On Nanjing Road, a small advertisement for debt collection, "Debt Collection Company" basically operates in an underground state, out of the public eye.
"Specialized in helping people collect debts..." On the streets, citizens often come across such advertisements. And when it comes to "professional debt collectors," people easily recall the mafia-like characters from films and TV dramas - covered in tattoos, wielding knives to chase down debtors. As the year-end approaches, this group's business picks up again. So, how do they employ various tactics to pursue debts? And are their actions legal?
Recently, reporters have found that debt collection companies can be divided into different tiers. Some claim they conduct business within the legal boundaries, insisting they will not engage in illegal activities. However, whether "legal" or "illegal," "debt collection companies" currently operate in either fully or semi-underground states, driven by substantial profit margins.
■ Survival Status
Long-term existence in an underground, hidden state
Paying off debts is a natural obligation, yet instances of failing to repay debts are common. Alongside the prevalence of "deadbeats," a group of "professional debt collectors" has emerged, operating in underground or semi-underground conditions. In recent years, with the rise of private lending, issues of overdue or evaded debts between enterprises or individuals have become increasingly severe. "Triangle debts" and "multi-angle debts" have proliferated, leading to the emergence of intermediary-style debt collection companies or individuals.
Renowned as the "First Person of Chinese Private Debt Collection" is Li Qiuzhong from Zibo, Shandong. In 1997, Li Qiuzhong founded the "Wanbang Debt Collection Company" and helped people recover debts across the country. They employed tactics such as relentless surveillance, loud demonstrations, and stubborn refusal to leave, using these methods to reclaim many long-standing debts, causing a sensation at the time. Subsequently, numerous debt collection and detective organizations appeared across the country. Among them, some debt collection companies used improper means like threats, deception, and extortion to forcibly collect debts from debtors, drawing attention from relevant national authorities.
On June 15, 2000, the Ministry of Public Security, the State Administration for Industry and Commerce, and other departments jointly issued a document banning all types of "debt collection companies" and prohibiting illegal private debt collection. In 2002, "detective agencies," "private bodyguards," and other emerging service industries appeared on the newly released "Classification Table for Goods and Services Trademark Registration" by the Trademark Office of the State Administration for Industry and Commerce. However, "debt collection companies" remained banned. Facing the high-hanging ban, "private debt collection" went semi-underground. In 2006, the Ministry of Human Resources and Social Security introduced five new professions, among which "Commercial Debt Recovery Specialist" was included. However, the training center under the Ministry clarified that the "Commercial Debt Recovery Specialist" training did not involve personal private debt collection and would not legalize professional debt collectors.
When reporters entered "debt collection company" online, millions of related contents quickly appeared. Those ranked higher in search results were mostly companies named "Business Investigation," "Credit Management," "Business Consultation," etc., but all engaged in "debt recovery, debt clearance" services. Some even offered private detective or revenge and fighting services.
■ Reporter Investigation
Can recover debts worth tens of millions annually
On December 18th, reporters contacted a business investigation company in Beijing online. When reporters expressed interest in having them recover a debt in Qingdao, the first question asked was "How much is the debt, and do you have a promissory note?" Reporters replied "13,000 yuan, with a promissory note." The response came quickly: "The amount is too small; we cannot take it. Please consult another company." Subsequently, contact with the reporter was immediately terminated.
Subsequently, reporters contacted a "debt recovery company," named "Qingdao XX Debt Collection Company." According to the phone number left in the advertisement, the person who answered the call claimed to help with debt collection, stating that any type or size of debt could be collected without signing a contract, but required prepayment of fees and requested to provide an account for remittance. This method of paying first and then collecting debts raised doubts about its authenticity, prompting reporters to hang up citing further consideration.
Afterward, reporters revealed their identity and randomly interviewed five or six "debt collection companies." Three refused interviews citing inconvenience and lack of time, appearing very mysterious. However, two answered some questions but only emphasized the legality of their company and refrained from discussing fees or methods. When reporters expressed interest in visiting the company in person, all declined citing inconvenience.
