When debt collectors pretend to be the police
Why Better is Forgiving $1M of Medical Debt in Georgia
Today, we are forgiving $1M worth of medical debt in Georgia as part of our campaign to abolish $16M in medical debt across the US. Georgia has more medical debt than any state Better has visited. In many cases, illegal tactics are used by debt collectors to intimidate people into paying.
Is Georgia a Haven for Debt Collectors?
A uniformed police officer came knocking on the door of a home in Dekalb County, Georgia, an affluent and diverse suburb of Atlanta. He was looking for a resident who owed money for an old medical debt. He was carrying two sidearms and a warrant. There was one unusual feature of his uniform. Beneath his badge was the name of a debt collection agency. He was a debt collector posing as a police officer.
The uniform was stolen and the fake police officer was using a familiar debt collection tactic, attempting to intimidate the resident by pretending to be law enforcement. Unfortunately, this is a common practice in Georgia.
“Federal authorities last year accused an Atlanta (debt collection) firm of terrifying people into paying debts, including some they did not owe, by using profane language, calling at all hours and impersonating law enforcement officers.” — Lois Norder, Atlanta Constitutional Journal: Is Georgia a Haven for Abusive Debt Collectors?
According to a new Urban Institute Report, 22 percent of Georgia residents report medical debt. In Warren County, it is a staggering 62 percent. The fake policeman is an extreme example, but Norder’s article describes a range of debt collection activities that are illegal from impersonating police officers to threatening arrest and physical violence. For example, consumers received phone calls calling them,
“…dirt bags, idiots, dummies, piece of scum and worse.”
Abusive behavior by debt collectors is something we covered when we forgave $1M of medical debt in Arizona. In Georgia, we looked into the process of debt collection.
Why Does the Debt Collector Call?
Medical debt is often unplanned and unavoidable. It is not like a car loan or shopping on credit. An accident or medical emergency, even for people with health insurance, can leave them with massive and often unpayable medical debts. This is how Americans get medical bills they can’t afford and in Georgia, like many other states, medical debt is big business. For example, in 2015 there were $36B in unpaid hospitals bills in the US. Hospitals and other healthcare providers do not have the time or resources to pursue unpaid bills so, after 60–90 days, these medical debts are often passed on to collection agents.
Inside the Debt Collection Agency
Debt collectors work on behalf of creditors, using lists that contain names, addresses, social security numbers, and other personal information of the individuals with debt. The main tools of a debt collection are letters, phone calls (including robo-calls), reporting debt to consumer credit reports and less often, legal action. In order to find out how debt collection actually works, a financial journalist called Fred Williams went undercover at a collection agency.
“Get the money!” our team leader exhorts us in a brief morning huddle. Then we hit the phones, making 150 to 200 calls a day.”
The debt collectors are highly motivated to persuade the consumer to pay.
“In this upside-down world, unpaid bills are a boon, not a curse. The bigger, the better. If we collect, the agency gets a bounty of 10% to 50% from the creditor, and it gives us a cut…Motivated strictly by cash, collectors manipulate, shame and threaten people into paying, without caring whether the bill is legitimate.” — — Kiplinger
Williams reports that how this particular agency skirts the law, rather than stepping way over line like the fake police officer in DeKalb.
“Outright deception is forbidden, but sometimes my co-workers pose as paralegals or even as “fraud investigators,” to imply that criminal charges are looming.”
Theses debt collectors will make deals, reducing the “sticker price” of the total bill and offering consumers unsafe financial advice like using their IRA savings, not making mortgage payments, taking out home equity loans, or paying off the old debt by loading up a new credit card.
“If a debtor opts to settle, I am trained to take their application. In a bored voice I ask for their cell-phone number, their spouse’s work phone and so on, as if I’m filling out a form. There’s no application; we get the phone numbers to hound them if their payment falls through.”
The bottom line is that the debt collectors who contact Americans in debt are focused on getting paid and use almost any tactics to make that happen. However, understanding how debt collectors work makes it simpler to deal with them, if they call.
