Mrs. RUSSELL. As a rule, if a person had social security and no other income, an elderly party, let's say, or someone who is on medicaid and no visible source of income whatsoever, these are people that we know instantly have no real means of paying a bill.

We do have people that are totally honest, elderly people on social security that send us $5 a month. We lose money every time we take that payment, but we take it because it gives them a little scrap of selfrespect to know they are doing the right thing. But we would not pursue them for it, did they not offer it.

Mr. FLETCHER. Congressman Wylie, if I may add that, a good collection man or woman that is well trained is almost a financial doctor, and they can tell-they can look at a person's problems and pretty well tell whether or not this claim is worth pursuing or not, as far as the collection end is concerned. This is not always true.

Mr. WYLIE. Thank you very much.

Thank you, Mr. Chairman.

Mr. ANNUNZIO. Thank you, Mr. Wylie.
Mrs. Spellman?

Mrs. SPELLMAN. Mr. Johnson, I was interested in that as we talked about exposés, there was an exposé where you were concerned, too. We learned today you had been a politician, and I am glad to see you have gone straight. [Laughter.]

Mr. JOHNSON. Well, Mrs. Spellman, every time when I was in office I read about a politician who was being convicted-and there have been a few in recent years-and it reflected back on me and all the rest of them, it was not very pleasant.

Mrs. SPELLMAN. Incidentally, I think you have done a beautiful job of type casting. If I were attempting to prove that the debt collection business is clean and honest and good and holy and pure, I would choose Mr. Fletcher, so you have done a great job.

Unfortunately, all the laws we have on the books are not written. for those who follow the Golden Rule. They are written for those who would try to circumvent the Golden Rule and so it is our business to write laws.

I have found, from working on consumer legislation in Prince Georges County, Md., that if you involve the industry, they can be of excellent service, because they know all of the culprits. We initially started out by asking them to testify, because we would prepare a bill. First, they would cry about the bill and say, "this is a terrible thing you're doing." Then you would say, "OK, these are the problems that we face; these are the people we are trying to expose-not you." But it was always the honest people who would help.

As we progressed they would sit down and tell us things about the culprits that we didn't even know about, because they were hurting their business and were hurting their reputations.

Later on if we had them sit down and work out legislation that they would recommend, they came up with better legislation than we could write.

So I would be especially interested in the legislation that your group has prepared, and I would like to know how it differs from what is being proposed here.

Mr. JOHNSON. Mr. Chairman, Mrs. Spellman, we have submitted, as we mentioned earlier, a sample bill.

Now, this one was not written by the American Collectors Association.

Mrs. SPELLMAN. Who was it written by?

Mr. JOHNSON. The Merchants Research Council. But in many ways it was similar to one we wrote 3 or 4 years ago and encouraged all members of ACA to try to adopt to have it adopted by State law.

Parts of that bill now appear in the Iowa State law, for example, which has a very comprehensive consumer credit practices code.

And you are correct: We do know more about the bad parts of the business as well as the good parts than anybody on the outside would know, and this is why we substituted the Merchants Research Council Act as being the endorsed act by ACA, so to speak, to get away from this business of people saying we are self-serving by having written the act ourselves, which we did not. And, also it covers what Mr. Wylie expressed.

It covers all credit grantors. These figures are 99 percent collected by credit grantors is true. A lot of that is current billing. There has already been a law passed on the Fair Credit Billing Act which had a lot of problems with it, and the law gets down to 30-day, 60-day, 90day credit past due and serious.

But that bill is quite comprehensive. It is longer than H.R. 11969, and I would certainly commend it to you. Really, we covered more areas than, frankly, we covered in this bill. We think it is a little more extensive.

Mrs. SPELLMAN. I am extremely interested in examining your legislation. In the consumer legislation that we have here in nearby Prince Georges County, Md., the collector may not contact the employer; and yet it seems to work out quite well. But in conversations with the people that have been involved in working under that law, I have been told that it would be easier for them to collect if they could contact anybody and everybody.

