Debt Collectors From NCO Make 400 Million Calls a Year
Four hundred million times a year, employees of a little-known company called NCO dial the telephone “just to talk.”
NCO’s hope: A simple chat will convince people to pay old debts.
“We have to strike a bond with someone,” said the company’s CEO, Michael Barrist. “We want them to explain their situation to us, and we’re going to try to work out an arrangement that they and the client can live with. That is our goal, so that they can pay our client.”
Despite the best wishes of Barrist, the world’s largest debt collection company generates thousands of consumer complaints about its practices each year and has paid settlements of $1.8 million to federal and state authorities.
But officials at NCO Group, based in the Philadelphia suburb of Horsham, Pa., insist that NCO takes pains to follow state and federal laws. Abuses by NCO collectors are the exception, not the rule, Barrist said.
“People have a perception of what and who the debt collector is,” Barrist said. “That’s not us.”
With unemployment and foreclosures rising, Americans now face more pressure from debt collectors, who must work harder to squeeze out payments in lean times, according to consumer advocates and industry experts. Consumers are increasingly complaining about debt collection practices to the Federal Trade Commission, and many of those complaints are levied against the industry giant, NCO, which employs 15,000 debt collectors worldwide and holds 600 million to 1 billion collection accounts at any time.
“We clearly understand that people don’t like being called by collection agencies,” Barrist said. “And we can’t make it a pleasant experience because nobody’s ever going to say, ‘Gee, I’m glad you called today.’ But we try very, very hard to make sure it’s done professionally.”
Since 2007, NCO has generated 7,964 consumer complaints to the FTC, nearly twice as many any other debt collection company.
Many of the complaints claim the company violated federal law by misrepresenting debt, repeatedly calling other people, and failing to send written notice, according to the FTC records.
Furthermore, the rate of complaints against NCO is rising faster than the collection industry as a whole. During 2009, all debt collection complaints to federal authorities are on track to increase 6 percent over 2007. In the same time period, complaints against NCO have risen 23 percent.
“I think we have the best record in the industry, statistically,” Barrist said, since the company handling the most accounts is likely to have the most complaints. “With that said, I take every one of these complaints seriously. I’m a big believer that regardless of whether NCO is at fault or not, the first thing we should be doing is saying we’re sorry and hearing what is going on.”
The FTC disciplined NCO in 2004 with a civil penalty for $1.5 million for misreporting consumer information to the credit reporting agencies, according to the FTC. Barrist blamed the blunder on another collection company, now-defunct Commercial Financial Services, which had worked the debts before NCO.
In 2006, Pennsylvania authorities settled with NCO after the company generated 800 complaints over a two-year period. NCO paid the state $300,000 and promised to follow the law. A spokesman for the FTC declined to say if it is taking any action against NCO, and a spokesman for the Pennsylvania’s attorney general office said it doesn’t have any pending cases against NCO.
Founded in 1926 as National Collection Office by Barrist’s grandfather, the company has grown explosively in the last two decades. In 1991, NCO had 63 employees, according to a company profile at the time. Now, it has 34,000 employees, about half of whom work in collections, according to Barrist.
Consumer advocates argue that the only way to get results in tough times is to be as aggressive as possible. Ira Rheingold, executive director of the National Association of Consumer Advocates, points out that NCO pays its collectors in part based on how much money they can recover.
“You’re going to see lots of bad behavior,” Rheingold said. “Institutionally, you have created a system that will encourage abusive behavior and harassment.”
Barrist disagrees. Outrageous tactics don’t work — and they hurt a collection company’s bottom line, he says.
“If you’re abusive to them on the phone, they’re not going to pay you,” he said. “All it does is start a whole chain of complaints and problems for the company.”
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