As Russians Struggle to Pay Bills, Debt Collectors Mimic the Mob.

Greg Krasovsky: Sounds like Russia desperately needs a tougher version of the U.S. Fair Debt Collection Practices Act!

See https://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices_Act

Things in Russia have gotten pretty bad on the debt collection front as the country's economy stagnates due to low oil prices and Western sanctions over Ukraine.

Just read this recent Moscow Times' article:

"Russia's Debt Collectors Bring Back Brutality of the 1990s.

According to Alexander Akhlomov, an executive at the United Credit Bureau, which monitors credit history, 11.5 million Russians held overdue debts by the end of December. Seven million people were more than 90 days in arrears. And an under-regulated, sometimes predatory collection industry is capitalizing on their predicament.
...
At the start of the decade, consumption was wild. "Time to have it all," said the credit companies in advertising campaigns. "Take it, you can return it later," the slogans crooned. And, as borrowing peaked and the economy stalled, a parallel collection industry grew up for those who couldn't pay.

Some banks began in-house debt recovery, but many began selling overdue loans to specialized agencies. These firms often operate on the edge of the law. "In most cases the activity of collectors is directly connected to criminality," the Prosecutor General's office said in a statement earlier this year. These agencies process more than 40 percent of bad debts, says Akhlomov — meaning that at least 3 million Russians are targeted."

See http://www.themoscowtimes.com/business/article/russia-s-debt-collectors-bring-back-brutality-of-the-1990s/559229.html
 
But there's some light at the end of the tunnel, as Russia's Rights ombudsman supports full ban on debt collectors in Russia:

"Russia’s new Human Rights chief Tatiana Moskalkova has told reporters that she supports a ban on private debt collectors and at the same time wants to improve working conditions of court bailiffs.

“I would support the idea of stopping the work of collector agencies and significant changes in the work of court bailiffs – their structure, status, functions and equipment, because the current level of their salaries causes low quality of their work and a constant deficit of skilled professionals,” Interfax quoted Moskalkova as saying on Monday.

In February, chairs of both parliamentary chambers jointly drafted the bill proposing restrictions on debt collector agencies. The document directly bans debt collectors from using physical force or threats, deceit or damage to property.

The collectors are also not allowed to disclose the information about debtors – either through personal contacts with relatives or co-workers, or through various media, like the internet or outdoor advertising.

The document also allows collectors only two phone calls and one personal meeting with an individual debtor per week. It is specified that neither phone calls nor meetings can take place at nighttime.

In mid-March, the bill was approved by the government without any correction, according to mass media reports."

See https://www.rt.com/politics/340830-rights-ombudsman-supports-full-ban/

Strict government controls on debt collection practices in Russia are just as necessary in Russia as they are in the United States, as self-regulation in this industry may be just like asking foxes to regulate their raids on chicken coups:

See "New ethics code for debt collectors introduced in Russia.

A professional association for debt collectors has introduced new ethics code which prohibits the use of several excessive measures such as discussing debt with debtors’ children, Izvestia newspaper reported on Tuesday.

According to Izvestia, the National association of professional debt collector agencies (NAPCA) was behind the new ethics rules. Last code was introduced 8 years ago and contained vague definitions.

The new code prohibits the debt collectors from speaking to debtors in disrespectful manner, hiding cell number during the calls or mentioning security agencies when talking to debtors. One of the most important innovations of the code is prohibition to talk about debtor’s debt with children and “third parties” as well as prohibition to disrupt the functioning of medical, educational entities and infrastructure objects, Izvestia reported.

Other prohibitions mentioned in the code extend to sending messages to debtor’s friends in social networks, discussing debtor with his or her colleagues at work. The new code obligates debt collectors to draft strategic approach and only use approved speech templates."

at http://www.rapsinews.com/news/20160426/275969763.html


Selected Excerpt from the New York Times Article "As Russians Struggle to Pay Bills, Debt Collectors Mimic the Mob.":

"MOSCOW — They have stripped and sexually abused a woman, severely burned a toddler by firebombing a house and broken a woman’s pinkie as a warning. Gang members, bandits, mobsters? Not exactly. These are debt collectors, a peculiarly Russian variety that is flourishing amid the country’s economic turmoil.

As a punishing recession stretches into a second year, people struggling to make ends meet are resorting in growing numbers to borrowing at astronomical interest rates that many cannot possibly afford.

With unpaid debts mushrooming, collection has turned into something of a blood sport reminiscent of the shocking gang violence of the 1990s, with threats and violence by debt collectors spreading across the sprawling Russian hinterland largely unrestrained by public authorities.

“As a rule, small sums are involved in these cases, and it is easier to recover them by physical force,” said Danila S. Mikhalishchev, a debt collector turned consumer advocate. “It is easier to frighten people than to sue them.”

In 2015, the amount of unpaid debt surged by almost 50 percent to $15 billion, or about 13 percent of all personal debt, according to Alexander A. Akhlomov of the United Credit Bureau, a private organization that tracks credit ratings. A borrower making no payments for three months is considered to be in default. Just since March of last year, the number of Russians in that category has leapt to 7.5 million from 6 million, he said."

Please read rest of the article at: http://www.nytimes.com/2016/04/30/world/europe/russia-debt-collectors-mob.html