Mr. ANNUNZIO. Could you please sum up? Your 10 minutes has gone by.

Mrs. RUSSELL. I will agree with the testimony, sections 808 and 810, is total overkill. I agree with the recommendations. I would like to also agree that section 814 is completely unnecessary. We would like to ask that you carefully consider our suggestions. Because, you see, we have a small profit margin and we have our own little pet projects that we think we extremely worthwhile in our local area. We appear before schools on many occasions; we have counseling free of charge to either the debtor involved or the credit grantor involved.

We get referrals from ministers, attorneys, credit grantors, employers. We have helped over 50 people that way alone. Again, we have taken the liberty of including some letters which you can look at at your leisure.

Mr. ANNUNZIO. We have made all of those letters a part of the record.

Mrs. RUSSELL. Thank you, sir. I appreciate it. Also these exhibits show some of the other community services that we have done. A little booklet we have put together for all the seniors in Wyoming. Appearing before a penitentiary rehabilitation group. Low-income groups through the local community action.

And honestly, if we would have to comply with all of the recordkeeping and special requirements in the proposed bill we might have to choose between whether we are able to do these extra services or whether we have to file all those extra papers. We ask your consideration in this area.

I wish you could sit with our credit reporting department because a lot of people are coming in complaining they are getting turndowns on credit, where on the same credit record a year ago, they were being granted credit. The reason is the credit grantors are getting leery because of all the legislation being passed. They are turning down. the low- to middle-income people.

Now I know this was not the intent of the legislation. I am not even convinced that it is a good reaction to the legislation, but it is the reaction the consumer is seeing. We hope that any legislation in the field of collection regulation will not follow the same path and inadvertently create more problems for the consumers than it solves.

I would like to just sum up by saying that we are proud of our work. We feel that we are professional, ethical people and we treat consumers as we would want to be treated were our roles reversed. Thank you, sir.

[Mrs. Russell's prepared statement with attached material follows:]

PREPARED STATEMENT OF LINDA RUSSELL, OWNER-MANAGER OF THE CREDIT BUREAU OF CARBON COUNTY, RAWLINS, WYO.

Chairman Annunzio, Members of the Subcommittee, my name is Linda Russell and I am owner-manager of the Credit Bureau of Carbon County, in Rawlins, Wyoming. We are a typical and statistically average 7 employee agency in a town of 10,000 persons. I am also a two term member of the State Collection Agency Regulatory Board which has power to grant and revoke collection agency licenses. I have been involved in the collection business for 15 years both as a collector and a manager of an agency.

Thank you for the privilege of addressing this Subcommittee. I feel that it is so very vital to our whole economy that this legislation, if passed, must be based on a complete understanding of the collection industry-and I hope to be able to share with you some of the knowledge I have gained in 15 years in the

profession. I have served on our state collection agency licensing board for two terms now, am a member of both Associated Credit Bureaus and American Collectors Association-and in fact have won the top international award in each organization; so even though we are a small town operation, I feel that we have something to offer here. Indeed, perhaps because we are a small town operation and therefore typical of the vast majority of agencies in this country we have information which you will want to know.

May I first back up though and try just briefly to sketch in why I feel our industry is so vital to our economy as a whole? We all know that the United States has the highest standard of living the world has ever known—but we take it so for granted that we forget to ask "Why?" When you stop to think about it there has to be a new reason since we are neither the oldest nor the biggest nation. History will show that credit is a large part of the answer. You see, consumer credit is a purely American invention-credit itself predates the Bible, but extending credit to consumers on a wide basis was never done before we Americans tried it. And success with it is what enabled even our lower and middle income citizens to buy the "good things in life" because they could pay for it on time payments.

History has shown us that we Americans managed this privilege of consumer credit very well-with nearly 90 percent of the credit reports we make showing no derogatory information at all. The system works.

