Consumer Law

Some Municipalities Using Private Debt Collectors

By M. Stan Herring

Business Week posted an article bringing attention to some cities and states decision to enlist private debt collectors to track down and collect "fines", such as speeding tickets and library fines. Jessica Silver-Greenberg and Peter Carbonara, authors of the article, say the idea behind this is to cut cut costs by collecting these unpaid fees from private collectors rather than hire more government employees saying their employees do the job just as effectively.

The idea is that private collectors would have more resources (and possibly time) to collect fines that a government employee wouldn't be likely to pursue, like a library fine. However, private collectors are often less effective. In March the IRS ended a four year contract with private debt collectors and instead hired 1,000 employees at the agency.

Some agencies using private debt collectors haven't been well recieved.

Not only are private debt collectors less effective than public ones, but a number of companies benefiting from the privatization trend have been slammed by regulators and prosecutors for overcharging municipalities, bribing public officials, and other predatory behavior. Some municipalities have stopped outsourcing their debt collection efforts altogether.

If you have questions or have had problems with a debt collector, feel free to contact us.

Full post as published by Alabama Consumer Blog on March 26, 2009 (boomark / email).