WASHINGTON -- Most people want to pay their bills, says Michael Sutherland, president and chief executive of American Collections Enterprises. They just need a little assistance. Which is what his callers are standing by to deliver. So please don't hang up.
At first, Martin and Pamela Pugliese, who live near Flint, Mich., didn't hang up when collectors called about a $5,000 credit-card bill. He told them he had been injured on the job, his wife had lost hers, and an investment had dried up.
"I'm in a destitute situation," he told the callers. "I don't have any money."
The calls kept coming, as often as 10 times a day, hundreds a month, a total of 912 times over a three-month period, the Puglieses allege in a lawsuit against the collectors.
"They were just unrelenting," Martin Pugliese says. "I got so many calls, I couldn't answer the phone anymore."
"He almost had a nervous breakdown," Pamela Pugliese says. "It was horrible. They should not be allowed to do that."
"They said we should sell our stove, our refrigerator," Martin Pugliese says. "They were telling me I was a loser, that I intended to never pay my debt. That I was basically like a deadbeat. Here I am, 55, working my whole life away and getting into a financial crisis. It was very demeaning to me."
Consumer advocates say the Puglieses' case is one of many in which overzealous collectors break the law by harassment. "It's another example of a broken industry, one that's really out of control, whose behavior is growing more and more reckless," says Ira Rheingold, executive director of the National Association of Consumer Advocates.
Although federal law prohibits such abusive tactics, the collections industry gets more complaints lodged with the Federal Trade Commission than any other. The Better Business Bureau's Washington-area office had a 40 percent increase in complaints between 2006 and 2008 and expects 2009's tally to be an all-time high.
In recent years, the FTC has levied hefty fines in the most egregious cases: debt collectors who used racial epithets and profanity and contacted employers and relatives about a consumer's debt. Last year, consumers filed a class-action lawsuit against debt collectors who they allege used a practice called "sewer service," claiming to have served a defendant with court papers that were never delivered, to win judgments fraudulently.
But Rheingold says the fines don't deter collectors from pressing hard, especially now: "They do a cost analysis and come to the conclusion that being aggressive and crossing the line is worth it because they're not going to be shut down."
Sutherland knows how lousy his industry's reputation is. At a party recently, he was asked, "How does it feel to get paid for being an (expletive)?"
Bad collection agencies make it more difficult for the ethical ones, says Sutherland, who has joined an industrywide effort to change collectors' image. He spoke proudly about the extensive training his employees receive on state and federal law, which mandates, for example, that collectors may not call with excessive frequency or before 8 a.m. or after 9 p.m.
His callers try to protect debtors' confidentiality, Sutherland said. When they reach, say, a roommate, they ask for the consumer without divulging the company name. Asked who's calling, they say it's "personal." If pushed, they say they are calling from "ACEI," the company's initials. Only if pressed again do they reveal that they are calling from a collection agency.
Sutherland requires his collectors to sign a pledge promising to treat debtors "with dignity and respect." Plus, being a jerk isn't good business: "If you're mean and nasty to them," says Sherrie Miller, a senior collections manager at the firm, "you are not going to get the results you want."
