A Masked Man Testifies…on Debt Collection

When a witness testifies before Congress using a pseudonym and wearing a mask, it might mean trouble for an industry. In a March 1976 hearing, a “James Clark” testified to his activities as a debt collector, practices he said were not condoned, yet widespread in the industry. Some choice quotes include:

• “The most common technique for collecting debts was known as beating. This is continuous calling of an individual…
• “You could call and threaten a debtor with any number of things. You could threaten him with suit; you could threaten him with losing his children and putting them in orphanages; you could threaten him with going to jail; you could threaten him physically.
• “

[I asked a debtor] ‘Ma’am, what size shoes do you wear?’
And she told me, ‘I wear a size 7.’
And said, ‘Fine, ma’am, I am going to have a pair made out of cement for you and we’ll send them over…

“[We had an arrangement with] a judge in the minor judiciary. And for a certain percentage, a certain dollar figure, this judge gave us blanks with his letterhead on it. And we were given a pad or two pads of these blanks in order to send them out to the debtors, to tell them that they owed the money, and that the account was now in his hands.

“We in the office had a closet full of police and other law-enforcement-type uniforms. We had numerous badges of law-enforcement officers.

“[W]e had a special line that answered ‘Sheriff’s Office.’ and this way we could call the debtor, and if he had not responded to the attorney, me, the sheriff could explain to him that he was going to jail or whatever.

“…The legitimate, strictly-by-the-law agencies are absolutely, definitely in the minority. They cannot operate effectively…we did not belong to any associations, clubs, whatever. It was a waste of time. They prescribed all kind of idealistic codes of conduct, and they were all a bunch of bull, because they themselves did not adhere to them. Why should we? They collected their membership fee, and that was all they did. [1]

Debt collection was an industry where self-regulation failed utterly. Abusive practices seemed to be ignored or even rewarded. As Representative Frank Annunzio related in a hearing for legislation that ultimately passed as the Fair Debt Collection Practices Act (FDCPA), the largest debt collection trade association had done nothing to police two agencies that had been sued by the FTC. In fact, the association’s president elect was under permanent injunction against engaging in illegal debt collection practices.[2]

[1] Hrg. on H.R.11969, The Debt Collection Practices Act, before the Subcommittee on Consumer Affairs of the Committee on Banking, Currency and Housing, House of Representatives, 94th Cong. 2nd Sess., March 30, 1976.

[2] Hrg. On H.R. 29, the Debt Collection Practices Act, before the House Subcommittee on Consumer Affairs of the Committee on Banking, Finance and Urban Affairs, 95 Cong. 1st Sess., Mar. 8, 1977.