Third-party collections is arguably the only growth industry left in the states besides those folks who wave signs advertising local businesses at intersections, millions of Americans find their lives disrupted by them. Calls as early as 8 a.m., or as late as 8 p.m. Multiple times a day, these menaces phone, leaving cryptic messages, threatening legal action, and spouting quasi-lawyer palaver in an attempt to shake down the poor and the clueless, the destitute and dispossessed, the victims of fraud and their own gullibility. That’s the process by which an operator buys some old paper from a lender or a record club or some such and attempts to collect on these debts from two or three years ago.

It’s a low-risk proposition. The “debts cost seven or eight dollars a piece,” according to one industry lifer. And—on paper, at least—the debts are worth many times that number, ranging from $67 to upwards of $2,000—even before the various refinancing charges and account adjustments are factored in.

Of late, there has been much journalism about the third-party collections racket—and it is a racket, predicated on shakedowns and threats of imminent legal action. That said, most of the writing is non-specific about how the industry actually works, in part because the collections industry, like any other hustle, operates under a system of kayfabe.

Its secrets are protected. Only on the inside can one truly discover how the scams are worked, and how employees are made to believe that their spurious and extralegal efforts are somehow virtuous, driven by the superficial morality that these people are morally liable for failing to pay off their payday loans from late 2007.

I know this because, at least for a short time, I was on the inside of one of these scams. I read the script. I played the role. I helped to work the marks. And for that, I suppose I should be sorry.

My foray into the sordid world of third-party collections happened, ironically enough, as the result of my own personal liquidity crisis. One of my principal clients suddenly decided that paying freelancers was not a primary concern. I needed cash flow, and I wasn’t convinced I could write my way out of this problem. So I decided to explore an industry about which I had always wondered, but had never quite had the impetus to enter.

I went to Craigslist and searched for “collections” on the job board. I wanted something with quick cash and weekly paydays, something I could start immediately. I was willing to scrape the bottom of the barrel, to shave facts off my application to ensure I wasn’t “overqualified,” and thus, unhireable.

The ad read:

“Must call 904 737-1250 for an interview. Absolutely NO EMAILS We are looking for strong personalities that are not afraid of talking to people. Must have a good work ethic and good people skills. Will Train if you prove to be the right type person. Previous collections experience not necessary. This is a long-term position. Looking for individuals not afraid of the phone and who want to make $$$. CALL S & W Specialty Group, LLC located in Jacksonville, FL 904 737-6942 and ask for Mr. Thomas to set up appointment No emails please.”

Seemed easy enough. The syntactical errors in the ad suggested that it was written by a self-educated man, one who, deep down, believed he was smarter than all the marks he worked. And, just maybe, inside I wondered if it was true. Could I, a struggling journalist, make $$$ or even $$? I, after all, was a “strong personality.” I called “Mr. Thomas,” as the ad suggested, and was summoned to the office for an interview.

The office park housing this agency was, like most in Jacksonville, on the formerly chic “southside” of town in an unremarkable strip mall. When I walked in, I was handed a short application and a math test. Both were completed in about 10 minutes.

Mr. Thomas—a.k.a. Thomas Stidham, the S behind “S & W”—is an older man in his early 60s, with white hair, half-glasses, and a singsong twang oddly reminiscent of Mr. Haney from “Green Acres.” He has run many corporations in several different locales—things like “Thomas Stidham Enterprises” He, along with portly “Pat,” a menopausal matron with a heartbroken twang in her voice, ran the shop. Their twained office desks faced the back of a row of Dilbert-styled cubicles with sad, fake stained-wood desks. All day, every day, they stared at the backs of their employees’ heads. This is standard for the industry.

The conversation was brief and agreeable. All parties concurred that I “had what it takes.” But, fretted Pat, who looked resplendent in a Dollar General blouse with a Jello-mold print, “he won’t stay.”