I am interested in two more items concerning this matter. You said putting a limit on the number of calls creates a problem, but you also said we should be able to call the employer. Of course, you can see what could happen. You call the employer any number of times and pretty soon the employee is fired, or some type of undue coercion is placed on him.

Mr. ANNUNZIO. The police have arrived with the dogs, so we are going to clear the room just for 10 minutes.

Mrs. SPELLMAN. If I may say so, if there was a bomb, we could have been in bad trouble by the time the police got here.

[Brief recess.]

Mr. ANNUNZIO. I want to announce that this will not occur again, I hope, because the dogs will be brought in in the morning and the room will be searched and swept and police will be assigned at the doors so that we will continue without interruption tomorrow, Mrs. Spellman.

Mrs. SPELLMAN. I'm trying to remember where we were. Oh, yes, I was talking about employers and how someone could call an unlimited number of times to harass the employer and cause an employee perhaps to lose his job. As you can see, this does create a problem.

I also want to reiterate that we are not in favor of helping people run out on their just debts, and I know you want to find people who are trying to skip paying their debts. How do you suggest we go about

doing this without creating problems for others and without running afoul of regulations? Anyone of the witnesses may answer this question.

Mrs. RUSSELL. Mrs. Spellman, Mr. Chairman, I believe that if you were to put into your present bill, rather than saying no call to employers or third parties, if you were to state one call for each debt turned in is all that can be made, and if you were to state that, well, I believe it is already in the bill in one of the sections that a person may not be called at an unreasonable hour or in an unreasonable manner, I have forgotten your exact wording, but would that not cover repeated harassing calls already?

Mrs. SPELLMAN. That might. I will be talking. I hope, with people from Maryland to ask them how they are managing because in my county they are not able to make calls to employers.

Mr. JOHNSON. Mrs. Spellman, may I respond?

Mrs. SPELLMAN. Sure.

Mr. JOHNSON. We have made the suggestion that a section be included in the law to require people, when they move, to notify their creditors. To us, this seems like a perfectly reasonable thing for a person to do. Most American citizens do that now. Some do not,

Mrs. SPELLMAN. I worry about writing such a law. How on Earth would we find everybody who owes something to somebody and check to see whether he did notify the people?

Mr. JOHNSON. Mrs. Spellman, your point is certainly well taken, but I do think if this were in the law, even if it were not enforced by law enforcement officials if it were publicized. I think it might encourage more people to voluntarily do this, and if they would do it, obviously there would be no need to do any sp tracing. It is sort of the utopía that we're talking about, but I think we can reduce the probem, at least, brindoding that in the law.

Mr. FLETCHER. Mrs Spellman may I say a word!

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..

Mr. FLETCHER. I would be happy to.

[The information requested by Congresswoman Spellman was sent directly to her office by Mr. Fletcher.]

Mr. ANNUNZIO. Mrs. Spellman.

Mrs. SPELLMAN. I would like to ask one more question. A recommendation to outlaw the writing of predated or postdated checks has been made. Instead of outlawing giving a check that is dated ahead, I suggest that it be against the law to submit a check or turn a check in for payment in advance of the date. How do you feel about that?

Mr. JOHNSON. Every one of the 50 States has a so-called bad check law and they vary from State to State somewhat, and there are court decisions and so forth. The lady who testified last week who said her check was cashed by the bank prior to the date on the check could have received all of her money back from the bank had she gone and asked for it. That is the bank's responsibility.

Most of the State laws also say that the writer of a check, as well as the person who banks the check knowing that there is no money in the bank, if they know it, and this is hard to pin down, of course, are equally guilty under the State statute.

There is quite a variety of laws on this subject, but generally speaking, the debtor is not hurt because they can get their money back from the bank.

Mrs. SPELLMAN. Thank you very much. I shall not take any more time, Mr. Chairman.

Mr. ANNUNZIO. I want to thank the panel for their testimony this morning and this afternoon, and I know that during the continued deliberations of this subcommittee that this exchange between the subcommittee and the panel will go a long way in helping us to develop the type of amicable legislation that we all desire, so I thank you very, very much for your contribution.

