1188: Debt Collection | Skeptical Sunday

Summary

Podcast Summary: The Jordan Harbinger Show - Episode 1188: Debt Collection | Skeptical Sunday

Overview

In Episode 1188 of The Jordan Harbinger Show, titled "Debt Collection | Skeptical Sunday," host Jordan Harbinger and co-host Nick Pell delve deep into the often intimidating world of debt collection. Joined by Trevor, a writer, researcher, and self-described former "deadbeat," the trio unpacks the mechanics of debt collection, consumers' rights under the Fair Debt Collection Practices Act (FDCPA), and practical strategies for handling debt collectors. The episode aims to empower listeners with knowledge to navigate debt-related challenges effectively.

1. Understanding the Debt Collection Process

What Happens When You Stop Paying Your Bills

Trevor begins by explaining the initial stages of delinquency. When a credit card bill goes unpaid for 30 days, the borrower receives a warning, and their credit score takes a significant hit. Continued non-payment leads to increased attempts to collect the debt.

Charge-Offs Explained

At [03:35], Trevor introduces the concept of a "charge-off," stating:

“Charge off is what they call it when the credit card company assumes you're not going to pay and sells the debt to third-party collectors.”

A charge-off occurs when the original creditor writes off the debt as a loss and sells it to a debt collection agency, often at a steep discount. For example, a $5,000 debt might be purchased for as little as $50 by the collector, making the collection process a lucrative business model for these agencies.

2. The Fair Debt Collection Practices Act (FDCPA)

What Debt Collectors Are Permitted To Do

Nick Pell highlights that third-party debt collectors operate under the FDCPA, a federal law designed to protect consumers from abusive collection practices. According to Trevor, debt collectors can:

• Call During Specific Hours: They are allowed to call between 8 AM and 9 PM local time [07:36].
• Contact Third Parties Sparingly: They can contact a third party only once to locate the debtor.
• Send Written Notices: These notices must inform the debtor of their right to dispute the debt within 30 days [07:58].
• File Lawsuits Appropriately: If necessary, collectors can sue in the correct venue, either where the debtor lives or where the contract was signed [08:33].

What Debt Collectors Cannot Do

The FDCPA imposes strict limitations on debt collectors' actions to prevent harassment and abuse:

• Communication Restrictions: No multiple calls during meal times or late at night.
• No Harassment or Abuse: Collectors cannot swear, threaten arrest, or impersonate authorities [14:18].
• Honest Representation: They must accurately represent themselves and cannot falsify information about the debt or legal actions.
• Limited Third-Party Disclosures: Only the debtor, their spouse, or an attorney can be informed about the debt [16:10].

Trevor emphasizes the importance of being aware of these restrictions to defend against potential FDCPA violations:

“If you have a win, that’s $1,000 in your pocket.” [10:53]

3. Legal Protections and Rights

Statute of Limitations on Debt

The statute of limitations varies by state and determines how long a creditor has to sue for the debt. For instance, some states like North Carolina and Mississippi have a three-year limit, while others like Rhode Island and Ohio extend up to ten years [25:09]. Understanding this timeline is crucial as attempting to collect beyond this period can render the debt legally unenforceable.

Debt Validation Process

At [37:18], Trevor advises:

“If you're dealing with one of these companies, the first thing you should do is tell them you want to validate the debt.”

Requesting debt validation in writing forces the collector to prove the legitimacy of the debt, often causing them to abandon the pursuit if they cannot provide adequate documentation.

Potential Legal Recourse

Consumers can sue debt collectors who violate the FDCPA. Each legitimate complaint can result in $1,000 in statutory damages [10:53]. Trevor shares his personal success in obtaining default judgments against collectors who breached the law by threatening relatives [12:41].

4. Practical Advice for Handling Debt Collectors

Don't Engage Unnecessarily

Nick Pell advises avoiding unnecessary conversations with debt collectors:

“If you're getting hassled by a debt collector, the best thing to do is ignore them until they start threatening to sue.” [31:00]

Requesting Debt Validation

Formalizing a debt validation request involves sending a written letter via certified mail, ensuring proof of receipt. Until the debt is validated, collectors must cease all contact [37:41].

Negotiating from a Position of Strength

Given that collectors purchase debts cheaply, they often have significant leeway to negotiate. Trevor suggests:

“You're negotiating from a position of strength because they absolutely want to take care of this as quickly, quietly, and easily as possible.” [41:02]

Avoiding Payment Traps

Making partial payments can inadvertently restart the statute of limitations clock, making an otherwise unenforceable debt legally actionable once more [27:13]. Therefore, Trevor advises against making any payments unless the debt is fully validated and enforceable.

5. Navigating Debt Relief Companies

Identifying Shady Practices

Two main types of debt relief companies are flagged as problematic:

• For-Profit Companies: Often scams that require paying fees without delivering tangible assistance.
• Lead Magnet Companies: Collect personal information only to sell it to telemarketers or other entities.