The bill collector has a role to play in this story too-which you are well aware. I have read Mr. Annunzio's statements that you don't want to harm the “legitimate” collector by legislation but only to make it easier to eliminate the unethical operator. Certainly we who are ethical and professional collectors would applaud the elimination of any unethical operators from our profession-but let's not get in such a hurry to do so that we throw out the baby with the bathwater!

Careful reading of your H.R. 11969, to be blunt, frightens me. Why? Because you will have a profound and adverse effect on the ethical operator if this bill were to pass in present form. I also fear that even in its present form-or any other form for that matter it will have very little effect on the unethical and illegal operator. It is still a matter of enforcement! The "gentleman" who testified in the black mask (and he should be ashamed to show his face) was in violation of several civil and criminal statutes already.

I can really only tell you about our office-but we are very typical of a smallcommunity ethical collection service. We treat the debtors as we would want to be treated if the roles were reversed. Why? First because one sleeps better at night that way and second because it is more profitable to do so. You see, our statistics show us that over 60 percent of the accounts which we receive are against debtors on whom we have or have had accounts already-so if we have treated them with respect and firm persuasion we are already half-way there on this new account. If we had not they would be angry, antagonistic and uncooperative. Indeed, had we done any of the things alleged to be done by that "masked marvel" we would have been reported and probably jailed-and deservedly so. I hope you understand that his story is so very far from "normal" professional collection techniques that it is hard to even believe he is real! I would like to invite any or all of you to sit with us in our office and watch and listen any time for as long as you wish! We have nothing to hide.

May I quickly though get to the business at hand-which is to tell you why I feel certain portions of H.R. 11969 would be very harmful to the ethical agency: First the provisions which eliminate the ability to contact any third party including an employer and further prohibit even calling the debtor at his place of employment. (Sec. 804 (a)(1)(A) and (b) (1) and (4).) Contacting an employer prior to the embarrassment of court summons and accumulation of possible court costs can be very beneficial to the debtor himself when done in an ethical manner. I have taken the liberty of attaching letters from 2 employers and 1 employee-debtor who was first contacted through his employer-and would ask that you particularly notice his letter (printed on blue paper so you can find it more easily). I just wish you could all meet Mr. Holliday-he is so very proud of what he has done and he has every reason to be proud! It has been our experience that employers in smaller communities really care about their employees and want to help them resolve problems. Perhaps you worry about them either firing the employee over the debt or pressing them to pay whether they owe it or not. We have been contacting employers with discretion for years and wish to assure you that neither concept even approaches the truth

in the smaller communities at least. If the employee denies the debt or tells of a defense believe me the employer is right there on his side and demanding that we check out the matter and right now! We have found consistently, the man's employer is his best ally!

As for not calling a debtor at work: Many debtors work the same hours we do, or do not have a phone at home. Many of these same debtors are sincere people who have had problems and are now in financial trouble and are frightened and because they don't know where to turn they simply do nothing. They ignore all notices and hope it will all go away. If we can reach this person-either through their employers or by phone at their place of employment-we can often help them to find a way out of the mess. We are far more often thanked than sworn at. Again, I have taken the liberty of attaching some notes which we have received from debtors from whom we have collected.

What is our alternative if we cannot call on the employer or call the debtor at work? Almost certainly more reliance on court actions-which will clog the courts, cause the debtors problems, and drastically increase the costs to the debtor. May I suggest that if you feel some control in this area is essential that you rewrite to allow one contact of an employer for each account turned for collection. This would prevent harassment of either debtor or employer, yet would allow a way for ethical collectors to help get the bills paid.

Second, Section 803 (a) eliminates written communication with anyone to locate a "Skip." By doing so, you eliminate many legitimate sources of information. You see, many large companies are willing to answer written inquiries where they are sure to whom they are giving information (as they could not be by phone) and where they can do it as they have time-but may well refuse to answer phone inquiries. The end result of this section would be to allow many "skips" to remain lost who could have been found had mail contact been allowed as well as phone contact.

