Spain's collection agents practice public humiliation

Debtors may be visited by collectors disguised as monks, bagpipe players, bullfighters, or even Zorro.

from the April 30, 2007 edition

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The agencies may be a blessing for small businesses that can't afford to let credit go unpaid, but they garner little sympathy from their targets. Mr. Camacho heads a legal service – Defender of the Debtor – that helps clients mount legal challenges for the presumed harassment they have suffered. "These companies exist on the border between the legal and the illicit," he claims. "But they use intimidation, and that's illegal."

Some courts have agreed. In 2005, a judge in Valencia found one agency guilty of coercion for threatening to send six collectors dressed as bullfighters to the debtor's wedding. The agency was fined 90 euros ($120), an amount that, like most fines in these cases, is hardly high enough to seem punishing. One political party, the Catalan Convergence and Union, introduced a nonbinding proposal in parliament in March proposing stiffer penalties and norms for collection agencies where there currently are none.

In the meantime, business is only getting better for Spanish collection agencies. Spain may have one of the fastest-growing economies in Europe, but much of that prosperity rests on a thick layer of debt. Some of that is personal debt: Mortgage debts increased 24 percent in 2006 over the previous year, and the ratio of debt to income now stands at 120 percent (up from 45 percent in 1995). But much of it is corporate. Indeed, the construction industry, which makes up almost 8 percent of the GNP, significantly higher than the European average of 5 percent, provides most of the targets of the Zorro agency.

"They're shameless," says Romero. "The heads of these construction companies drive luxury cars, eat in expensive restaurants, have nice apartments, but they're not paying the plumbers in the houses they're building, or the small company making the windows." In fact, he adds, that's where the idea arose for dressing eight of his 72 collectors like the swashbuckling bandit.

"You've seen the movie with Antonio Banderas? That's what we're like: We force the rich to give back to the poor."

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