Monthly Archives: May 2007

MarketWatch is playing with my world view.

MarketWatch is an online news outlet that is almost entirely finance based. In fact, its logo includes the words, “From DowJones”. Its headlines are usually things like, “Analysts bullish on REIT stocks after recent pullback”. So, I’ve always considered it an arm of big finance and bigger business. Yesterday evening, on my MarketWatch RSS feed came the headline, “How to Handle a Debt Collector”. I took another drink of my wine and checked that one again.

Yep, MarketWatch ran an article that included things like:

Have you convinced a debt collector to stop calling? It likely won’t be the end. You may hear from several collectors down the road, thanks to “debt buyers,” which have been springing up since 1989, when creditors began selling debt.

Even more interesting,

Of particular concern: The large number of FTC complaints — 14,700 — that allege debt collectors are harrassing consumers, often by calling them continuously. Also, some 8,000 debt collectors in 2006 were said to have used profane or abusinve language.


The FTC also alleges that debt collectors who obtain authorization to do automatic debts from checking accounts sometimes take more than the amount authorized. Some have even given debtors an incorrect address so letters disputing debts won’t be received. That’s almost clever, actually.

I’d really like to be shocked — but I’m not.

I am a little surprised, though, at the source of the story. I also found it interesting that the FTC is holding a debt collection workshop this October (is that some kind of hands-on how-to session?) which could influence the FTC’s annual report to Congress. (An FTC sponsored debt collection workshop?)

The article also quotes some facts about the collection and repurchase industry that shouldn’t come as a surprise to those of us who work with debt. Debt repurchasers are paying on average 5.3 cents on the dollar for debt. The older the debt the more expensive to collect. Debt collectors have access to data bases that can track you down when you move — as one third of the population does each year. Oh, and those old stand-bys –interest never stops accruing and that is before adding collection fees and attorneys fees. So, the older it gets — the bigger it gets.

I am starting to wonder about my life when I am more surprised by the source of this article than its contents.


So, why didn’t I think of this?

I spent most of my undergraduate years as a member of a collegiate mock legislature. So, I know how to draft legislation. I went to law school and survived legal research and writing, so I should be able to figure out basic statutes and municipal regulations. I even have friends in politics. So, why didn’t I think about opening, “The Law Store”? Probably because I don’t live in Florida.

The Orlando Sentinel ran an article about a week ago on a guy in South Florida who has opened a store front, called The Law Store, where residents can, basically, custom-order laws and municipal regulations. The Law Store drafts them and then utilizes the procedures in virtually all municipal charters (and some State Constitutions) to get a measure on the ballot by some kind of referendum. You’ve got to love the title of the Orlando Sentinel’s article, Got a beef? Have a ‘McLaw’ made to order.

Democracy in action — and capitalism too.


Reg Z Amendments and Credit Card Disclosures

Ok, ok, so it has been a couple of weeks. I was pretty good about blogging at least three times a week until I went out of town for a few days. Life has been just crazy busy ever since. Ok, enough with excuses.

Yesterday, the Federal Reserve issued long-awaited proposed amendments to Reg Z (implementing Truth in Lending). These amendments directly govern credit card disclosures. Now, they do nothing about changing the substantive law. This won’t stop lenders from using universal default clauses — it just means they have to tell you about it. The proposed regulations can be found here. At the bottom of the press release this link leads to is a hotlink for commenting on these new proposals. PLEASE comment. I can promise you the banks will.

Of course, the proposed amendments total over 800 pages. Even I am not reading all of that. However, according to the summaries I have read, the amendments will require lenders to:

  • reformat and add new content to card disclosures to make them clearer;
  • disclose the full impact and duration of penalty rates;
  • emphasize the risks of making minimum payments; and
  • better explain how fees affect annual percentage rates.

(Quoting, Industry, Congress Take Stock of Reg Z Revamp, American Banker Online May 24, 2007)

As far as substantive changes go, there are currently seven bills pending in Congress to change abusive credit card practices. That is a lot of opinions to get reconciled in one session with a lot of higher profile issues. Yes, we need substantive legislation. Until then, let’s get behind this regulatory action. Go to the Federal Reserve’s web page and leave a comment. Write your Congressmen. Even in this day of lobbyists and campaign contributions, old-fashioned grassroots commentary can still make a difference.