in an answering machine, if there's any response at all. The machine script contains the sentence that we call the mini-Miranda warning. "This call is an attempt to collect a debt, and any information obtained will be used for that purpose." We are to state that in messages to the debtor's primary phone number on the account, and when speaking to a debtor, our training says.
"You don't have to say that," says Aaron, the collector to my right, after overhearing me recite the mini-Miranda into the phone for a few days. Aaron is no Joe. He uses a soft-voiced, friendly approach that emphasizes the benefits of settling the account. But he's no fool, either. No one, or practically no one, repeats the long and boring disclosure statement, though most of us have tacked it up in our cubicle. Joe shows me the message he really uses, handwritten on a scrap of notebook paper he can slide under his keyboard. It's a variation on the ominous "decision on your behalf" message that was supposedly outlawed by compliance.
Three training managers patrol our end of the room. They jump on the phone when we get a live debtor to provide a "second voice" and show us how to record payments on the computer system—something we get little practice with. The training managers also assiduously avoid acknowledging breaches of the official process. At one point, Joe asks Mabel, the training group manager, to look at the message he has worked up—he seems proud of it—and she refuses. "We gave you the message [script]," she tells him. "If you're using something else, I don't want to know about it."
The computers here are no newer than the antiques back in the classroom. Small, black-and-white screens that display only text, they are throwbacks to the days before Microsoft invented Windows. A cursor blinks on a black background, awaiting a command from one of the lists thumbtacked on my wall. The advanced age of these little tubes belies their power, however. They can reach into the tens of thousands of account records, which are stored in servers stacked somewhere in the depths of the building. They can pull up screen after screen of information on each of these thousands of accounts. Another program taps an online database that can find current and old addresses as well as phone numbers at work and home; it can even search for the debtor's relatives and neighbors, based on surname and address.
The most powerful tool, however, is the credit report, which pops on the screen instantly from one of the major credit bureaus. The credit report lists your debts, paid and unpaid, and your open charge accounts, plus bankruptcies and civil judgments. To a trained eye, it lays bare your financial pressure points. A mortgage payment means there's a house you might lose. A big car payment means you have a ride that you're proud of. To a collector, possessions equal weakness.
Even with all the tricks in the book, getting money from people who don't want to pay is a frustrating task. It takes persistence, all right. Toward the end of the day, Benjamin, a gentle-voiced collector on my row says, "If one more person hangs up on me, I'm going to snap."
"What do they think," his buddy Aaron replies, "the money is just free?"
Even though I've just started, I don't remember having ever been so glad for the passage of time on a Friday afternoon, as the clock ticks toward 5:00 p.m. to end my first week as a collector.