The Economy: Don’t Pick Up the Phone

The tanking economy isn’t exactly your fault, but America’s biggest debt-collection company — headquartered in Horsham — will still hunt you down

AND THERE IS, of course, the classic defense of bill collecting: It may not be pretty, but it’s necessary, because without bill collectors, there’s no way to separate the people who make good decisions about how to spend their money from the people who make bad ones. The bill collector is a responsibility enforcer in a system that depends on responsibility for its very survival; he is basically the consumer economy’s obese and omnipresent umpire. The fans may hate the ump, but without the ump, the game grinds to a halt. The game stops being fair. The ump isn’t good or bad, he’s just a necessary part of the way the game is played, entwined with its fundamental structure. But this leads to the question that Barrist — and all of us — are now facing: Who’s good anymore? Who’s bad? How do you spot a deadbeat in the middle of a Depression? Is a laid-off worker at General Motors or Goldman Sachs a deadbeat? Is a recent divorcée? An uninsured cancer patient? “We’re on the Main Line here,” Cary Flitter, a Narberth attorney who represents plaintiffs in FDCPA cases against debt collectors and buyers, including NCO, told me. “We’ve got a lot of [clients] who make healthy six-figure salaries. I’m not talking $100,000. They’ve got homes over a million dollars. And they’re getting collection letters.” Here’s the weirdest part: Barrist actually agrees with Flitter. He admits that the profile of the average debtor is changing.
 
If Barrist never describes the people who owe his clients money as deadbeats, it’s not merely because they simply aren’t; it’s also strategic, his concession to the fear and panic of the moment, the feeling of pervasive doom that’s enfolding America like a Snugli. “The new economy we’re in, while overall it’s good for people in our business,” Barrist says, “the reality is, it’s harder and harder to collect from consumers, because they’re in a tough spot.” (Sure enough, NCO has reported net losses for the past eight quarters.) The number of debtors has gone up, but the average payment has gone down. Barrist claims that NCO is softening the tone of its collection calls and offering more payment options to debtors: workouts for 80 cents on the dollar, installment plans. Getting a call from a debt collector is never going to be “the best part of the day,” but still, “We want them to see this as a professional, reasonable process,” Barrist says.
 
That might not be spin. For a time, it paid for the debt collectors to be nasty on the phone, because you, the debtor, probably still had something to lose; you still had a little bit of wiggle room in your budget, or a slightly decent credit rating. You could still buy a house or a car, assuming the debt collector didn’t spray shrapnel into your credit report. But today, even people with amazing credit can’t get a car loan or home loan. A debt collector who threatens to destroy your credit doesn’t seem quite as scary in a climate when good credit is increasingly irrelevant. Even as collectors see their business growing, they see their leverage shrinking.  
 
This month, President Barack Obama will be sworn in, and life will get more difficult for debt collectors; the federal laws, which haven’t been substantially revised since they were enacted, when Barrist was a teenager, are about to be tightened. What this means, for someone like Tara Burkholder, is that help is on the way. The next call from NCO is likely to be a little bit nicer, a little bit sweeter, a little bit gentler. And what it means for Michael Barrist — this guy who built a billion-dollar company by predicting and molding the sorts of consumer behaviors that nobody else wanted to deal with — is that maybe it’s a good time to diversify into businesses “that are not directly tied to consumer behavior.” NCO has all these call centers, see, and many don’t have anything to do with debt collecting. They’re just buildings full of phones and headsets and Successories posters. You call a company about something you bought. You think you’re talking to the company. You’re not. You’re talking to an NCO employee. This may be the debt collector’s greatest trick. Envy his wiliness, his resilience: To wait out the coming Depression, he manages to disappear.
 
E-MAIL: jfagone@phillymag.com

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  • Maggie

    SHAME ON ALL THESE DEBT-COLLECTING COMPANIES. Shame on anybody who is so desperate or stupid as to work for them. And shame on the greed-driven credit card companies and others these companies collect for, with the usury rates of interest they charge. Harassing wives and children of people deployed to Iraq and breaking federal law to collect debts. Badgering dying cancer patients for a few dollars. Call after threatening call demanding money, stressing and eventually driving an 86-year-old widow to a stroke. (this actually happened to a lady I know)The list of abuses by debt collectors goes on and on.Small wonder fewer and fewer people worry about defaulting on payments. My children need food before Barrist and Piola need another Mercedes.And by the way if the USA had SINGLE PAYER HEALTH CARE FOR ALL –- real healthcare, not for-profit “insurance” — many if not most of these "debts" wouldn't be owed.

