Consumers bemoan debt collectors' methods

The Jakarta Post, Jakarta

After being roughed up by a credit card debt collector, Abadi Negara Sinulingga swore he would not pay the Rp 10 million (US$1,058) owing to the credit card company until he received an apology.

"The debt collector hit me in front of my employees! Can you imagine how humiliated I felt?" he said at a discussion on credit card complaints on Saturday, held jointly by the Indonesian Consumers Foundation (YLKI) and Bank Indonesia.

As the number of credit card holders continues to grow at a rapid pace, from 4.5 million in 2003 to 7.5 million in 2004, more Indonesians, such as Sinulingga, are becoming familiar with the presence and practices of debt collectors.

YLKI chairwoman Indah Suksmaningsih said a recent survey conducted by the organization revealed that 30 percent out of 901 credit-card user complaints lodged with the organization from March 2 to May 15 this year were about practices of debt collectors.

She said the stringent debt recovery targets and quotas set by credit card issuers put pressure on the debt collection agencies they contract.

"As a result, debt collectors use any means to reach these goals," she said.

Indah said YLKI regularly received complaints from people who felt "terrorized" by debt collectors, such as family members receiving threats and rude phone calls in the middle of the night, being accosted at their homes or workplaces, the threat or use of physical force, or having their possessions confiscated.

"I don't think the methods used by debt collectors here would be legal in other countries," she said, adding that credit card issuers often looked the other way concerning these practices.

The rapid increase in credit card holders has seen the volume of credit card transactions increase as well, from Rp 19.2 trillion in 2001 up to Rp 37.6 trillion last year.

Bank Indonesia recorded that the amount of bad credit card debt in 2004 was about Rp 1 trillion, or 8.7 percent of the total outstanding credit card debt of Rp 11.8 trillion.

The central bank director of accounting and payment system, Mohamad Ishak, said even though the use of debt collectors was left up to the individual issuers, they could find an alternative way to settle bad debts.

"One way is for them to ask a customer to come to their office and ask what the problem is," he suggested. (002)