Legitimate Non-Profit Debt Relief

Non-profit organizations can offer genuine assistance by helping consumers create budgets, negotiate with creditors, and consolidate debts without hidden fees [43:42]. Their success rates range between 50-70%, typically taking three to five years to fully eliminate debt [44:38].

6. Key Takeaways and Conclusion

• Know Your Rights: Understanding the FDCPA empowers you to recognize and defend against illegal debt collection practices.
• Stay Informed: Awareness of your state's statute of limitations and the debt validation process is crucial.
• Selective Engagement: Limit interactions with debt collectors to prevent unwanted legal repercussions.
• Seek Legitimate Help: Utilize non-profit debt relief organizations for structured assistance in managing and eliminating debt.

Nick Pell wraps up the episode by reiterating the importance of informed action and utilizing legal protections to navigate debt collection challenges effectively. Listeners are encouraged to consult legal professionals for personalized advice and to leverage resources provided in the show notes for additional support.

Notable Quotes

• Trevor on Charge-Offs:
  “Charge off is what they call it when the credit card company assumes you're not going to pay and sells the debt to third-party collectors.” ([03:35])

• Trevor on Debt Purchasing:
  “They’re paying 10% of your debt for the privilege of trying to collect the whole thing.” ([05:19])

• Trevor on Legal Recourse:
  “Every complaint, well, every legitimate complaint you make against a debt collector under the Fair Debt Collection Practices Act costs them a thousand bucks.” ([10:53])

• Nick Pell on Consumer Rights:
  “The main thing I want people to take away from this is that you have rights when it comes to dealing with third-party debt collection agencies.” ([36:31])

Resources Mentioned

• Consumer Financial Protection Bureau (CFPB): Offers guidelines and resources on debt collection practices.
• Non-Profit Debt Relief Organizations: Links and recommendations provided in the show notes for listeners seeking structured debt management assistance.

Final Thoughts

This episode serves as a comprehensive guide for anyone grappling with debt collection, offering both legal insights and practical strategies. By demystifying the debt collection process and highlighting consumer rights, Jordan Harbinger and his co-hosts equip listeners with the tools needed to confront and manage debt-related challenges confidently.

Transcript

[Trevor]

Too fast, Trevor.

[Jordan Harbinger]

Too fast.

[Trevor]

Here at the Zebra, research shows people would rather teach their kids to drive than search for auto and home insurance. I know what I'm doing, mom. Or attend a corporate team building workshop.

[Nick Pell]

Go team.

[Trevor]

Feel that synergy. Or be regaled by Uncle Frank's conspiracy theories.

[Nick Pell]

They're listening to us right now.

[Trevor]

That's why the Zebra searches for you. Comparing over 100 insurance companies to find savings no one else can Compare. [e-mail] we do the searching, you do the saving. Shh. They're here.

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[Nick Pell]

Every style, every home. Welcome to Skeptical Sunday. I'm your host, Jordan Harbinger. Today I'm here with Skeptical Sunday co host, writer and researcher Nick Pell. On the Jordan Harbinger show, we decode the stories, secrets and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. Our mission is to help you become a better informed, more critical thinker. During the week, we have long form conversations with a variety of amazing folks, from spies to CEOs, athletes, authors, thinkers and performers. On Sundays though, it's Skeptical Sunday where a rotating guest co host and I break down a topic you may have never thought about and debunk common misconceptions about it. Topics such as circumcision, sovereign citizens, e commerce scams, diet supplements, the lottery, ear candling, self help, cults and more. And if you're new to the show or you want to tell your friends about the show, I suggest our episode starter packs. These are collections of our favorite episodes on persuasion and negotiation, psychology, disinformation, junk science, crime and cults, and more that'll help new listeners get a taste of everything we do here on the show. Just visit jordanharbinger.com start or search for us in your Spotify app to get started. It sucks being behind on your bills. One reason it sucks is that you have to deal with debt collectors. If you've ever been behind on payments, you know all about the sick feeling you get in your stomach. Worrying about these debt collectors. You get letters in the mail. Your phone rings at all hours. With people who only speak back after you say hello three times. They talk to you about legal action, charge offs, maybe even the scariest word of all. Garnishment. Talking to a debt collector is about as fun as getting a root canal. The whole process can feel really intimidating, even if you have every intention of paying back the money, but you just can't right now. One of the reasons that it can be so scary is that you just don't know where the process is going. You're positive it's going to get worse.

[Trevor]

You.

[Nick Pell]

You're just not sure how. What is the worst case scenario you're looking at? If you have debt collectors breathing down your neck, what are your rights? Can they really take you to court? More to the point, will they? Are they bluffing? Or is your catastrophic anxiety actually warranted? Here to help me garnish this episode with some actual expertise is writer and researcher and former deadbeat, Nick Pell. Nick, how you doing today?