Third, the entire of sections 808 and 810 involve total "overkill"-they would be so cumbersome and expensive that it could easily cause smaller agencies to go out of business by plunging a small profit margin into a loss picture. Why? I have done some checking of our records and find the following facts. I feel that you want to make sure that the debtor can see an itemization if he wants and also can see where his money he paid has gone and to be sure no unauthorized charges have been added. Right? Well-our facts from our office show that we request itemized statements for two reasons. Court action and debtor is disputing account or wants details. Suit is filed on less than 5 percent of the accounts which are turned for collection, and in the second category, we have had just 4 requests in the last 2 weeks. During that same time we had over 300 accounts turned in-so you can see that if we had to keep on hand itemized statements on all accounts you would increase our filing alone by about 1 file clerk worth-and they would be used by debtors only 1.3 percent of the time. Surely it is not sensible to put such a burden on ethical professional collectors for so little benefit to consumers? Again-suggestion: rephrase to state that a collection agency shall make available to a debtor who disputes a bill any or all of the following at his request in writing and shall withhold all further action until the request is honored and include itemization of the debt, copies of any notes signed by the debtor, records of where any payments have been applied and what charges, if any, were added to accounts. This would accomplish your purpose as I understand it without putting the agency under an avalanche of paper work.

Forth, section 812(a)(3) allows the attorney fees to be greater than the plaintiff's recovery resulting in a situation in which a plaintiff might receive a $100 with $1,000 attorney fees. This section should either be eliminated or contain a stated maximum attorney fee of 25 percent of recovery.

Fifth, Section 814 is completely unnecessary. The legislation should be properly written, clear and need no such FTC regulation to muddy the waters.

We sincerely ask that you give careful consideration to our suggestions! You see, we operate on a small profit margin. From this margin we already volunteer several community services which we feel are needed locally. We counsel with troubled debtors whether or not they have any accounts with us for collection free of any charge to either debtor or credit grantors involved. We have referrals from ministers, attorneys, employers and credit grantors constantly and have helped over 50 persons in the past year alone in our community of 10.000. Again, we have taken the liberty of attaching some of the letters we have received from those persons we have given credit counseling.

We also make frequent appearances at local schools because we feel so strongly that prevention is the key and our young people so badly need to learn how to property handle credit and budgeting and how to balance a check book. (Here is an area for you-should our schools have such a course as a mandatory item?) We appear before adult education groups also-the low income groups through our local community action center and the penitentiary groups for rehabilitation to name just a couple of the most recent.

Attached are some of these voluntary community services which we do because we feel credit is such a vital part of our economy and that people who learn to handle credit properly are perhaps our country's greatest asset! We hope to be able to continue these services-but if this bill were passed in its present form we might well have to choose compliance with it over community services-if indeed we could survive under it at all.

I wish you could sit with us in the credit reporting department at our office and hear the number of complaints we are getting from consumers who are now being turned down by credit grantors where even a year ago they were being accepted-and on the same record. Why the turn-down now? Because of all the new legislation regulating credit granting, the credit grantors are more nervous and are therefore turning down middle and low income persons more frequently. Surely this cannot be regarded as a good effect of legislation and it certainly was not the intent of the legislators-but it is nonetheless the result the consumer is seeing. It is our sincere hope that any legislation in the field of collection regulation will not follow the same path and inadvertently create more problems for the consumer than it solves!

To sum up we are small compared to many big city agencies, but we feel that we are typical of the majority of collection agencies. We are proud of our work and feel that we are professional, ethical people who treat consumers as we would want to be treated were our roles reversed. We know too, that this sort of collection ethic works and is profitable. In our office this last month we have collected over $30,000-money which would otherwise have to have been made up in increased prices by the 90 percent of consumers who do pay promptly. We perform many "extra" services directly for the consumers for which we are not paid-and which we cannot continue to do if we must add to our expenses through legislation. Please do not be in such haste to deal with the few things you find wrong with the present system that those which are right get upset in the process! [The attachments referred to by Mrs. Russell in her statement are retained in the subcommittee's file.]

