Library uses collection agency to help recover overdue items
I received a notice from a collection agency in May, seeking $51 for the Hawaii State Public Library System for a book that was due last August. This shocked me because I had never received any overdue notice to begin with! The library said it had an old address on file and the notice somehow was not forwarded to our new address. However, the collection agency notice was sent to our current address. Also, the library had my current number on file, so I don't understand why no one called me. I was told that if I returned the book I would be required to pay only the late fees and a processing fee. But what about the damage to my credit caused by the collection agency? The library Web page notes that "almost all library accounts which are $10 or more in arrears and are more than 90 days past due will be turned over to a collection agency." Is this really necessary? I could see if an individual had a substantial balance, but a $10 balance? A March 2006 article on Kiplinger.com states, "A library fine that goes to collection can shave 100 points off your credit score -- and boost annual interest payments by hundreds of dollars." I have since located the "lost" book and paid my fees, but my credit report is now stained for seven years.
Answer: It used to be that the threshold for getting a collection agency to go after overdue accounts was $125.
But that was dropped to $10, primarily because customers complained when accounts ran into the "hundreds and thousands of dollars," according to Hawaii State Public Library System officials.
One parent said that the library system should not have let his child borrow so many items to cause the account to get so large. The $10 threshold was considered "a more manageable fine."
The library system has used a collection agency -- MEDCAH Inc. -- for the past 10 years.
"Back in 1995, an initial estimate projected that there were about 110,000 overdue library accounts with a total value of $2.5 million," said library spokesman Paul Mark. "In 1997, it was estimated that the number of overdue accounts could increase to 120,000 and the projected total value of all overdue accounts would exceed $6 million."
That prompted the start of the "Collection Agency Project" in 1997.
In just the first year of the project, between its inception and October 1998, the library system collected a net $780,000 on overdue accounts.
Mark also provided figures that showed that, for the three years from 2004 to 2006, the collection agency was asked to recover an estimated average annual amount of $623,000, with an average individual debt of $40.
The average annual recovery rate was 64 percent, or $404,000, he said. Of that, MEDCAH received an estimated annual commission of 34 percent (or an average of $137,360 per year), he said.
We asked Mark to explain the procedure by which the library system tracks delinquent accounts.
He said the computer system is used to identify accounts with overdue items. Past due notices are then mailed to a customer's address on record.
"It is the library customer's responsibility to update any personal information such as an address change," he said.
He noted that when a library card is issued, the staff verbally will inform people of their responsibility, as explained on the back of the card, including the fact that they accept responsibility for all materials charged out and agree to pay any fines, costs or fees assessed by the library for overdue, lost or damaged materials.
The applicant will then be asked to sign the card.
He said if your old, incorrect address was still listed in your record, the notice would have been sent there. If mail forwarding was not requested, the notice would have been returned as "undeliverable, no forwarding address," which would then prompt an "address correction" notation to your record.
"As a result, the customer would not have received any past due notices or the precollection notice issued by the collection agency on behalf" of the library system, Mark said.
You indicated you did have mail forwarding, but that somehow did not show up in the library's records.
Mark said that when an account is turned over to the collection agency, the initial notice would be sent to the address on record.
"When the collection agency receives notice that the mail is undeliverable, it utilizes resources that are unavailable to (the library system) to locate a current address for the customer," he said.
Mark said the library system does not have the resources to contact customers by phone.
"The main objective of fines and ultimately collection agency services is to recover overdue items so that other library users may borrow them," Mark said.
We asked if there are any figures as to how many overdue books there are at any give time or how many are never returned. Mark said the library system does not have the resources to track those figures.
He suggested that cardholders regularly go to the Web site -- www.librarieshawaii.org -- to check due dates of borrowed items.
From the Home Page, select the "My Account" tab at the top of the screen. You will need to provide your 10-digit library card number and PIN to access your account. If you are not sure of what your PIN is, Mark said to contact your local library.
Regarding your credit report, Mark said you should call MEDCAH, at 266-2020.
The MEDCAH Web site at medcah.com describes the company as "a full-service debt collection agency serving Hawaii creditors for over 30 years." It says it provides professional collection services for state and city agencies, various utilities, as well as such businesses as hospital and medical centers, dental practices, emergency medical services and laboratory and diagnostic services. Its contract with the library system runs through October 2008.
Got a question or complaint?
Call 529-4773, fax 529-4750, or write to Kokua Line, Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210, Honolulu 96813. As many as possible will be answered. E-mail to firstname.lastname@example.org
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