[Trevor]

Emphasis on the former. Yeah, doing great, man. Really fired up to talk about this topic because it astonishes me how little people know about this and how scared they are over nothing, really.

[Nick Pell]

Just so people know, one of the reasons I asked Nick to help me out is you have some interesting experiences with debt collectors.

[Trevor]

Yeah, yeah, I've had them owing me money.

[Nick Pell]

You've told me about this in the past. But. And trust me, guys, there's more here than just Nick bragging about pulling an UNO reverse card on debt collectors. So let's start at the beginning. What happens when you stop paying your credit card bills for whatever reason?

[Trevor]

At first, Nothing. After you're 30 days late, you're going to get a warning and your credit score is going to take a significant hit. It might be over a hundred points depending on where your credit score is. If you keep not paying, you're going to get more attempts at contact from the credit card company. And where things really begin to change is when they do what's called a charge off.

[Nick Pell]

So what is a charge off? I've never heard of this.

[Trevor]

Well, I have, because I'm. I'm kind of a serial credit delinquent. Not anymore, guys. I pay my bills like. Like a grown up. But okay, charge off is what they call it. When the credit card company gets tired of trying to collect their debt, they assume you're not going to pay it. So for them, it's better off to use it on their financials as bad debt. They sell it to these third party debt collectors. And that really is the thing that most people are talking about. When they talk about debt collectors, they mean third party debt collectors, not, you know, Chase or Citibank calling you trying to get their money. Your credit card company is not covered by the Fair Debt Collection Practices act, which is the main law that governs debt collection.

[Nick Pell]

Okay, we'll talk a little bit more about that in a bit because I have questions. But why would anybody want to buy your bad debt? Doesn't it seem like a bad idea to go and purchase people who can't pay the bill? You're basically, they're, they're buying your bill of goods and you've already proven that you can't pay. Why would anybody buy that?

[Trevor]

Yeah, they're buying your delinquency. So the credit card companies sell it because it's better to get something instead of nothing. They sell it. They don't just give it away. As for why the debt collectors buy it, they buy it at a pretty steep discount because they think they can collect it. So say you owe the credit card company $5,000. The collection agency might pay 500 bucks for that.

[Nick Pell]

Wow, okay, that's crazy. They're paying 10% of your debt for the privilege of trying to collect the whole thing. Maybe.

[Trevor]

Yeah, and 10% is the high end, by the way. They pay 50 bucks for it. So from their perspective, it makes good business sense because if they get the whole thing, that's a serious return on their money. It also means they have tons of room to negotiate in terms of settling the case. So if they paid 500 bucks for your credit card debt and then you pay them 2500, they're still up $2000. It's slightly more complicated than that because obviously they have overhead that isn't just buying your debt. But in terms of keeping the math simple, I think listeners have gotten the point about why this is a lucrative business model.

[Nick Pell]

Sure. So the third party debt collectors are now the legal owners of your debt.

[Trevor]

Sometimes it could be owned by one company who then hires another company to collect it on their behalf. There are companies whose whole business model is just owning a lot of debt. And there are others whose business model is collecting that debt. And some companies do both. I think for the purposes of our discussion, the difference is kind of irrelevant. First of all, we're only really talking about the collection agencies. Second, you're almost never going to deal with a third party whose only skin in the game is owning your debt. And finally, people who aren't trying to collect your debt are not going to be covered by the Fair Debt Collection Practices act because they're not trying to collect the debt.

[Nick Pell]

Got it? So the main takeaway here is that the credit card company assumes, okay, this guy's never gonna cough up the money. They're tired of dealing with it and getting stonewalled, so they hand it off to some maybe sketchy company who calls you six times during dinner.

[Trevor]

They actually can't call you six times during dinner. That's one of the provisions of the Fair Debt Collection Practices Act.

[Nick Pell]

Okay, so this is where it starts, I assume, getting really sexy. So the Fair Debt Collection Practices Act. Make sure you're sitting down, people. It's going to get exciting over here. This is a real consumer protection law with some actual teeth. One of the reasons these companies can bully people is and get away with it is because people don't know the law. They don't know their rights. They don't know where they can actually push back on these guys. So let's start by talking about what they can do, because I think that what they cannot do is really where it starts getting interesting. And of course, where people can take action if they're being harassed by these guys.

[Trevor]

So what they can do is actually not a lot. They can call you between 8am and 9pm local time. They can contact third parties once and only to find out where you live. They can send written notices telling you that you owe them money. But those written notices have to let you know that you have 30 days to dispute the debt.

[Nick Pell]

So read the fine print, people. Yeah, so it's important for people to know that you can indeed dispute a debt. And just because someone calls you and says you owe them money doesn't actually mean that you owe them money. If I came up to you in the street, you're getting your Cinnabon on or whatever, and I say, hey, man, remember that 50 bucks you owe your brother? Well, you owe that to me, now you got to pay me. You'd probably do something to verify whether or not that was even true. And so the same principle applies here, right?