"We collect debts first and charge commission only after successful collection. If the collection fails, we do not charge any fees." A Wang-surnamed manager of a debt collection company in Jiaozhou stated that their company differed from others. Some companies rely on covert photography, tracking, and other methods to collect debts, while his company solely depends on personal connections, focusing on corporate and enterprise cases. "I usually use my connections to reach their superior leaders or government management departments, applying pressure. Most of our cases are in Qingdao, but if it's elsewhere, we go to Beijing to find connections. Our cases are large, generally in the hundreds of thousands to millions, mostly referred by friends, solving debts worth tens of millions annually."
Reporters found during investigations that debt collection companies employ various methods: some companies start with legal procedures through lawyers and then apply psychological techniques; others leverage personal relationships to exert pressure on debtors or companies; still others act more persistently than deadbeats, posting banners, blocking doors, setting off firecrackers; and some resort to violence by hiring thugs...
Although most debt collection companies claim they do not use violence or threats during collections, some professional debt collectors admit that completely avoiding violence is impossible.
Mostly working under the guise of friends to collect debts
Investigation company head: no jobs below 30,000 yuan
To learn the law specifically for debt collection
On the afternoon of December 18th, reporters contacted via phone the head of a business investigation company offering "debt collection" services based on online information. Mr. Sun, in his forties, stated that although their industry has always been in a gray area, it isn't entirely hidden, so he was willing to give an interview. Mr. Sun mentioned that their company has been established for nearly seven years, mainly handling debt disputes in Yantai, Weihai, Qingdao, etc., with a total of over ten employees. Due to debt collection, he earned considerable wealth and even studied law specifically.
"What kind of debt would prompt creditors to seek help from debt collection companies?" reporters asked. Mr. Sun explained that economic disputes involving creditor-debtor relations generally fall into two categories: private debts and commercial arrears. Private debts include loans, gambling debts, etc., while commercial debts include loans, goods payments, etc. "In these debts, cases where borrowing occurs due to family hardship are rare; most arise from investments or insufficient capital turnover, often resulting from high-interest loans or compound interest loans, commonly known as 'rolling debts.' On one hand, the principal and interest of the loan have not been legally recognized, and on the other, judicial routes take too long, with each stage of litigation requiring legal recognition, so clients directly approach us."
Mr. Sun introduced that many employers seeking their services hold court judgments. These cases face difficulties in execution after court judgment or remain unsolved by police due to limited manpower and resources. For example, assets may have already been transferred, or the debtor simply disappears, "This is when it's our turn to shine."
Generally, they receive a 30%~50% commission
"Since the state does not permit the establishment of debt collection companies, are your debt collection practices legal?" reporters asked. Mr. Sun explained that the state does not allow the establishment of debt collection companies, but according to the General Principles of Civil Law, citizens with civil capacity can entrust agents for civil acts. Debt collection is also a form of civil behavior, and we act as individuals representing clients in debt collection. Mr. Sun noted that when helping clients collect debts, they usually appear as friends. "The usual procedure is this: the client contacts us, explaining the situation and providing the debtor's name, address, phone number, etc. We sign a power of attorney with the client, agree on the fee, and after successfully recovering the debt, we take a percentage as commission."
Mr. Sun stated that they generally do not accept jobs with debt amounts too small. The minimum debt amount they handle is usually above 30,000 yuan, with no upper limit. He disclosed that debt collection companies generally charge commissions based on the recovered debt amount. Standards vary depending on the difficulty of debt recovery, with commissions ranging from 30%~50% of the recovered amount. In other words, if they recover a debt of 1 million yuan, the company's reward could be 500,000 yuan.
However, Mr. Sun also pointed out that many creditors' hired debt collection companies are not very "regular," often yielding little money and costing more. "For instance, for a debt of 100,000 yuan with a 50,000 yuan commission, during the process, the debt collection company might request the employer to prepay some expenses for car fuel, telephone bills, relationship maintenance fees, etc. Once the money is recovered, the commission remains unchanged. Since the money is in the hands of the debt collection company, the employer generally dare not argue. In the end, for a debt of 100,000 yuan, getting 30,000 yuan is already good."