Five Simple Steps To Dealing With Debt Collections
As with so many other aspects of healthcare, it is the patient who has incurred the unexpected medical debt who has to deal with the financial consequences. Luckily, there is support available. Since we were in Georgia, we contacted Georgia Watch, a consumer advocacy non-profit and spoke to Beth Stephens who directs their Health Access program.
“We know that Georgia has one of the highest percentages of individuals with consumer debt in the nation. It’s an issue we really care about so we wrote a resource on medical bills and medical debt and debt collection.” — Beth Stephens, Georgia Watch
Beth co-authored (with Berneta L. Haynes) the Georgia Consumer Guide for Medical Bills and Debt that contains practical information on how consumers can protect themselves against unexpected medical bills and what to do if they receive one. It also links to their excellent instructions for dealing with debt collectors: When a collector calls: An insider’s guide to responding to debt collectors
Here are the five most useful steps you can take to deal with debt collectors:
- Do Not Ignore Debt Collectors
As Beth writes in the consumer guide, “Debt does not go away if you ignore it.” Ignoring letters and phone calls almost guarantees the debt will be reported to the consumer credit reporting agencies or result in legal action. If anyone in debt is in a position to offer payments, they might want to consider negotiating a payment plan with the debt collector. Unfortunately, this is impossible for many people since 63 percent of Americans do not have enough savings to cover a $500 bill.
2. Protect Your Information
Fake policemen are not the only imposters preying on consumers. Fake debt collectors scam consumers, requesting personal information to use for identity theft.
“Criminals, pretending to be debt collectors may ask for your FULL Social Security number, COMPLETE birthdate or other personal information that seems excessive, and won’t offer you alternatives for verifying your identity.” (Insider’s Guide)
Do not provide this information. A legitimate debt collector is required to verify a consumer’s identity by asking for name, address, only the month and year of birth, and only the last four digits of a Social Security number. However, you are not obliged to give any information over the phone. It may be safer to,
“Ask the caller to send you written information about the debt and the collection agency. Tell the caller you won’t discuss the debt until you receive the letter.”
3. Verify it is Your Bill
Consumers have the right to demand that the debt collector prove that the debt is valid. The Insider’s Guide writes that, “The first time you speak with them (the debt collector) about the debt, get a clear understanding of which debt they are calling about. Ask for the amount you owe (with details of fees, interest and the age of the debt).” You also have the right to request a document called a debt verification letter. There is a really detailed article on verification letters, what they should contain and how to obtain them atNerd Wallet.
4. Know Your Rights
A fake policeman on the doorstep is, unsurprisingly, very illegal but so are many common practices of debt collector. They cannot:
Call you before 8am or after 9pm
Talk to family, friends or coworkers about the debt
Harass, threaten violence or harm, use obscene language
Publish anyone’s name in a list of debtors
Make false statements (including pretending to be law enforcement officers, or threatening legal action they have no intention of pursuing)
Anyone with a debt write can demand in writing that a debt collector stops contacting them. It must be a letter, not a phone call or email. If a debt collector violates consumer rights, they should be reported to the Consumer Financial Protection Bureau (CFPB) and/or state regulators.
5. You Can Never Keep Enough Notes
What is true of dealing with health insurance or healthcare treatment is even more true when dealing with debt collectors. Save letters, invoices or documents and make notes of any conversations.
“ Write down and keep details about all phone calls, including dates, times and topics discussed, and any letters or emails you receive.” (Insider’s Guide)
Detailed notes are evidence and valuable in a complaint or legal action against a debt collector. Record any agreement or payment plan in the same way, and request the debt collector confirms in writing.
Why We Are Abolishing Debt in Georgia
In case you were wondering, the fake policeman was arrested and jailed. Unfortunately, debt collection will continue to boom in a healthcare system makes it too easy for ordinary Americans to find themselves in medical debt. By abolishing the debts of ordinary Georgians, we are lifting a burden from their credit records so they can get on with their lives. We are very grateful to Liz Coyle and Beth Stephens of Georgia Watch and the amazing work they are doing to help consumers. Finally, thanks again to all our users for their support and making this debt abolishment possible.
Georgia has been our third stop in our state-by-state campaign to buy back medical debt, ending on John Oliver’s doorstep in New York City. To discover our next stop, follow us @BetterClaims and help us #BeatJohnOliver