[Trevor]

Finally, they can do the thing everyone is worried about when it comes to debt. They can sue you. They have to sue you in the correct venue, which is either where you live or where you sign the contract.

[Nick Pell]

So what about the stuff that they can not do? Because I'm going to guess that at least one person is going to listen to this and think, wait, wait, somebody trying to collect money is definitely doing that to me or did do that to me, I might have a case against them.

[Trevor]

And, you know, there probably is someone out there that's going to start a case after they listen to this episode, because there are so few things they cannot do. And all of these are totally reasonable restrictions, completely unobjectionable, and yet There are over 100,000 complaints about Fair Debt Collection Practices Acts violations every year.

[Nick Pell]

Honestly, it doesn't surprise me. Mostly because I've known guys who have worked for debt collectors to earn money over summer break in college or something, for example. But a lot of guys that those guys worked with, not exactly elite human capital, let's put it that way. A lot of these companies, they pay on commission. And for the most part, it seems like you get briefed on the Fair Debt Collection Practices act one time during your orientation at the YMCA or whatever, and then you're just turned loose with a headset that you bring home. And it's a great little gig if you're smart and you know how to negotiate. But I think for a lot of people, it's just a disaster waiting to happen.

[Trevor]

It's not just how educated they are on. On the act itself. It comes down to temperament. Can the agents keep their cool when you're being a jerk or just refusing to pay? Can they do that on 20 or 200 calls a day?

[Nick Pell]

Yeah, some of the guys doing this are total pros, in fairness. I mean, I've definitely had experience talking with people for debt stuff back in the day or on behalf of clients when I was a lawyer and I was like, okay, these people are legit, but you can turn the tables on them and have them owing you money, which is kind of awesome. And I never really thought about that.

[Trevor]

Yeah. So the name the Fair Debt Collection Practices act sounds super boring, but it's the main law governing what debt collectors are allowed to do and say in pursuit of their money. It really limits what they're allowed to do. And if you play your cards right, you can actually turn the tables on your debt collectors and have them owing you money.

[Nick Pell]

I've heard you talk about this before, just in casual conversation, but how can you have debt collectors actually owing you money? That's. I think a lot of people's ears are perking up when they hear this because. Well, first of all, I think if somebody's bugging you all the time, sticking it to them is pretty appealing.

[Trevor]

Yeah. So every complaint, well, every legitimate complaint you make against a debt collector under the Fair Debt Collection Practices act cost them a thousand bucks. If you Win in court. So if you get a win, that's 1,000 bucks in your pocket.

[Nick Pell]

But how hard is it to get a win? I mean, you're talking about a court case. Sheesh.

[Trevor]

You know, I've gotten to. It's actually pretty cut and dried. The thing that sucks is you can only get a thousand bucks. You know, you can't, like, take them to court for seven violations at once. You get a thousand bucks in statutory damages unless you, you know, damages are capped at $1,000 unless you can prove real damages, not just that they violated the law. The good news, though, is you can probably double dip on the federal violation and whatever version of it your state has, because there's a really good chance that in violating federal law, they also violated state law.

[Nick Pell]

I see. So capped at a thousand bucks. Unless you can prove real damages. And I think, just in case people are wondering what that means, this is a hypothetical situation. Let's say they call your employer and tell your employer, hey, you got this new hire. He's a real deadbeat. He owes this credit card company $10,000, and he didn't pay. And the employer's like, oh, and you're working with the money in my business, I gotta let you go. Now you've lost your job because of these guys. So that's a real damage. That wouldn't probably be capped at a thousand bucks. Right? You can say, hey, I. I was counting on this job to feed my kids. Now I have real damages. Okay, that's interesting. And you're saying there's a good chance that if they violated federal law, they've also violated the state law. So have you actually successfully sued a. And got them to pay you? Is that what happened?

[Trevor]

Yeah, I've done it twice.

[Nick Pell]

So what did they do to you, and how did you get your money?

[Trevor]

They called my half brother and told him how much I owed.

[Nick Pell]

Whoa.

[Trevor]

The hilarious thing is that in my case, they were kind of extra stupid about it. They left a voicemail.

[Nick Pell]

Okay, that was my next question.

[Trevor]

Yeah, all he had to do was send me a copy of the voicemail on his phone.

[Nick Pell]

Yeah, that's. Oh, my God.

[Trevor]

You don't have to hire a lawyer. You can take him to small claims court. And they didn't show up. Yeah, which they're probably not going to do for you either. And so I got a default judgment for 2000 bucks. Because they violated state federal law, they're.

[Nick Pell]

Unlikely to retain a law firm to fly out to whatever podunk jurisdiction you're in to fight something in Court where you have a voicemail with a violation on it. Yeah. So did they take the two grand off of the debt that you owed them or how did that work?

