Spanish debt collectors now wearing top hats and tails

[pvpatty]

Dressed to embarrass
Spanish collection agency sends out men in top hats and tails to humiliate debtors into paying up

JASON WEBB

Reuters

August 22, 2008 at 3:36 AM EDT

MADRID — If more confirmation were needed of the funereal state of Spain's economy, it can be found in the shape of The Debt Collector in Top Hat and Tails.

That's a translation into English of "El Cobrador del Frac," the name of a company that specializes in sending out men dressed like extras from a 1930s Fred Astaire movie to humiliate debtors into paying up. Its business is booming.

"At the start of the year we noticed demand was increasing," said Juan Carlos Granda, head of El Cobrador del Frac's international department.

With Spain's economy on the edge of recession as a property bubble crumples, Mr. Granda expects El Cobrador del Frac to enjoy several boom years as it clears up debts left by consumers and companies during years of financial fiesta.

Spain's household debt is at record levels - above 120 per cent of gross domestic product, a result of the easy credit facilitated by euro membership that long allowed people to live far beyond their means.

Many firms with unpaid bills turn to debt collectors like El Cobrador del Frac, which buys debts at a discount before trying to collect them. It claims a success rate of about 70 per cent. The privately owned firm has more than 550 employees in Spain and Portugal, and just hired an extra 70 or so to deal with demand.

Mr. Granda refers to the top hats and tails, whose appearance has unnerved so many Spanish debtors, as the company "uniform."

"We send collectors in uniform and collectors without uniform. It depends on how the debtor reacts. If we need to do it to collect a debt, we send a collector wearing top hat and tails, so his debt attracts more attention," he said.

The company usually starts with a phone call and a warning, or a faxed demand for payment. If that doesn't work, the approach becomes more aggressive, although Mr. Granda says his men always stay within the bounds of the law.

Consumer groups don't like it either. Enrique Garcia, spokesman for Spain's Consumers and Users Organization, said complaints against debt-collecting firms such as El Cobrador del Frac were rising as the economy turned ugly.

"The way these companies approach consumers often borders on being illegal," Mr. Garcia said.

In one spectacular case, in which El Cobrador del Frac was seeking to reclaim a large debt for an unpaid wedding banquet, the company even resorted to phoning guests who had attended to demand they pay their share of the bill. The red-faced bride and groom soon coughed up, Mr. Granda said.

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[storeynicholas]

Surely, the answer is simple, one simply opts for full morning dress and full evening dress when venturing forth, distinguishing oneself from the vulgar rabble and bailiffs with gloves, cane, gardenia buttonhole and a superbly belled hat.
NJS