Consumers association calls for overhaul of the debt collection industry

The debt collection system needs to be overhauled, said the consumentenbond, the consumer association. They wrote a letter calling for state secretary Teun Struycken (legal protection) to take action against this. "Companies should not be earning money off of another person's debt. And the costs cannot get so high that the consumers' problems are worsened."

The association said one in 11 homes has problematic debt. "At the same time, the debt industry is earning billions off of the misery of consumers," the association added, who called this practice immoral and socially irresponsible. "We have to get rid of companies whose business model is based on collecting collection costs. In 2022, the average profit margin of collection agencies was 46 percent. That says enough," says the director of the Consumentenbond, Sandra Molenaar.

"We recognize that there are problems and excesses," said a Ministry of Justice and Safety spokesperson. He emphasized that the last Cabinet put many things in place to tackle the debt collection problem. "This is also a target for the new Cabinet."

The Consumentenbond wants consumers with debts only to be charged for costs that were actually incurred. "The collection costs now depend on the amount of the claim. But that is actually very strange. Whether you send a letter because of a debt of 50, 500, or 5000 euros, the administrative action does not get any more expensive for it," said Molenaar.

In addition, the association wants the so-called allocation order to be reversed. "If someone with debts repays an amount, it gets deducted from the collection costs first, then from the interest on the debt, and finally from the outstanding debt. The result is that some consumers pay the recurring costs for a long time," the director explains.

According to the association, there should also be a ban on buying and reselling debt. "A buying party, in this case, has no connection at all with the consumer or any understanding of the original claim. You miss the human side. Plus, the company needs to recoup the money it paid for that bulk of debt. And that all too often goes at the expense of the debtors," the association said.