  • MattyMat

    Good story on the "Robo-Collector". I have my own story that involves harrassing debt collectors that has a rare, but happy ending.Back in the day, I used to work as a collector when I was going through college, and saw pretty much exactly what your story describes– unscrupulous behavior in order to collect debt– I even witnessed one collector threaten an old lady that "he will be dropping by" because he knew where she lived. And that worked– to the tune of 5 grand. I also learned the laws that are in place concerning debt collection– more specifically– California law. Fast forward to a couple months ago—I received a phone call from a debt collector that immediately started out with a very aggressive, threatening tone. I had not seen any paperwork on this "alleged" debt– and what the persons (I asked to talk to her supervisor) were doing were trying to get a verbal agreement for payments, which is binding in CA. I asked that they do not call me at this number agai

  • MattyMat

    again. The phone calls never ceased. Harrassment– against the law. I immediately called a debt collection legal service, logged all the phone calls, etc. and just yesterday received a settlement that erased the debt, payed for lawyers fees and put a little money in my pocket.There are laws people– harrassment is AGAINST the law– and you too can get your debt erased by these pathetic, any means nessessary debt collection firms. I know I did– …and to think— if they were only professional about it– I would have paid them. Oh, the irony.

  • Jeannie

    The tanking economy isn’t exactly your fault, but America’s biggest debt-collection company — headquartered in Horsham — will still hunt you down

  • Sharon

    Being on the receiving end of Mr. Barrist's billion dollar industry, I find it hilarious that I'm dismissed as one of those "people who made bad business decisions on how to spend their money." I went from being a single mom living in my car with two small children, to earning a college degree. However, that which was supposed to save me, turned out to be the biggest mistake of my life. After graduation, apparently, the "bad" choices I made included feeding my kids, paying the late fees to get my electricity turned back on & repairs on my 20 year old car so that I could keep my two jobs, in lieu of re-paying my student loan debt. The original $27k in student loans is now $70k (this is the arbitrary amount that NCO is garnishing my 30k a year salary for. So now, I go without eating a few days a week in order to pay my rent. Mr. Barrist has made a fortune since discovering that student loan debt cannot be discharged through bankruptcy, there is no statute of limitations on colle

  • sharon

    I wasn't done…Mr. Barrist has made a fortune since discovering that student loan debt cannot be discharged through bankruptcy and there is no statute of limitations on collecting. Even my social security can be garnished. Conflatulations, Mr. Barrist. You're a rich man. I read that you recently had to cough up four million of your own money to stay afloat. Careful, don't squander the profits from the business you inherited from daddy.

  • Clarence

    Mr. Barrist's employees have violated contract law: demanding payment where there is no evidence of a contract,third party adhesion contracts without disclosure are illegal, nondisclosure of terms of a contract are illegal. Refusal to identify the person demanding payment has no standing in law. Creating money, monetizing a line of credit issued on a persons signature is fraud.

  • Jennifer

    I would not pay NCO a dime directly. They are known not only for fabricating bills, but overinflating them, and not turning money over they may have legitimately collected to their client. These people need to be shut down. As far as the student loan, how about deferrals? NCO never gets a judgement unless the person owing the bill doesn't show up in court.

  • dave

    i got a new number, thought that it was just coincidense that i started to get these calls for a women i don’t know. maybe the lines didn’t get switch over or something, anyways. i informed NCO financial that i wasn’t her, so what do they do, mind you they haven’t addressed themselves at this point. they asked for my personal information to see they had an account for me. i can go on and on, not enough room for the texts.

  • Consumer

    If Congress increased the statutory damages from $1000 to $5000 available under the FDCPA, we wouldn’t have all these problems with debt collection agencies anymore. The federal CFPB has to step up and regulate debt collectors directly. There is no federal oversight.