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| No | 59% | 181 votes | Total: 305 votes | |
| Yes | 41% | 124 votes |
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Add to FavoritesWe are living in a world where identity theft is rampant. One of the things that I feel helps drive this escalating crime is none other than third party collections agencies. As the name implies, these are third parties that operate to collect debts for original creditors.You are very likely to run across these types of collection agencies if you fall behind on your debt obligations.
What's the problem with these agencies? Few people may realize that the original creditor has turned your private financial information over to these agencies. The issue here is that you only need to do a little research to see that some of these agencies are less than honest in their business dealings.
In fairness, there are honest people that work within these organizations. The problem is that there also some very questionable people that either own or work in these types of agencies. Once the original creditor has turned your personal financial information over to these companies, then they have little if any control over the safety and security of your data.
Third party collectors are required to do background checks on their employees, however these are notorious for being outsourced as well. Background checks seldom catch problem employees because the checks themselves are not conducted properly.
Right now in this country, original creditors are giving personal financial data to third parties that shouldn't have access to this data. You may be shocked to find out that your personal financial data is in the hands of collection agencies with horrific records in regards to their efforts to comply with the applicable laws governing the collection process.
This whole process has serious security flaws that leaves you vulnerable to identity theft. Every single time your private data changes hands the odds are greater that it can be compromised.
One could argue that this industry is regulated,however, there is simply no way to effectively enforce the regulations to the point needed to protect the average consumer.
In my opinion the only way to minimize the risk and help protect the data is to shut down the exchange of information. Original creditors should be required by law to perform their own collections and safeguard the consumer's data. Even this option will not be completely safe, but I feel it removes the additional risk associated with handing someone's personal financial data over to a company that may not be setup to adequately secure the data.
Learn more about this author, Kerry L. Thomas.
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Yes
Third party collection agencies are among the most reviled financial organizations in our modern world. Just a step up from loan sharks in many people' minds. Some of them have truly earned that reputation.
From the verbal abuse to the excessive calls to downright illegal threats that are made, there are atrocious collections agencies out there. Not only are they atrocioous, but they do need to be stopped. Their tactics and results do not good for anybody and cause problems for other, legitimate agencies. These companies are in business to make money. Abusive tactics do cause people to pay up more money - out of fear, annoyance and ignorance.
Third party collections agencies are a distasteful fact of life. However, they should not be made illegal. They are just attempting to collect on a legal debt. Additionally, they help keep the cost of borrowing money less expensive for the rest of us. These vultures, by feeding on the bad credit cases, make it less expensive for the companies who offer credit to do business.
Creditors know that a portion of the credit they extend will not get paid back, even if they only lend to people with perfect credit and incomes. Things happen that change people's situations. A good number of people who get into credit problems did not overextend themselves or fraudulantly obtain services. They just had a change - often not in their control - happen that turned a good situation into a bad one.
When that happens, the creditors now have a dilemma on their hands. They can keep the debt in house and try to collect on it. That way, they get the most money back. Unfortunately, that takes a lot of people to track and follow up on these delinquent and bad debts. It only gets worse when the economy goes into a slump. Often, keeping it in house is break-even at best. Or they can charge off the bad debt and sell it to a third party agency for collection. Selling off the debt reduces the loss the originating companies will take on the bad debt. This mitigation means less money that needs to be made up by the other customers.
That is why bad debts will be frequently be sold off. This helps the lenders because the non-performing debt is no longer on their books. Second, they get cash up front to offset a portion of the bad debt. Finally, this additional cash allows them to focus on what they do best: selling cars, furniture, originating home mortgages, catering parties, etc.
It also benefits the consumers as it offers a quicker route to get out of debt. By buying the debt at a discount, third part collection agencies do not need to receive the full amount of the debt in order to make a profit. Consumers can often negotiate with these companies to discharge the debt for 50% or less of the original amount; even though it would have cost more to settle with the original creditor.
Think of a situation where an abusive husband beats his family to make them do what he wants. He should be punished. Yet, just because there are husbands who are abusive, there is no reason to punish every other husband who is not abusive. Likewise, even if most third party collection agencies use abusive tactics, the ones who choose not to should not be punished because of the others.
In summary, it is not the collection agencies which are the problems. It is the abusive collection agencies. They need to be dealt with appropriately. Abusive companies need to be penalized, hugely. At the least, being abusive needs to cost more than the companies can make from those actions. Preferably, the penalties should be severe enough to force abusive companies out of business. Keep the companies that are fiar and play by the rules.
Learn more about this author, Jack Thornton.
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