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Government Debt Collection Scam

Written By Geoffrey Pike

Posted March 9, 2015

debt collectorA recent CNN investigation uncovered some rather disturbing practices by collection agencies …

These debt collectors are going after people and making big profits by tacking on huge fees on top of the debts already owed.

So how do these debt collectors get away with such a practice? Wouldn’t the government have some laws to protect people? Well, there are consumer protection laws to protect against overly aggressive debt collectors. But the problem here is that these collection agencies are actually doing work for the government.

That’s right. These aggressive collectors are attempting to collect money for unpaid taxes, tolls, traffic violations, and parking fines. In many cases, these fees can add up to amounts that are substantially more than the original unpaid fee.

One example found a man in Texas actually ended up owing $300 from a toll charge that was originally just $1.25. While this was a more extreme example, even tacking on 30% or 40% seems rather abusive for some of the higher amounts owed.

It is especially ironic when we have to hear politicians go on about needing government regulations to protect consumers. They will be quick to say that the government should stop predatory lenders with high-interest payday loans. Yet many of the same politicians will allow these tactics from collection agencies.

To be more accurate, it is not just that politicians are allowing this to happen. They are the ones encouraging this to happen. They are making an exception in the law for collection agencies doing government work. Their precious tax money is more important than any money owed to a private business.

In other words, the politicians will supposedly offer consumer protection, as long as that doesn’t mean protection against the government.


When we hear the term privatization, it is often thought to be a free market solution. But we have to be careful in how the terminology is used and how it is being applied.

In this case, these are “private” debt collectors. They are companies looking to make a profit. The problem is that they are making some of their profits by using the force of government.

Even if they weren’t being granted special privileges in their collection tactics, this would still be the case because they are collecting government taxes.

But this is especially glaring because these debt collectors are being given special privileges in comparison to other companies. If a debt collector tried to charge these extra exorbitant fees for debt owed to a credit card company or a store, then they would be in trouble with the law.

Even though these government debt collectors are making profits, this has little to do with free market capitalism.

There are a lot of companies that make big profits due to their alliance with big government. But if they are not serving consumers, or they are preventing others from serving consumers through government protectionism, then it is not a free market system.

For all of the talk about needing government to help the poor, this is one more example where the poor are disproportionately hurt by government policies. These debt collectors are preying on poor people and are likely to get less fighting back from them.

In addition, when you tack on, let’s say, $25 onto an already unpaid parking fine, this is going to hurt poor people a lot more than those with money.

Many people say we need government for regulations to protect consumers. But who is protecting consumers from the government?