AJC Watchdog: First Alert

Keeping watch on those who hold the public trust and money

Atlanta showdown: Debt collectors face regulators - and the public

Debt collectors are not allowed to lie, pose as FBI agents, threaten debtors with arrest or harass them into repaying loans they don't owe. But they've been accused of exactly that in Georgia.

Federal regulators trying to protect consumers have recently been at odds with the debt collection industry.  But for one afternoon this month right here in Atlanta they will make nice -- or at least, allow the public to come watch while they have it out.

The Federal Trade Commission is holding a small number of "Debt Collection Dialogues" with representatives of the industry and with law enforcement. One is in Atlanta on Wednesday, Nov. 18, starting at 1 p.m. Earlier meetings were held in Buffalo, N.Y. and Dallas.

It's free to come watch. The public is also invited to suggest questions for the participants by email in advance.

Attendees are scheduled to include top law enforcement officials from Georgia and other southern states, including Attorney General Sam Olens.  Pre-registration is advised; an earlier meeting had to be re-scheduled because of overflow attendance. See more information here.

Industry representatives are slated to include the head of a major creditor advocacy group, a Washington-based advocacy group for debt collection lawyers, and the man in charge of following rules at a debt collection company. Topics on the posted agenda include "the agencies’ debt collection enforcement actions, consumer complaints about collection practices, debt collection compliance issues, and industry best practices."

Astonishing numbers of Americans these days find themselves overloaded with debt, especially as the costs of health care and education borne by consumers have skyrocketed over the decades.

A lucrative and innovative industry has sprung up in the collection of debt. Private companies that have nothing to do with the original reason someone took out a loan, will buy a bunch of bad loans for pennies on the dollar, in hopes that something will make at least some of those hardened lapsed borrowers pay.

Sometimes government officials are in on the game. In Fulton County, the tax commissioner gets a cut from sending late property tax payers off to a private debt collector.

Some have allegedly stepped over the line. Some seem con artists, according to federal agencies.

One law firm in Marietta was accused of churning out hundreds of thousands of lawsuits with just 16 lawyers, essentially casting a net to see what they could bring in. The firm denied the allegations, saying they presented evidence they do not run a sloppy operation.  One borrower sued; he said the firm got his wages garnished to pay off $3,300 of debt -- and then came back three years later, for the same debt.

In Washington, D.C., Congress set up a new agency, the Consumer Financial Protection Bureau, in the wake of the recession to protect consumers against dubious practices by lenders. Some businesses say it's going too far.

Here in Georgia, from payday lending to speedy foreclosures, there is a long history of giving lenders a long leash -- and that goes for Democrats in the state Legislature as well as Republicans.

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About the Author

Ariel Hart is a reporter on health care issues. She works on the AJC’s politics team and has reported on subjects including the Voting Rights Act and transportation.