Problems at Child Support Inc.By Caroline E. Mayer and Jacqueline L. Salmon
Washington Post Staff Writer
Thursday, May 18, 2000; Page B01
Karen Scott needed help.
The single mother was trying to collect child support for her 12-year-old daughter, and she got no assistance from Virginia's child support enforcement agency. So the Fairfax County woman signed a contract with National Child Support Network Inc., one of a growing number of companies across the countryhelping parents obtain child support owed by their former spouses.
Scott had seen the company's ads, with testimonials from grateful parents. "They seemed really good," said Scott, 40, a highway safety specialist with the state.
But instead of collecting child support from her ex-husband, the Arkansas company delivered nothing but trouble, Scott said, keeping a $300 check from her ex-husband that was to go to her and billing her $775 for collecting $4,000, even though the state had collected that money.
National Child Support Network sees it differently. Spokesman David Wayne said that the company worked hard to collect more than $5,000 from Scott's ex-husband and that she failed to pay in violation of the contract she signed. Company records, he said, indicate that caseworkers made 81 telephone calls and sent 14 letters to Scott's ex-husband, who sent the money to the state, which forwarded it to Scott. Her ex-husband could not be reached. Like Scott, thousands of custodial parents have turned to outside help to get their child support payments after becoming frustrated with the inability of state governments to collect, or after being scared away by long waits.
In some cases, what they have found is that private firms aren't the answer either. A growing number of parents are filing complaints with state agencies and public-interest groups, saying the companies don't live up to their promises. Too late, the parents say, they discovered they were locked into lengthy contracts that not only were hard to terminate but also imposed a hefty fee. A 33 percent commission is not uncommon, often on top of an initial administrative charge of between $50 and $400.
What's more, private companies frequently charge for child support payments they had no role in collecting, some parents and state officials say. "This is kids' food, clothing, shelter and education money. . . . People are just desperate," said Geraldine Jensen, president of the Association for Children for Enforcement of Support Inc., an Ohio group representing 40,000 parents owed child support.
Last fall, the attorney general of Illinois sued two such companies for misleading clients: One firm was accused of intercepting child support payments that were supposed to go to at least 14 families; the other allegedly promised to help collect money owed to 41 families but did little or nothing on their behalf. The first case was prosecuted successfully, and the second is pending, officials said.
For the most part, though, child support collection companies remain unregulated. States have few, if any, rules, and federal regulations barring abusive and deceptive debt-collection practices do not apply because the courts do not consider child support payments as consumer debt. Complaints about private child support collection agencies come as Congress is considering giving them greater power to collect delinquent payments. A House Ways and Means panel will hold a hearing today on a proposal to allow the companies access to confidential government data used by state agencies--such as employment, bank account and passport information--to help them collect. The legislation also would allow the companies to do what states can already do: intercept any tax refunds due a delinquent parent and send the money to the custodial parent.
"Moms should have every help we can give them in collecting child support, and they should have a choice," said Rep. Nancy L. Johnson (R-Conn.), the subcommittee chairman, who introduced the legislation. "There are terrible examples in every arena of the failed system, but there are also wonderful examples of great successes. My goal is to get more dollars for kids." The problem with child support is immense and well documented. In 1998, the most recent year with available statistics, at least 12 million parents nationwide owed an estimated $63.5 billion in court-ordered child support, but paid only $14.4 billion, according to government figures. In Virginia, $347 million was paid, but $1.6 billion was still owed in 1999. In Maryland, $374 million was paid; the overall amount still owed was unavailable. In the District, parents paid $44.5 million last year and currently owe $364 million.
Even though states have been given more power in recent years to act against scofflaw parents, only about 20 percent of child support payments are made each year. That should improve with the recent installation of a computer system that matches delinquent parents with their bank and brokerage accounts; but even with such enhanced tools, child support officials say they may not garner more than 30 percent of what's due. It's no surprise, then, that in the past decade the private sector has stepped in to fill the void. Industry executives estimate there are now two dozen companies.
The companies say they offer parents an alternative to overloaded government agencies or private lawyers who may demand hundreds of dollars before even taking a case.
By all accounts, tens of thousands of parents are turning to private firms. Richard "Casey" Hoffman, head of the Austin-based Supportkids.com, one of the largest, said 90 percent of his clients "have already been to the government and can't afford to go to a private attorney."
Last year, Hoffman's company collected $20 million in child support, more than two-thirds of which went to families, he said. This year, he expects collections to hit $30 million, proving "the private sector is part of the solution."
But the large amount of money kept by the companies disturbs many advocates for children and custodial parents.
Jensen, of the Association for Children for Enforcement of Support, likens the private companies to "vultures." "This is not money owed to JCPenney or even a dentist," she said.
The companies strongly disagree. "Clients receive more money in the long run than what they were getting," said Doc McCoy, president of the Fort Worth-based Child Support Intervention and executive director of the National Child Support Enforcement Council, an association of private agencies. "Seventy percent of something is better than 100 percent of nothing. It's the price people pay because the public service has failed them."
Tiwanta Barnes Daniels, who works at the University of Alabama, is a believer. Divorced in 1992 with two sons, then 8 and 9, Daniels said she received none of the monthly $284 payments her ex-husband was supposed to make. When Daniels sought help from the state in 1994, "a woman took down my information and said she'll let me know something in a month. I'm still waiting to hear back from her."
Three years ago, Daniels signed up with Supportkids.com, which took more than two years to track down her former spouse. The money finally started to flow this month. The amount was barely over $400, but Daniels is thrilled with Supportkids.com. "They're my heroes," she said.
Not all parents have been so fortunate. Vickie Gorman, of Dallas, turned to two private firms to collect the hundreds of dollars a month her ex-husband was ordered to pay after their 1989 divorce. "Neither one did anything at all," said Gorman, a single mother who has a son, now 15, and a daughter, 12.
Gorman got out of her contract with the first company, which later went out of business. In 1996, she signed with Child Support Advocates in Dallas. By then she had already located her ex-husband, who, she said, had begun paying, although not the full amount. Gorman hoped Child Support Advocates would push him to pay the full amount and some of the thousands of dollars past due. Instead, she said, all the company did was take its commission out of the money he was already paying.
She hired a lawyer to terminate her contract. "Never again would I use a child support collection agency," she said. "I [got] burned." The company did not return phone calls.
Neither Gorman's nor Daniels's ex-husband could be reached.
Dan Jacobsen, president of Child Support Network Inc. in Phoenix, said private companies could better serve parents if they had the same tools the state has.
"You just have to trust at some point that professionals will hold the information that is sacred very close to their chest," he said.
But extending this clout to the private sector, as the measure now before Congress would do, disturbs some state officials and public-interest groups.
"The legislation is being styled as a way to help mothers, but it really is a business opportunity for these private companies to make a profit at public expense," said Vicki Turetsky, senior lawyer at the Center for Law and Social Policy, an advocacy group for low-income families. "There is no question that the public child support program has been under-resourced and under-performing. But let's give more resources to the public programs."
Johnson acknowledges that the private firms are far from perfect but hopes her legislation would help correct some of the abuses and drive "poorer performers" out of business.
Under her legislation, Johnson said, states could set up guidelines for firms to follow if they wanted access to the government data. "It could be a big step forward in addressing some of the problems we know are out there," she said.
But others caution that there is no quick fix to the problem.
"There are no simple answers," said Dianna Durham-McCloud, of the National Child Support Enforcement Association, which includes private companies as well as public agencies. "Child support can be tricky and nasty," she said. "That's because it's all about sex, power and money."
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