A New York Times article effectively makes the case that debt buyers’ practices have long mirrored the recent headline-grabbing abusive practices by banks that have been too quick to foreclose on homeowners. The article brings up an important point: why do banks who cut corners with paperwork cause an uproar, while debt buyers who have been cutting corners for years still scurry in the shadows?

The Times shines a light in those dark corners, revealing that an employee at Asset Acceptance said under oath that he had to sign hundreds of legal documents a day that attested to him having reviewed and verified the records of consumers who owed debts. Similarly, a woman who worked for Asta Funding said under oath that she had signed 2,000 affidavits per day declaring that she had validated consumer debts. The Times estimated that her work volume translated to about one affidavit every 13 seconds. Hardly enough time to look up a consumer’s name, much less validate a debt.

As we’ve said on many occasions, achieving success in the debt buying arena is simply a numbers game. Debt buyers purchase written-off debt for pennies on the dollar, and then try and collect from consumers. Sometimes they contact the right people, sometimes they harass the wrong people into paying, and other times they try and collect even when the statute of limitations has run out.

The Times illustrates this numbers game beautifully, citing JPMorgan Chase as an example. Chase was getting ready to sell 23,000 accounts for 13 cents on the dollar. The debt had a face value of $200 million, and Chase expected to get $26 million. Even if the debt buyer collected a quarter of the outstanding debt, he would be able to make close to 100% profit.

The article makes a larger point, which is that the veracity of the data Chase was planning to sell was questionable. Indeed, when an employee brought errors to the attention of her manager, she was urged to ignore them. When the employee went to Chase’s legal counsel, she was fired.

When inaccurate data gets into the hands of debt buyers, they seem to run with it. Debt buyers essentially swear to having verified the debt, when they most often rubber stamp whatever data is on the computer screen. Because debt with greater substantiation is more expensive than debt that just has the consumer’s name, address, and dollar amount, debt buyers really have to dig to validate the debt. And that’s not cost-effective. Instead, they often simply file lawsuits against consumers and obtain default judgments – even if they have the wrong information or the consumer doesn’t realize he or she is being sued.