Media Reports Blacken Eye of Entire ARM Industry

And now to the industry’s other black eye: an ugly contusion, principally of its own making. (Read about the first black eye)

 

On May 28, 2010, a jury in Texas awarded a Dallas consumer, Allen Jones, more than $1.5 million in damages after he sued Philadelphia-based collection agency Advanced Call Center Technologies, LLC (ACT) for violations of the Fair Debt Collection Practices Act ("Jury Hands Down $1.5 million Verdict Against Debt Collection Agency," June 1).  In a series of phone messages recorded by Jones—some of which were left before 8am as proscribed under the FDCPA—collection representatives from ACT assailed Jones in language that most reasonable people would describe as hate speech.

 

The calls were placed by ACT employees under contractual agreement with Bank of America to recover a credit card delinquency of less than $100.  The messages were profanity-laden.  They were racist.  They were illegal.  They remain inexcusable.

 

That said, ACT acknowledged the verdict, terminated the employee or employees responsible for the calls, and restructured some of its management.  But ACT also continued to receive placements from Bank of America subsequent to the judgment against it.  That is, until last week.

 

Almost four months to the day after the Jones trial, ABC News approached Bank of America CEO, Brian Moynihan, on the street armed with cameras and a copy of the ACT messages Jones had taped.  Moynihan was nonplussed; two days later, the creditor severed its relationship with ACT.  Bank of America officially cited “issues surrounding the economy” as the basis for its decision.  That same beleaguered economy that had been officially in recession since December 2007 and arguably farther from recovery at the time of the Jones verdict than it was just a few days ago.

 

You say potato, I say headline risk.

 

This is the story of mutual and compounded failures.  Both the creditor and the collection agency ostensibly abandoned their responsibility to vet, to monitor, to educate, to train, to comply, and to control.  ACT has already paid a high price for its mistakes.  But the ultimate cost of its missteps remains to be seen.  Rest assured, however, that the toll will not be restricted to a single collection agency.

 

Headline risk is the second black eye.  So what can the ARM industry do to keep this problem from swelling out of control?

 

First, the industry’s trade associations should finally step up and do triage.  Like it or not, the battlefield has arrived at their doorsteps.  Codes of conduct and ethics must now become more than words on a page.  In the days since the recent ABC News story on Bank of America broke, Google alerts for terms like “debt collection” are suddenly dredging up articles, video, blogs, and message board chatter that are in some cases years old.  Why?  Because people are talking, and people are writing, and headlines are being made.  And those people aren’t just consumers and newspaper reporters.  People are men like Senator Al Franken.  People are women like Elizabeth Warren.  In the service of the greater good of its members, ARM industry associations should begin actively dissociating its compliant members from companies that violate established rules of professional conduct.  Triage in this instance means letting the dead bury the dead.

 

Second, each and every company in the collection industry should immediately treat the inevitable problem of headline risk as a mirror instead of a veil.  The ARM industry cannot hide from this threat to its very existence as we know it.  Rather it should convert the lesson of ACT – Bank of America into a diagnostic tool.  Business owners and executives should seize upon the opportunity to review their internal business practices, to invest in the monitoring and training of their employees at all levels of the organization, to make hard decisions as situations warrant, and to get ahead of—or at least keep pace with—impending and inescapable regulatory reform.

 

Headline risk is the second black eye.  The ARM industry must act now, before it goes blind.