I rebutted quickly. “I would stay. Absolutely. I’m just looking for work.” I stared downwards. “My girl’s got a baby on the way.”



Tom bought in. “You’re just lookin’ for work, huh?”

Yes sir. I responded. But I was looking for more than that.

I sought answers about practices within this industry. The kind of answers that could only be obtained by going inside its bowels, by doing the dirty work that collectors do, work that everyone—from the scammed and legitimate debtors to the myriad contacts, “primary references,” “3rd degree relatives,” “associates,” former roommates, landlords, and past and present employers and housemates—despises. Like working in a slaughterhouse, it is the type of job—and mindset—one can only fully understand from inside the belly of the beast.

I didn’t hide the fact that I was a writer; unlike Barbara Ehrenreich in “Nickel and Dimed,” who felt compelled to obscure her identity, my anonymity and lack of real career achievement was, for once, a protection. Tom even felt compelled to patronize me. Draping a flabby arm over my shoulder, he told me to “be creative… don’t be afraid to talk to people like you’ve always wanted to talk to them,” and to enjoy a measure of “literary license” (something not afforded to me on most of the writing jobs I’ve held, for what it’s worth.)

I showed up at 11 a.m. on a dreary mid-January Thursday for training. I was assigned to shadow a “Ms. Tan,” a single mother who was seven months pregnant with another baby daddy’s legacy—but no worries there, she assured me within an hour of making my acquaintance that “he made good money” and “really wanted a kid” and so there would be money on her child support card.

When I heard that, my stomach flipped. This wasn’t the way women of my acquaintance talked, making the overt case that the child they carry is some sort of 18-year promissory note. But those women had all been to good schools and learned early on to like the right brands and to aspire to the upper-middle-class hipster aesthetic, even if they couldn’t quite afford it without parental help. They had learned to fake it, but Ms. Tan, a square-jawed, bottle-blond Arlington native, did not.

Ms. Tan gave it to me straight. “Your name is Anthony, huh? Haven’t had good luck with Anthonys, or Tonys,” she muttered before going on to complain about the disproportionate number of Latinos she had to call doing “investigations into possible fraud on a bank account formerly held” for the “finalization” department at this “pre-litigation” firm, as the script put it.

“This is Ms. Tan working in coordination with [Insert County Name Here] investigating a possible case of identity fraud. I need you to verify the last four digits of your social security number….”

Over and over again, I listened to the script, and the other statements that were unscripted but still as rote: like the empty threat that, if “restitution” wasn’t made by the end of the day, then the “network of attorneys” our firm “represented” would insist that “paperwork would be sent to the county courthouse.”

There were no attorneys, of course. Just as there was no company Web site, or even an e-mail address beyond one at earthlink.net. In other words: a total scam. S&W was little more than a shell company created to buy bad debts and attempt to enforce them via naked threats and pidgin legalese.

I learned how to play the role, to sound like law enforcement without actually representing myself as a LEO. When my technique was on and the person on the other end was particularly credulous, I would be referred to, I was assured, as an “investigator” or a “detective.” That claim came to pass.

As watchdog Web site 800Notes.com claims, in a story about the uptick of complaints against collection agencies: “More Debt Collectors Use Abusive, Illegal Tactics. Debt collectors are leaning hard on consumers to make good on their debts, and, in the process, some are crossing the line.

They call friends, family members and co-workers trying to embarrass the debtor into paying. The worst threaten violence, spew obscenities and claim—falsely—that “unless a payment is made immediately the debtor will be hauled off to jail.”

We never threatened violence at S&W—I’ll say that much. But we were willing and able to use the Lexis-Nexis skiptracing program, Accurint, to find our debtors, and a healthy cross-section of their associates. Except for the kind of people who lived on other people’s couches, using disposable cell-phones, and the ones who didn’t speak English, we were able to find the majority of our debtors through pressuring their lily-livered or ill-wishing associates into giving up the info.