"Sing what suits the mountain"
What methods do debt collection companies use to collect debts?
"The debt collection methods are not fixed; different strategies are needed for different people, akin to singing what suits the mountain," Mr. Sun said. After receiving a case, their first step is to talk to the debtor, understanding why they don't repay and the reasons behind it. There are generally three types of debtors: those who genuinely have no money and lack repayment capability, forced by circumstances to not repay; those who have money but know the creditor's personality and believe they won't face consequences, intentionally delaying repayment (deadbeats); and those who have conflicts or misunderstandings with creditors, psychologically unwilling to repay. The best scenario involves finding opportunities to resolve conflicts and recover debts.
If the debtor is a company, different tactics must be employed. Companies fear embarrassment, persistence, and complaints. People can be sent to stand outside the company door telling customers the company lacks integrity, complain to their supervisory department or superiors, or expose them through media.
Mr. Sun indicated that those in this line of work often remain hidden in daily life but occasionally "transparent," knowing some laws while playing "unspoken rules," possessing negotiation expert qualifications but not lacking cold-blooded violence.
Debtors refusing to pay are intimidated by calling in a few brothers
"At the end of each year, it's peak season, and we're extremely busy." Mr. Sun shared a case with reporters: just a few days ago, they completed a 40,000 yuan job. The situation was simple: the creditor's business partner intended to transfer 40,000 yuan as payment for goods. At the time, due to circumstances, the creditor borrowed a friend's account, which belonged to the debtor, and the money was directly transferred there. When the creditor asked the debtor for the money back, unexpectedly, the debtor refused outright.
"The debtor doesn't deny the matter but claims to have spent the money and keeps delaying repayment. The creditor has no evidence and doesn't want to go through the hassle of a lawsuit, so they approached us," Mr. Sun said. After contacting the debtor, they initially tried persuasion, but the debtor didn't respond well, claiming temporary inability to repay. Mr. Sun and his team persisted without physical action, angering the debtor. "He brought in two or three social figures to intimidate us, a very common occurrence. We called in a few brothers, and both sides refrained from physical confrontation, making him immediately compliant."
Earning 150,000 yuan by setting off fireworks at midnight
Mr. Liu, close to a professional debt collection company, recounted a debt collection story. His friend runs a debt collection company, and last year, they received a 300,000 yuan job. "The debtor, Zhang, runs a shoe store and borrowed some money from the creditor during procurement. Eventually, the principal and interest totaled 300,000 yuan." Upon accepting the task, the debt collection company investigated Zhang's home address, income, etc., discovering that Zhang indeed lacked 300,000 yuan in savings, making the debt difficult to recover. Thus, the debt collection company agreed with the creditor that the commission for this debt would be 50%, or 150,000 yuan. The debt company then located Zhang, who couldn't produce the money, prompting the debt company to stick to Zhang until he became angry.
"Since it's almost the New Year, let's send you a string of firecrackers, and we'll visit you daily before the New Year." Finally, the debt collection company brought a roll of firecrackers, setting them off late at night at Zhang's home. The elderly and children in Zhang's household were startled, and neighboring residents complained.
Zhang was now caught in a dilemma—wanting to repay but lacking funds, wanting to delay but unable to endure the harassment from the debt collection company. At this point, the debt collection company gave him an idea: "You owe 300,000 yuan, right? The creditor needs to pay us 150,000 yuan in fees, so you only need to give him 150,000 yuan and give us 150,000 yuan. In this way, you owe him 150,000 yuan, which I will lend to you, but you need to write a 300,000 yuan IOU and repay it within a year."
Mr. Liu said that in this way, his friend made a profit of 150,000 yuan. "Isn't this extortion?" reporters asked. "If they present evidence showing that the 300,000 yuan IOU represents the true intentions of both parties, going to court might make it hard to determine who wins," Mr. Liu said.