[Trevor]

No, because most of the time you haven't even acknowledged that you owe the debt if it's a third party debt collector as opposed to the original creditor. So they just cut me a check, huh? And wouldn't you know it, that was also the last I ever heard about the debt. Yeah, it's, you know, more benefits to winning a case against a debt collector.

[Nick Pell]

Yeah, it sounds like they basically panicked when they found out that you knew your rights and they wiped you off the books, which is pretty smart. Okay, this guy knows his rights. He's already got $2,000 of our money. Can we stop pushing this guy's buttons? We have a call roster with 80,000 other people on it. Just move on.

[Trevor]

Yeah, and that's the thing. Like, they have so much more to lose by ducking a court judgment than I do by continuing to not pay a debt that had already been charged off and put into collections. I mean, they have all kinds of regulations that govern them.

[Nick Pell]

Yeah.

[Trevor]

You know, so they're just going to pay it.

[Nick Pell]

So let's get into the nitty gritty of the Fair Debt Collection Practices act, the fdcpa. What are they specifically not allowed to do and what can you use against them to turn the tables and get them either leaving you alone or paying you?

[Trevor]

So there are basically four groups of things they can't do. First, there's communication restrictions. They can't call you between 9pm and 8am that's kind of the inverse of the what they can do when they can call you. Other than that, if you ask them to stop calling you at work, they have to do that. If you tell them in writing to stop contacting you, period, they have to do that. If you have a lawyer, they have to communicate with your legal counsel and not with you.

[Nick Pell]

That actually makes total sense. So if you tell them to stop contacting you, period, how are they supposed to collect the debt?

[Trevor]

Then they have to file a lawsuit. That's the only thing they have left in their arsenal. They're allowed to send you one letter telling you that they won't be contacting you anymore. Other than that. Yeah, they can sue you. That's it. Next up are the restrictions on harassment and abuse. They can't swear at you. I actually had another case where I got a collection agent to curse at me on a recorded line. You know, easy thousand bucks for 2000 bucks or whatever it was.

[Nick Pell]

That's interesting. Did you just push his buttons until he cursed at you, or was it kind of an accident and you were like, ah, I can turn this into money.

[Trevor]

He was kind of mean from the start.

[Nick Pell]

Yeah. Yeah, that seems. That makes sense. So you're like the Babe Ruth of suing collection agencies. That's. This is great.

[Trevor]

That's seriously one of the best things anyone has ever called me.

[Nick Pell]

Yeah, you're welcome. So, okay, harassment means what in this case? Because I'm guessing threats is pretty obvious. You already mentioned that. They can't just keep calling you over and over, bugging you at work. What else is going to fall under harassment? Because that's always so vague of a definition. Right?

[Trevor]

Well, as I just said, like, they absolutely cannot curse at you. That counts as harassment. But other than that, it's like calling you over and over again. Beyond that, they have to represent themselves honestly. They can't lie to you about who they are, what you owe, who you originally owed it to. They can't falsely claim to be cops or lawyers or government officials of any kind. They can't threaten to have you arrested or anything else that they can't actually do. They're not allowed to send you documents that have the appearance of court documents. I don't know specifically what that means because looks like court documents is. Seems like it's pretty flexible. I've gotten stuff in the mail that kind of looked like it was a court document, but I'm sure it was on the right side of the law. And then the last thing is third party debt disclosures. They're only allowed to tell you, your spouse and your attorney how much you owe.

[Nick Pell]

I see. Or they're going to owe Nick Pell 1,000 bucks. That makes sense, right? Because you don't want them again calling your boss and saying, hi, we're a debt collection company, and this guy that works for you owes us ten grand. And you're just like, oh, is he gonna start embezzling because he's in debt? Why is he in debt? Does he have a drug problem? Maybe we should. While he's on probationary period, we should let this guy go. You know, that could cause real damage. Or. And also, how unfair would it be for these guys to call everyone in your family and just start telling them, oh, yeah, he owes 5 grand. He owes us 5 grand. He owes us 5 Grand. You don't need to hear this from your mom, your aunt, your brother, your sister, and your dad. You already know. Right? And so it sort of stops them from applying pressure in a way that's it's just needlessly damaging.

[Trevor]

Yeah. And you can get 2,000 bucks because you're probably also going to get them on the state law. Almost every state has a law that's like a carbon copy of the fdcpa.

[Nick Pell]

I see. So basically, don't just go after them for the federal violation, go after them for the state violation. And I think states like California and New York, and especially New York, they've got really good consumer protection laws. So it's often like, yeah, it's 1,000 bucks for the federal violation, and in New York, it's fifteen hundred dollars, but it's also 25% interest per week if they don't pay you or, like, don't show up. It's always New York is always like, we will bend this company over and twist them sideways if they do this to you. Except for landlords. Landlords have all the power in New York City, but that's a different issue. So I remember back in the day, man, debt collectors used to be really nasty. I've got very limited experience with these guys. I think I was a teenager. But I've had some experience again in the distant past where they totally violated pretty much all of these regulations. They would start recording the call without permission. They would threaten me. They would say all kinds of crazy stuff. 2020 hindsight that makes no sense. Like, I'm going to tell your parents and you're going to get in trouble and you're not going to get into college and stuff like that. And I'm guessing I'm going to go ahead and guess that the ship for my case sailed a long time ago, since this is like 30 years we're talking about. But are they comparatively well behaved now? Is that kind of the deal?

