Within that you conceivably have debts whose collection is perhaps ethical by nature but not ethical in practice. For instance, as I said earlier, collection on bad checks circumvent many normal collection laws, and you can thus have interest rates of 200% or higher. Another example would be Student Loans, which have their own set of ridiculous loopholes that allow the debt to persist past bankruptcy, past retirement, etc. As someone who was still in college myself only a few years ago, the idea of the financial burden imposed on me for the rest of my life simply for doing the thing that society practically strong-armed me into doing seems, to me, ridiculous; for that reason I am hesitant to call any form of Student Debt collection "ethical" simply because the laws which govern it are atrocious.

With that said, I have dealt with many agencies who at least tried to operate on an "ethical" model (usually they collected on medical debt), and they seemed polite and reasonable in their collection efforts. Remember, they're in the business to make money. Some agencies will go for the "Make the debtor's life as miserable as possible to make them pay up" tactic, which includes harassment, lawsuits, garnishments, etc. I deal with them frequently, and I think they're the scum of the Earth (primarily because they talk to me in what I imagine is the same tone as they talk to debtors). Others, however, will simply try to get what they can, and if they CAN'T--i.e. they realize that continuing to call a guy about a debt when he's already stated that he has no job and no savings would be like squeezing blood from a stone--they'll stop wasting their time and move on to an account that would be more profitable.

Much of the work done by agencies these days is not only getting people to pay, but finding out who is more LIKELY to pay so that the agency can focus its efforts accordingly. This analysis might include things like the line of business, their credit score, their location (they usually figure that areas with a higher average income are more likely to pay), etc.

To answer your question succinctly: probably. It would center primarily on whether the percentage of the portfolio that actually pays can sustain the percentage that you're willing to let go when pursuing them further would entail questionable tactics.

I can even make their fee contingent on their success in collection.

Figuring out who the deadbeats are is great too IF you can reach scale (hence your free service is important) and likewise for calculating a score.

What's your average commission charged to the freelancer and do you find that many have the ability to oncharge collection costs to their clients?

tx

"that would make many loans more difficult to issue"

Maybe in some cases, but I'm broadly skeptical. Selling bad debt is usually not an important part of non-shady businesses models. 2nd order effects, if any, are likely to be the main concern. If a business is known to offer 10% settlements after 2 years... that predictability will eventually be taken advantage of.

Honestly, I think the debt stuff (also aspects of copyright) are just the loose ends of major industries. Most bad debt or long tail IP assets aren't worth much. But if you can bundle, they're never too small to monetize.

Once you have an industry dedicated to squeezing that last drop... you probably have a destructive industry.

IMO, the best solutions is policing. Somehow, policing is rarely mentioned as a solution to corporate crime. That might mean occasionally tweaking laws to help make policing effective... but that only makes sense ifyou are already policing.

I bet these trolls are as sloppy as the victims they're targeting. At least in debt collection, at a certain depth... they're not doing any due diligence. Often, all they have is a name, number and sum. That means they often are collecting on BS premises. Charge them with fraud, or racketeering. A business practice premised on demanding payment of a debt, without proof that the debt is real... that's an extortion racket.

I wonder if the trolls here can stand up to scrutiny. Do they actually own the rights? Have they based their business model on strategic avoidance of due diligence? From what I've heard, IP trolling exists by exploiting liability limits of both corporate law, and practical law enforcement.

There's actually a good startup opportunity here. Many of these debt collectors are unethical. You could buy these bad debts for pennies on the dollar, settle them for a very modest margin, and help the poor people fix their credit without filing for bankruptcy.

I'm mostly taking issue with people who are threatened with a default judgment for a real debt but pretend it isn't happening and then turn around and cry abuse by the system.

While others are correct to point out that such a law would create perverse incentives, it's worth noting that debtors can already effectively buy their debt for a fraction of the price though settlements.

Or the law could get a little more flexible and punish them for their intent, even if what they do is a "gray" area.

Or it could also make "collection agencies" illegal in their entirety.

The other side can just inform you of your debt, once, and if you fail to comply within a legally mandated deadline, they can go through the courts if they want to pursue it further. Who said "debt collecting" companies should be a thing?