Debt collection horror stories are nothing new. But there's a whole other side to the industry that no one’s talking about: collectors hired by government agencies to hunt down debtors.
In this world, forgotten tolls can easily snowball into hundreds of dollars in debt, and an unpaid speeding ticket can land you in jail.
That’s because government debt collectors are rarely held to the same consumer protection laws as collectors that go after credit card debt or auto loans. And with the power of state and local governments behind them, these debt collectors can charge steep fees and make scary threats, warning that the government will suspend your driver’s license, garnish your wages – even issue a warrant for your arrest.
CNNMoney spent months investigating this booming business and one of its biggest players, Linebarger Goggan Blair & Sampson. We analyzed hundreds of consumer complaints from state attorneys general and the Federal Trade Commission, among other organizations, and interviewed dozens of attorneys and other experts. We also spoke with consumers who received threatening letters from Linebarger seeking to collect on debts.
Among them: A Brooklyn mom who received a $710 bill for damage to the police car that killed her son. A Texas Air Force Major who was threatened with foreclosure while he was serving overseas. And an Oklahoma man who was billed more than $100,000 for taxes he had already paid.
Many people are shocked when they receive terrifying letters like these and confused by the sky-high fees and huge bills they may not have owed in the first place.
Linebarger alone collects $1 billion for government agencies each year. Its clients include 2,300 state and local governments in 21 states, including Texas, Florida, Illinois and New York.
Once a small Texas law firm, Linebarger has transformed itself into a national debt collection powerhouse by wining and dining politicians and spending millions on lobbying and political campaigns. It has donated to everyone from small-town school board members to Rick Perry and Greg Abbott, the current governor of Texas. It even puts current elected officials on its payroll.
Its controversial political ties have also landed it in the middle of a number of big scandals, including one that landed a former partner in jail.
But Linebarger continues to rake in lucrative government contracts, making its top executives and founders rich while the debtors it goes after are left scrambling to pay its steep fees.
After CNNMoney's investigation ran, lawmakers spoke out against the special treatment given to government debt collectors, and consumer groups expressed major concerns. Read their reactions here.
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