It is every bit interesting as it is ironic.
The Internal Revenue Service is partnering with four debt collection agencies to track down people who owe delinquent back taxes.
Here’s the irony: A government agency, the IRS, is partnering with merchants who are under strict watch of another government agency, the Consumer Finance Protection Bureau. In fact, the CFPB recently sued the parent company one of the four debt collection agencies with which the IRS has partnered, for the misleading of student loan borrowers according to the New York Times.
At first glance, some might view the collaboration as the alliance of two bullies, but we disagree. We see it resulting in two positives.
- The Federal Government values debt collection as an industry.
- This may help the industry’s image; that acquiring banks will be more open to providing payment solutions for debt collection merchants, a very difficult industry for which to find payment processing.
But first, we have some debt collection questions:
Will debt collection agencies have to follow rules?
We blogged in September of 2016 about how debt collection, in our opinion, is the most difficult industry for which to get payment processing solutions. The debt collection industry is under scrutiny by the CFBP for a number of ill-advised tactics:
- Intimidation by merchants
- False representation of government officials
- Harassment by merchants
- Excessive tacked-on fees
Wait…how do I know this isn’t a scam?
The stories of ‘IRS agents’ — with strange accents — calling random U.S. consumers demanding they pay (non-existent) back taxes have circulated social media in recent years. A search on YouTube of ‘IRS Scammers’ generates countless videos of consumers avenging inquisitors representing the IRS.
Thus, the IRS-Agency partnership begs a legitimate question: What will the four agencies do about the understandable and persistent ignorance of consumers who unknowingly owe, and believe the calls from debt collection agencies are part of a hoax?
Will the partnership succeed after two previous failures?
According to the New York Times article, the partnership between the IRS and debt collection merchants is its third attempt at employing independent collection agencies. The IRS tried it in 1996 and 2006, and lost much more capital than it collected.
It is reasonable to ask what makes this attempt different. Would it make more sense to simply form an IRS debt collection agency?
Payment Processing for debt collection merchants
While debt collection is an industry for which payment solutions can be difficult to obtain, Instabill merchant account managers will do their best to find payment options for your debt collection business. Speak one-on-one with an Instabill representative at 1-800-530-2444.