Mr. ANNUNZIO. Thank you, Mrs. Russell.

Now, Mr. Fletcher, can you proceed in your own manner, and we will make your entire statement part of the record. You have 10 minutes.

STATEMENT OF JACK FLETCHER, MEMBER OF THE AMERICAN COLLECTORS ASSOCIATION'S NATIONAL LEGISLATIVE COUNCIL AND PRESIDENT, UNITED CREDITORS SERVICE, INC., NASHVILLE, TENN.

Mr. FLETCHER. Mr. Chairman, I want to thank you, sir, for your interest and understanding of the American Collectors Association. Members of the subcommittee, and chief of staff, Curtis Prins, my name is Jack Fletcher. It won't take this subcommittee long to figure out that I am just an old country boy from down the hills in Tennessee, from a place called Nashville. I share certain views of some old timers from Tennessee by the name of Davy Crockett, Andrew Jackson, Cordell Hull, and a few others, in that they believed in America.

They believed in this Congress. They believed in the integrity of members of people elected to represent the people back home; so I share that view. I also share the view of my old pappy when he said that Members of Congress still have some good old common horsesense. So I want to make that clear.

I would like to commend this subcommittee for its patience and its help, and I would also like to thank Curtis Prins, who I have come to admire because of the knowledge in the field of credit and collections, and also for being nice and patient with us.

I am a coowner of a little company called United Creditors Service down in Nashville; and I have been in the collection business about 30 years. So I kind of consider myself a newcomer, to tell you the truth, compared to some other people. In addition, I am a member of the International Consumer Credit Association, an organization of some 55,000 retail and wholesale credit managers, a member of the national legislative committee of that organization, a past president of the Tennessee Collectors Association, Tennessee Consumer Credit Association, the Nashville City Club, and some other things.

I would like to say to you, sir, that I do not profess to know all the answers by any means. Contrary to what you may think, because of testimony of the past few days, I assure you that ACA wants to protect the American consumer from unscrupulous, unethical, and illegal activities also. As you are aware from recent investigations, few organizations or associations are free from rotten apples in the barrel, and we are certainly no exception.

If you will refer to the Congressional Record of August 4, 1971, you will find that Senator Taft stood on the floor of the Senate, and he said, "Mr. President, if we all will think back to the final hours of debate on the truth-in-lending bill, we will now realize how very little we know of this intricate field of consumer credit."

I am not inferring, sir, that the Senator is any more knowledgeable in the field of consumer credit than this subcommittee, but using this just as an example to indicate to you and this subcommittee how intricate this field of consumer credit and this system really is.

However, I appear before you today on behalf of my own business, the American Collectors Association, and as a lay member of its national legislative council.

I would like to comment on four proposals of H.R. 11969, which will hurt credit grantors, will generally hurt consumer debtors, and will probably have the net result of increasing prices to most all

consumers.

These four provisions of the bill would: (1) Inhibit a collection service's ability to skiptrace and locate missing debtors; (2) prohibit collection services from contacting anyone but the debtor, under most circumstances, on an unpaid bill [section 804]; (3) prohibit contacting debtors at their places of employment [section 804]; and (4) prohibit accepting postdated checks from debtors [section 807-z].

On skiptracing, this section of the bill, section 803, that would make it almost impossible for a collection service to locate debtors who owe past due accounts and who have moved without notifying creditors of their new addresses, provides that: (1) A collector cannot communicate except by telephone with any person for the purpose of locating missing debtors; (2) cannot communicate with such person more than once unless requested to do so by that person; and (3) cannot request to speak to the delinquent debtor himself when calling in an attempt to find out where the debtor is.

These limitations would undoubtedly result in many more people trying to avoid the payment of their accounts, simply by skipping