Last Week Tonight with John Oliver is a popular late-night TV show. He’s funny, satirical Brit who likes to deflate pomposity, expose corruption and uncover messed-up and widespread practices. In this example he reveals the sordid world behind debt-collection agencies and the murky – and often threatening – tactics they use to harass debtors. Then he created TV history!
Watch the video, it’s truly interesting.
As Forbes reports: Oliver pulled back the curtain on the debt-buying industry, revealing how banks holding the reported $12 trillion in outstanding consumer debt will often write off the debt (for tax purposes!), before selling the obligation for pennies on the dollar to a collection agency, who will then do their best to collect the full face value of the debt from the owing party. Should the collection agency fail to collect the debt, it will in turn write off its purchase price of the debt for tax purposes, before selling it again for even fewer pennies to another collection agency. Inevitably, the debt ends up in the hands of the lowest common denominator of collection agencies, who will assign the process to often-unscrupulous independent debt collectors, who will then harass the debtor into paying up, even threatening to eat their dog.
Oliver then dug into the seamy underbelly of the largely unregulated debt-buying industry, revealing how in many states, you can purchase and collect consumer debt with no license. To illustrate how ”disturbingly easy” it was to establish a debt-buying company, he created one.
It was simple. Through the company he acquired 9,000 names for $60,000. He would have been within his legal rights to chase down that money. Instead, he chose to forgive thedebt, freeing 9,000 people from the midnight calls and the hounding by companies at four or five removes from the original debtor. And in the process beat Oprah Winfrey’s giveaway record of $8,000,000 in cars — by forgiving $15,000,000 of medical debt.
(If you’re interested in knowing more about the tax implications of that, check out the Forbes article.)