And we weren’t the only ones. Florida’s Office of Financial Regulation, which licenses collectors, received 780 complaints in 2009, compared with 629 in 2008. This year there will be more.

Third-party collections is not a business in which one goes to make friends. One enters it to professionally tear people down, making chicken feed while the operator gets rich.

Perhaps that’s why it’s an easy field in which one can get credentialed. After a few hours of training, I was ready to be put on the phones. I was given a “portfolio” of debt to manage—100 accounts, totaling about $60,000 of paper value (though only about $800 in negotiated cost to the company.)

Making $8 an hour, with an unreachable commission goal of $1,500 “green” in a week, it was easy to see my utility here. If I suckered one $800 debtor into paying up, I had just offset the cost of my entire portfolio. Even if I brought in 10 percent of my debts in a few weeks, I would not only pay for my portfolio and salary, but a great deal of the costs of the operation.

Stidham ensured the short-term liquidity of the operation going in, setting aside $40,000 for payroll, to be dispersed “whether we made money or not,” according to Tan. An easy enough move to make, given that the worst-case scenario was that he would just bundle together the uncollectible debts and sell them downstream, to God knows who. This practice would be the fate of all debts at least until they reached their seven-year statute of limitations.

Part of my employment of the aforementioned “literary license” was that I was given the opportunity to rename myself. Tom decided I should go by “Mr. Steele.”

I developed a voice worthy of the gimmick—a southern accent, modeled after the PE coach in “Beavis and Butthead.” The intent was to sound like a grizzled, hand-em-their-asses investigator, who has dispatched the hardest cases in the entire world of pre-litigation.

And to be sure, there were cases. There was the man whose uncle told me that he had actually fallen for two separate Nigerian e-mail scams. There were pregnant teens who I called; they cried as they were told of the pending “identity theft, theft of services, or check fraud” charges against them. There were men who changed names and towns every few years; people whose phone numbers changed faster than billboards; single mothers living in halfway houses, on relatives’ couches, and so on.

There was the man in Pennsylvania—the son of a college professor, who brought his family into disgrace by stealing from the college for which his dad worked (according to the man’s ex-mother-in-law, who went on at some length about what a “drug addict” the debtor was). The man in Alabama—barely 21, whose girlfriend was dumping him in the background as I rattled off my list of quasi-charges against him.

And the Texas woman whose stepmother, an 81-year-old fan of “The Price Is Right”—if the background noise meant anything—spent about 45 minutes shoveling dirt on her stepdaughter. She talked of never seeing the woman and her common-law husband, who was being investigated by Child Services in Texas for molesting the debtor’s daughter (who was in foster care at the time as a result).

The stepmother assured me that I could find the woman at the husband’s mother’s house, where they were taking care of the sickly woman. “They’re just waiting for her to die. They’re buzzards. They want the money.” And so did I.

I called the debtor at her current residence and, after a brief and fairly pleasant chat, the husband yanked the phone away from her. “How dare you call this number? My mother just had open heart surgery.” He was livid and his voice so loud that there was distortion even on the landline.

Usually I refrained from using personal information given to me by an informant against someone on the other end of the line. But in this case I couldn’t resist. “Hopefully you’re taking care of your mother better than you did your stepdaughter.” Then I hung up.

Was it harassment? Obviously. Unethical? Indubitably. But all of us had our reasons. We were a special breed; we had to be—to convince these suckers that six shades of hell would descend upon them if they didn’t pay some $200 debt from December 2007. But there were two parties there who stood out, even among the rest of us.

There was the couple from Lake City—Scott and Shana Falanie—who were the most rah-rah of all the collectors there. The husband would occasionally shout industry-approved slogans like “Green is the Scene” (a reference to the desirability of “green” money, which came in that same day, as opposed to money of other color designations, which came in days, weeks, or months down the road).