[Trevor]

Yeah, they are. And the main reason is the Consumer Financial Protection Bureau, which came around in 2006.

[Nick Pell]

Oh, I see.

[Trevor]

And so now there's a lot more pressure on these companies to play by the rules. I mean, I had a guy threatened to come and take my television in like 2002.

[Nick Pell]

Wow.

[Trevor]

Like, he can't do that. So telling me he's going to do that is illegal. The other thing is that I think people are just more aware now. And it's way easier to monitor your communications. Like, you don't even need an app to record phone calls anymore. If you have an iPhone, it's just baked right into the phone.

[Nick Pell]

Right, okay. Yeah. Because recording a call in the 90s, you needed some Radio Shack, Specialized gear.

[Trevor]

Yeah.

[Nick Pell]

And even then it was like illegal in most states. Right. Because you had to have consent and all that stuff. I love how my phone now tells people when I'm recording them. I rarely use this, but I can imagine that when bill collectors hear guys saying they're being recorded, you know, turning the tables on them, it probably makes him really irritated. And I'm here for it. So that's the law. I'm guessing there are gray areas and that's how the system ends up getting abused. I mean, that's kind of always the case. It's not the black and white areas where you see the problems. It's somewhere in the middle where bad actors feel like they can get away with abuse because, oh, this is technically not illegal. It's like your brother in the backseat of the car holding his finger in front of your face and telling you, you know, I'm not touching you. You can't get mad.

[Trevor]

Right. So the gray area is definitely what people need to be aware of because this is where you're going to get screwed and be completely out of luck because they follow the law.

[Nick Pell]

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[Jordan Harbinger]

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[Trevor]

I love my Hiya vitamins. I have Haya vitamins too.

[Nick Pell]

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[Nick Pell]

If you haven't done so yet, check out our newsletter. It's called Wee Bit Wiser. It's a great companion to the show. Very actionable, very practical. It's a two minute read every Wednesday. Jordanharbinger.com News is where you can find it. All Right, back to Skeptical Sunday. So legal scams. Places where they might know how to stay just on the right side of the law. But what they're doing is definitely shady, even if they're legally covered. I can think of it like the court documents thing where you're like that kind of looks like a court document, but it doesn't have a docket number and It's a slightly different font and the header's different. It's like, okay, yeah, right.

[Trevor]

I'm sure that everything I've ever gotten that looks like a court document is legally. Legally does not look like a court document.

[Nick Pell]

Right.

[Trevor]

And I think it's fair to call these things legal scams. It's certainly deceptive, but, you know, I get why. From a legal point of view, there's always going to be a gray area. You can't draft a law for each and every contingency, and at a certain level, the onus is on you to be aware and to take care of yourself. I don't think it's plausible or desirable to have the state mediating every possible iteration of commerce.

[Nick Pell]

So what are some of the shady but not totally illegal things that a collection agency might engage in if they're trying to get money out of you?

[Trevor]

I lived off grid for several years, and when I moved back on grid, I started getting all kinds of letters from alleged creditors saying that I owed a five figure debt from 2015. And it's like, dude, that's not enforceable literally anywhere.

[Nick Pell]

So that's the statute of limitations you're talking about. Like, they can only collect this debt for so long until it's not legally enforceable in a court of law, I assume. So how is it legal for them to try and collect that debt? Doesn't that break the law about misrepresenting themselves or not?

[Trevor]

Ah, see, here's the thing. They do legally own the debt, and they absolutely can try to get you to pay it, but if it's past your state's statute of limitations, there's not a federal one. As far as I know. The statute of limitations varies from state to state because they have to sue you in a state court to collect.

[Nick Pell]

Right. Okay, this sounds a little weird, but as a lawyer, I get it. No court will enforce the debt because it's too old. They're still allowed to try to get you to pay it, even though they have no way of actually forcing you to pay in a court of law, which is the most powerful and kind of the only real weapon in their arsenal. So what they do is they just try and scare you into doing it or trick you into doing it somehow.

[Trevor]

Yeah. And they're not legally obligated to give you advice, legal advice in any way at all.

[Nick Pell]

They're not going to say this is not legal, legally enforceable anywhere. But you, come on, be a good guy and pay it right? They're just gonna go, you know, you still owe us money. You mentioned this is a state thing. So it varies from state to state.