Disrupting business at meal times by occupying tables and ordering peanuts
Reporters also heard a classic debt collection story: A restaurant in Qingdao owed a seafood farmer more than 40,000 yuan. After accepting the case, the debt collection company brought more than ten employees to eat at the restaurant during its busiest hours. Each table had only one person sitting, and each ordered only a plate of peanuts, loudly talking and staying for two or three hours, preventing the restaurant from operating normally, causing the owner great distress.
A few days later, the restaurant owner managed to gather more than 30,000 yuan but was still short by nearly 10,000 yuan. Eventually, the debt collection company and the restaurant owner reached an agreement: the debt collection company would temporarily take over the restaurant, and all income within a few days would belong to the debt collection company until the debt was settled.
Using the debtor's name to book a room and then soft imprisoning them
Interviews with multiple "debt collection companies" revealed that most claimed their companies never committed crimes, adhering to the bottom line of not committing crimes. "Frankly speaking, most debt collection companies are somewhat involved with organized crime," a boss of a "debt collection company" told reporters. The reason people associate debt collection with the bloody coercion seen in TV dramas is related to the fact that some "debt collection companies" in society indeed use violent means to collect debts, with personnel being mixed, including ex-convicts with no legitimate occupation.
During interviews, reporters learned of such a case: a debtor kept delaying repayment of the creditor's debt. After the creditor sought help from a debt collection company, the company lured the debtor to a hotel under the pretext of discussing business. To avoid committing a crime, they let the debtor use his own ID to book a room. After entering the room, several people prevented the debtor from leaving and called his family to demand money. Eventually, the debtor's family gathered the debt.
In June last year, the Liangang Court sentenced a "debt collection gang" led by "Big Brother" Zhang Jianhong. The gang doused victims' clothes with cold water, forced them to lick their toes, extorted money... Ultimately, they were convicted of organizing and leading a black society organization, participating in a black society, illegal detention, intentional injury, extortion, etc.
■ Related News
Violent debt collection and illegal detention
Recently, under the strong assistance of Guangdong police, the Zhangping police in Fujian captured nine suspects including Wang Peng, successfully solving the "September 10" major illegal detention case involving a ransom of 2 million yuan. The victim, Li, was successfully rescued. On October 23, 2011, all nine suspects involved in the case were arrested.
On the morning of September 9, Li, who operates a chemical company in Zhangping, received a call: "Mr. Li, I am Manager Wang Peng from Xiangzhou Chemical Company in Zhangzhou. After some research, we think your company's products are excellent, and we are interested in acting as your agent..." After some discussion, both parties agreed to meet the next day at Li's company for detailed talks.
On the morning of September 10, Wang Peng arrived at Li's office as scheduled. After concluding the business discussion, they went to a countryside farm restaurant for lunch. After eating, Wang Peng invited Li to visit his company and discuss cooperation details with the general manager. Li agreed. However, Li didn't expect danger was waiting for him.
After Li got in the car, he noticed three young men sitting inside. Before he could greet them, the three men took out knives and threatened him, wrapping his head with clothing. Several hours later, when Li opened his eyes again, he found himself far away from Zhangping, in an unfamiliar place. Just as he was confused, Wang Peng showed Li a debt collection contract and forced him to call his family to directly transfer 2 million yuan to a specified bank account.
With the active cooperation of Guangdong police, on the morning of September 13, the special investigation team locked onto the location where the victim was held and the hiding place of the suspects. That afternoon, in a villa on a mountain in Zhongshan City, Guangdong Province, the nine suspects including Wang Peng were caught on the spot, and the victim Li was successfully rescued.
At noon on September 10, after Li was deceived into the car by Wang Peng, Wang Peng revealed the debt collection mission, but Li claimed he had no money to repay. Subsequently, Wang Peng forcibly took Li to a villa by the stream in Quanlin Mountain Resort in Santown, Zhong