The Falanies had a side business: they pushed a health drink called Monavie, which they would often try to impose on their office mates, offering the first one for free as if it were cocaine. On general principle, and a categorical aversion to them, I refused to buy any of this potion. And at three dollars a bottle, it was out of my price range.

And then there was John, the shadiest operator in the bunch. His wardrobe consisted of a lot of faded polo shirts and sweaters, and his stories never quite added up.



His principal occupation, outside of the office, was taking care of his ancient grandmother, whose age shifted from one day to the next. One day she was 96, the next 93, then 95 the following day—sort of like a summer weather forecast with minor thermometer variations.

John claimed to own a BMW, but couldn’t drive it. His license had been suspended, and so he was relegated to driving Grandma’s Cavalier to and from work. Despite this, he lived the high life according to his tales. He was at the bar every night, and frequented Outback Steakhouse and the like with regularity. And he boasted about taking a spur of the moment trip to Miami to see the Pro Bowl—only to find himself thwarted when the fascists at the ticket counter wouldn’t accept a photocopy of his driver’s license as identification.

And then there was the time he brought Hershey’s Kisses and ChapStick into the office for “the ladies” for Valentine’s Day. The general consensus was that his lines were all bullshit, but at least he was entertaining. Ms. Tan “loved him to death.”

A job like this couldn’t go on forever, at least not for me. I started to come home at the end of every shift with migraines. I began to skip work or come in late. And the writing was on the wall; if those chairs weren’t filled, money wasn’t being made for “The Group.”

Despite the amiable dunce act I put on to get this job, I also noticed that my relationship with Mr. Thomas was starting to sour. When I talked to him one morning and dropped phrases like “debts being resold downstream” and referred to the statutes of limitations on these obligations, his manner noticeably frosted. I was the man who knew too much. And soon enough I was gone.

But not before internalizing lessons about this industry.

The first is that complaints to the Better Business Bureau and the like are meaningless to the third-party collectors of the world. Both Tom and Pat said at varying times that we shouldn’t worry about such things, because the complaints “had no teeth.” That it’s just the price of doing business.

The second, more salient lesson is one that should worry people who would like to see this activity ceased.

When going into this racket, I wondered how people could do this business. Now I wonder why more people don’t. The return on investment in these loans is potentially astronomical, and operating as a Limited Liability Corporation obviously insulates the proprietors from significant risk. Law enforcement can’t stop these companies—if one is stopped, a dozen sprout up to replace it.

Complaints, such as they are, end up on the legal backburner—or the Internet, as this one complaint against S&W did. A complaint that really could have applied to any company in the industry:

“All these scams are blatantly criminal. These scammers don’t even bother to skate close to the edge of legality as in the past. Now, more and more–even the “legitimate” debt collectors, are actively resorting to criminal tactics to defraud people or violate federal consumer law. You have to ask why? The fact is the chances of getting caught are next to zero and even if they are, the penalties are ridiculously inadequate, just the cost of doing a very lucrative criminal business– a laughably small fine and forget jail. Is it any wonder that with the feds claiming greater concern but doing little and Congress passing empty laws with no teeth, the problem only gets worse? It’s the wild west for the tele-scammers and we are the targets. Until the government takes these crimes seriously and treats the scammers for what they are, criminals, things will never change.”

The problem with logic like this is that it essentially is old-school, 20th century thinking. The government is overwhelmed, lacking the resources to handle things like the coming entitlement crisis and the myriad predators marauding through society. In the grand scheme of things, payday loan collection is not as serious a crime as rape, murder, assault, et al. Predation on the weak and stupid is common to all hustles, and whatever punishments might be inflicted on a company like that I worked for are essentially minor.

Nothing will change. Not as long as there is a resale market for debts. Not as long as 20 percent of Americans are underemployed or with no work at all. As with strip clubs and plasma clinics, there is a need for such gigs. And once you get used to it, once you internalize the logic of the hustle, it is all in a day’s work.

A.G. Gancarski is a freelance journalist based in Florida.