[Trevor]

So the statute of limitations on debt again is how long creditors can legally get a court to enforce the debt. They can write as many letters as they want. In a lot of cases they're throwing spaghetti at a wall and they're hoping that somebody who has no idea what the law is or how credit reports work is going to cough up money for a 15 year old debt. Without question, statutes of limitations vary pretty widely. At its lowest, it's three years in North Carolina, Mississippi, South Carolina and weirdly, Delaware. I say weirdly because Delaware is less a state than it is a place where banks have mailing addresses so they can avoid following laws.

[Nick Pell]

Right. Yeah. Everybody's incorporated in Delaware.

[Trevor]

Or imagine being able to be magically whisked away to Delaware. Hi, I'm in Delaware. The longest statutes of limitations are in Rhode Island, Iowa, Kansas, Wyoming and Ohio. So as you might have noticed, there's not a lot of rhyme or reason to this. You don't see higher statutes of limitations in red states versus blue states. There's not really any kind of pattern to it. As far as the types of debt, the ones we're talking about are usually called open accounts or revolving accounts. So the statute of limitations isn't necessarily the same for a credit card as it is for a contract loan or other types of debt.

[Nick Pell]

Right. So you'd have to check on that. Well, your lawyer would have to tell you, advise you whether you still owe this or not. And after that clock runs out, I want to say you don't owe the money anymore, but that's not exactly it. Right?

[Trevor]

No. The thing is, and I get the finer points of this are maybe a little hard to wrap one's brain around, but you do legally owe the debt and the courts don't disagree. The issue from the perspective of the debt collectors is that there's no legal way to force you to pay it. The courts think the debt is too old, so they're not going to get involved. Your credit rating took all the beating it was going to take from non payment, probably around the time of the charge off. Charge off is a huge deal for your credit score. And once you get that, it's not really going to get any worse. Maybe a little worse, but after two years it just, it does not make any sense at all to pay these people from the perspective of your credit score.

[Nick Pell]

Interesting. So when does the clock start for these?

[Trevor]

It usually begins when you make your last payment. So one of the slimy things debt collectors will do is try to get you to make a payment on a debt that isn't legally enforceable, even a token payment. So say you owe $5,000 and they're trying to get the whole thing and they can't. So they keep negotiating down and you're just sick of talking to them. So you go, hey, I'll give you 50 bucks, shut up and go away. But you just made a huge mistake. You restarted the clock. Clock is now at zero again. So what might not have been a legally enforceable debt is now legally enforceable for the full period all over again.

[Nick Pell]

So you give them 50 bucks and they're like, and now we can sue you. And the clock has started at zero. Yikes. So you're saying it's totally legal for them to try to get you to pay something, that as far as the courts are concerned, you don't owe anymore. And if they can somehow get you to do this, then you owe the original amount plus interest potentially all over again. And then you have to wait another three to 10 years for it to go back to legally unenforceable territory. Wow. So you're just saying stop paying all your bills. That's a takeaway from Nick Pell on this episode.

[Trevor]

I think there's lots of legal and moral reasons to pay off old debts. And hey, let your conscience and your legal counsel be your guide here. But from the perspective of your credit score, paying off a five year old debt that's still on your credit report because you think it's instantly going to give you a 750, this is not going to happen. It's going to do little to nothing. But this is one of the ways they get people to make a payment. So say you live in a state where the statute of limitations is less than three years. The typical timeline for something falling off your credit report. Seven years. Like you live in Mississippi, the statute of limitations is three years. After three years, your credit is as wrecked as it's going to be. There is just zero upside to paying this off to improve your credit. And there's zero legal means by which the collection agency can force you to pay. So why pay it?

[Nick Pell]

I'm guessing that the collection agencies don't give you this kind of sound legal and financial advice when they're calling you up trying to get their money. And again, this is not legal advice from us. But I'm saying these collections agencies, they're not going to give you any kind of legal or financial advice when they're calling you up trying to get money from you.

[Trevor]

Yeah, they're not going to do that. So again, to kind of like recap, they legally own the debt, so there's nothing illegal about them trying to collect it. Unless they're misrepresenting by saying they're going to take like, if they say they're going to take you to court, that's a misrepresentation. If they say they're going to get a judgment, have your wages garnished. They're not doing anything illegal by telling you that you owe them money and they want you to pay it. That's not illegal.

[Nick Pell]

I see. And again, if you pay them anything, you owe the full amount all over again. The club starts at zero.

[Trevor]

The full amount, plus whatever interest, penalties and charges are legal in your state.

[Nick Pell]

What else are they doing that falls into this legal gray area where what they're doing is totally legal, but maybe just a little bit shady or deceptive?

[Trevor]

The other main thing is offering to settle and then pretending like they didn't agree to settle.

[Nick Pell]

How can that work?

[Trevor]

So say you get a call from a collection agency, you owe $5,000, but they say, hey, we'll settle it for 500 bucks if you pay it today. Makes a lot of sense from their perspective, especially if they only paid 50 bucks for the dad. So you give them your credit card number. And seriously, if you're like half listening to this, listen to this thing, this is the only takeaway that you have absolutely, positively never, under any circumstances give your credit card number to a third party collection agency for reasons that are about to be made extremely clear. They might take your $500 payment and next month you get a charge for 4,500 bucks, which is the balance of what you owed them.

