Dive Brief:
- The Huffington Post reports that five of the Department of Education’s highest rated debt collectors are being dropped because of unscrupulous collection practices. They are: Pioneer, Coast Professional, Enterprise Recovery Systems, Natio Recoveries, and West Asset Management.
- These companies are alleged to have violated borrowers’ rights under laws regulating fair debt collection, including misleading borrowers about their debt and how to get out of default.
- The department is in the process of transferring the accounts currently being handled by the five firms. Once they’re finished, the contracts will officially be terminated.
Dive Insight:
While the Department of Education has been criticized for the actions of its debt collectors, it has not made such a strong public move to clean up that image. Industry analysts are keeping an eye on the reverberating effects throughout the debt collection industry following news of these terminations. The Huffington Post has also previously reported on a pilot program from the Treasury Department, which tasked federal workers with debt collection services instead of letting the Department of Education contract out that labor. Keep an eye out for continuing changes in this lucrative industry.