Take the Time to Stand Up for Our Industry

If you want something to watch while you drink your morning coffee and get your blood pressure up, take a look at this YouTube video:

I found this clip while playing around on YouTube over the weekend.  After I watched it for the first time, I couldn’t believe what I was watching. After the second time, it began to sink in and got me motivated to write about it.  I was surprised I had not seen it sooner, nor had anyone really commented about it back in March. But it’s still very relevant as our industry continues to fight negative press.

This video helps to spell out what our industry is facing when people like Dave Ramsey — who to many is knowN as an “expert” at providing advice to consumers on how to get out of debt — tell an audience that “most credit card collectors are scum.”  He has a national show and a huge following in the U.S.   The ARM industry is such an easy target for folks like Ramsey.

We all have to do our part (small and large) to respond to challenges like this.

Mike Varrichio, President of GACC, a debt buyer/collector in Texas sure did his. He tried to fight back with logical arguments, but Ramsey still used his platform to make collectors and collection agencies look like the enemy.  We have no choice but to fight the negative press our industry receives.

Every industry has its good and bad apples, but we need to continue to be “proactive” when appropriate and respond to negative press.  Some folks in the industry believe that it is better to lay low and not speak up, because if you do, you’ll end up with a target on your back and all the negative attention will end up on you.  I don’t know how we “lay low” and not fight back against attacks like this.

We can’t afford to just accept this and move on with our day. Varrichio took the time and wrote a well-thought out letter to Ramsey, which he recounts in part in the clip.

For everyone’s benefit, here is the letter that Varrichio wrote, refuting Ramsey’s commentary:

Mr. Ramsey,

My name is Mike Varrichio and I am the President of Global Acceptance Credit Company based in Arlington, Texas. We are a purchaser and servicer of distressed consumer debt. Our company is also a member of ACA International, a trade organization representing the credit, debt purchasing and collection industry consisting of 5500 member organizations and one-half million employees nationwide. We are debt collectors.

I had the unfortunate experience of watching your segment on Fox and Friends this morning (Wednesday, March 18). Your comment that “most credit card collectors are scum” compelled me to email you. We understand that debt collectors are viewed by many as the bad guys. From a consumer’s perspective, I can understand that it may be embarrassing to have a delinquent debt and that consumers may prefer to not communicate with a debt collector. However, I want to share with you why we believe we are actually the good guys and why the people who work in our industry deserve respect and not the degrading comments you made in the national media.

Most credit card consumers pay their debts. The charge-off rate for credit cards fluctuates between 3% and 8% primarily based upon macro-economic conditions. In the current economic environment, the charge-off rate is closer to 8% and it is predicted that it may go higher. These facts make two interesting points: 1) 92-97% of consumers pay their credit cards debts, and 2) the volume of distressed credit card debt is approaching and may exceed historical highs.

On the first point above, the efforts of the collection industry make a significant and positive impact on the U.S. economy. The dollars that are collected on defaulted debt are circulated right back into the economy. Our ability to perform our function efficiently and effectively keeps prices for goods and services lower, interest rates lower and allows the continued flow of credit. In a study performed by PriceWaterhouseCoopers in the single year of 2007, our industry returned over $40 billion back to the U.S. economy saving every American family $354. In addition to protecting and enhancing the financial interests of the 92-97% of the consumers that pay their credit card debts or carry no credit card debt (which I assume includes you), our industry keeps hundreds of thousands of consumers who work in credit and collections employed.

On the second point, the increased volume of distressed credit card debt has increased the volume of contacts that are taking place between a collector and a consumer. These days there are millions of collector/consumer communications made daily. While we believe that one complaint is too many, the number of complaints our industry receives is dwarfed by the number of collector/consumer communications performed. We are not so naïve to believe that of the millions of collector/consumer communications made that some may be handled inappropriately or may even be illegal, nor do we believe that, as in all industries there are no bad apples in ours. However, your comment that “most credit card debt collectors are scum” and that debt collectors will drain your bank account if they have your checking account number, exhibits your naivety of our industry, our mission, our people and the facts.  You should know that my company, the vast majority of companies in our industry and the ACA International membership do not condone any collection activity or behavior that violates local, state or federal laws nor behavior that violates ACA International’s Code of Ethics.

The employees of debt collection companies are some of the hardest working and resilient Americans I have known and worked with. They are typical middle-class working Americans who have the same challenges as many of the consumers they must communicate with everyday. On an average day they are making 150 phone calls and talk to many consumers. They get hung up on, cursed at and must experience the wrath of consumers who quite honestly don’t want to talk to them while maintaining a standard of professionalism and treating the consumer with dignity and respect. And, in spite of the difficultly of the transactions they must deal with have the perseverance to pick up the phone and make the next call in an attempt to accomplish their mission for the consumer, their company, and the economy.

In summary, I want you to know your comments were inappropriate and do not reflect the truth regarding the vast majority of collection professionals.

How are you fighting back against negative press in your community? Do you agree with how Varrichio refuted Ramsey’s commentary? Do you think it makes sense for members of the ARM industry to fight back in some way?

If you’d like additional guidance on dealing with negative press, consider attending EXPO 10.6.10, the ARM industry’s leading online trade show. insideARM.com will be hosting a free Webinar on managing negative press which will include a panel of industry and PR experts. The Webinar will begin at 1:30pm Eastern time on Ocotber 6, and again, it’s free to attend. For more information, visit the EXPO 10.6.10 page.

I look forward to your comments. Feel free to call/email me.

Michael D. Lamm advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly at 240-499-3808 or by email. You can also read his blogs, follow him on Twitter, or network with Michael from his social media page on insideARM.com.