Mr. JOHNSON. Thank you.

Mr. FLETCHER. Thank you, sir.

[The following letter was received from Mr. Johnson for inclusion in the record:]

AMERICAN COLLECTORS ASSOCIATION, INC.,
Minneapolis, Minn., April 14, 1976.

Re H.R. 11969.

Hon. FRANK ANNUNZIO,
House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN ANNUNZIO: Just a note to again express our appreciation for the opportunity to tell our side of the story at the hearings on this bill. At the close of the testimony you asked if we all had had the opportunity to present our viewpoint. We believe we had, and expressed ourselves accordingly. I guess the only caveat would be the opportunity to present the additional information requested at the hearing that we did not have, to respond in writing to any questions that might occur in the meantime to members of the committee, and then to respond to other points raised by those who testified after us.

Along these lines, we would like to submit two additional pieces of information today:

1. Enclosed are six additional letters particularly regarding one of our Chicago members. These are written to consumer debtors by the State of Illinois Collection Agency Licensing Administrative Department telling these debtors that their complaints against this particular ACA member are invalid.

We submit these to further strengthen the statistics that the overwhelming majority of complaints against collection services are simply efforts by some debtors to continue looking for ways to avoid keeping their payment promises.

2. I understand that the Illinois State witness, Tom Raleigh, said that there was no need to cover credit grantors in the bill. Although we did not make the point that they should be covered during our testimony, it was made repeatedly by others; however, the Illinois position stated before your committee and their position as stated back in Illinois, where they have been attempting to bring various credit grantor groups under the collection agency regulations, are different.

We appreciate the ten-day period in which to submit additional testimony. We will have our revised comments on each section of H.R. 11969 to you and the other members of the committee within that period of time.

Sincerely,

JOHN W. JOHNSON, Executive Vice President.

[The letters referred to by Mr. Johnson are retained in the subcommittee files.] Mr. ANNUNZIO. The next panel, Dalton Sheppard, Jr., Seivea Avant, Carl J. Selbo, and Robert Leonardini.

As I stated previously, you have all been in the room listening to the testimony and wherever possible, I wish you would avoid duplication. Your entire statements will be made part of the record, but will you take about 6 minutes each? You are a panel of five. That gives us a half hour and then we can ask questions, because we will be called for a vote shortly. We will start with Mr. Sheppard, and I ask unanimous consent that your entire statement be made a part of the record. Without objection, so ordered.

STATEMENT OF DALTON SHEPPARD, JR., CREDIT BUREAU

ADJUSTERS, INC.

Mr. SHEPPARD. Yes; I sure can. I agree with you that everything that can be made has been said today and almost anything we would say would be repetitive, so I will be brief.

I am Dalton Sheppard, Jr., and I own and operate three agencies in South Carolina, with 20 employees. There are two primary reasons why I am in Washington today. One is that as a small businessman, I feel a threat to the extent of being severely handicapped in my ability to conduct my business if H.R. 11969 is adopted in its present form. I will not waste your time. As I have already said, I have pointed out all those specific areas of the bill that I think will accomplish this possibility. The points have been made by those before me.

Just suffice it to say that while I am sure now, after hearing the testimony from both sides today, the questions and answers, I am sure that it is not the intent of this subcommittee to prohibit the collection of just debts. I feel that H.R. 11969 in its present form may encourage certain persons to do just that.

The second reason is certainly as important to me as the first, that I am here is that I do resent very much the implications made that I, along with thousands of others, am a villain and spend most of my time harassing, intimidating, using abusive and profane language, and even threatening with violence, those persons that have past-due bills that I might come in contact with.

I certainly don't want to infer that I am a saint, but I do believe in honesty, fair play, and those other virtues that I feel the average American believes in. I am active in my church and in civic groups such as Rotary, chambers of commerce, and various credit groups. I also participate in community fund-raising activities such as the

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