[Nick Pell]

How can they do that?

[Trevor]

Well, they do it.

[Nick Pell]

I see.

[Trevor]

Because you weren't recording the call and you didn't get the agreement in writing and they're going to say that you agreed to pay off the rest later. This is an extreme example. They're more likely to just start taking $500 payments every month until the whole thing is paid off. But yeah, they do this. And is it against the law? Is it not against the law? They get away with it.

[Nick Pell]

Yeah. As an attorney, but not your attorney, I want everyone to understand that you should always get any sort of financial agreement in writing for precisely this reason. And technically, to run a payment you didn't agree to that is against the law. But you're just not going to be able to prove that you didn't Agree to it. So it's a moot point. Right. And you might even be able to dispute it.

[Trevor]

Yeah, they're going to say that the first payment was agreement to subsequent payment.

[Nick Pell]

Exactly.

[Trevor]

And there's the thing is they may even say that on the phone in this like oh by the way, we're going to, you know like talking like the micro machine man nice to shoehorned into the call on their recorded lie. They may even say that, but you're definitely not agreeing to that. You know.

[Nick Pell]

Yeah, that makes sense. Right? They're going to do I just need to read you this disclosure and it's like super, super fast. You're not listening. Right. And it's like we're going to charge you every month. Well, what happens if you go, hey, I want this in writing. Are they going to actually do that or what?

[Trevor]

They generally don't want to give you any kind of agreement in writing. So if you start asking for one, expect them to change the subject, stonewall you and do basically anything but agree to the terms in writing.

[Nick Pell]

So there are many things you can do to debt collectors that they do every day, but they get really upset.

[Trevor]

When you turn the tables. They're actually pretty thin skinned.

[Nick Pell]

Yeah, well, I'm assuming there are some people like you who just enjoy getting a rise out of collection agents and then goading them into violating the law. But I think there are probably way more people who are legitimately behind on their bills and they want to know what they should do.

[Trevor]

So not legal advice, but.

[Nick Pell]

Right.

[Trevor]

If something has gone to charge off and it's below a certain amount, I would do absolutely nothing.

[Nick Pell]

So you've done this a few times then?

[Trevor]

I have. And like this is the thing is like I pay my bills on time now. The degenerate days are behind me. But like we'll get into the details in a minute. Something with a charge off for 600 bucks, like paid if you feel morally obligated to. But they're not taking you to court over 500 bucks. So I'm not saying like charge up your credit cards and walk away from them. There's a difference between ruining your credit on purpose by not paying your debts and just walking away from a charged off debt that's so small you're not going to get sued for it, you are not going to get garnished for it. I know somebody who got like a charge off for like 30 bucks. They're not taking you to court for that.

[Nick Pell]

What about the upside of not getting dragged into court and having Your wages garnished.

[Trevor]

That's the thing. They're probably not going to sue you. I mean, I've owed a lot of money to creditors.

[Nick Pell]

Can I ask, what do you mean by a lot?

[Trevor]

I think the most I ever owed a single creditor was like $8,000, which that I was convinced I was going to get dragged into court over, but I didn't.

[Nick Pell]

Wow. Okay. That is, you know, objectively a lot of money. Why would they not come after you for that?

[Trevor]

Well, you're a lawyer. You know the cost of initiating legal proceedings. There's all kinds of ducks they're going to have to have in a row before they even think about taking you to court. That costs money. Then they have to hire a lawyer to at least have a name to put to the case. They need to hire a paralegal to get all the paperwork for court together. They have to serve you with papers. That's all going to cost them between 200 and 600 bucks, which isn't a lot, but remember, Maybe they paid 80 bucks for my $8,000 debt, but they're.

[Nick Pell]

Going to get it all back if they sue you because you owe them money and they're going to win. Unless you're, you know, dead broke.

[Trevor]

Maybe they're going to win, but they actually have to prove that the debt is legitimate and that they own it. And that's actually not as easy as you think.

[Nick Pell]

Okay, folks, be responsible. Don't go into debt, manage your money carefully, and here's some stuff for you to buy. We'll be right back. This episode is sponsored in part by Simplisafe. Here's the thing about home security. You don't want to be the low hang and fruit on the block. The house with no cameras, no system, no deterrence, that's basically an open invitation to anybody looking for an easy target. And most of the time, it's the homes without protection that get hit first. That's why we use Simplisafe. It's not just about getting alerted after somebody breaks in. It's about stopping the threat before it even starts. Their new active guard outdoor protection is great. It uses smart cameras and real human agents who can actually step in, talk to someone lurking, flip on spotlights, call the police if needed. It's proactive, not just reactive. And I gotta say, the peace of mind is 100% worth the price. It's not expensive. Monitoring plans start at around a buck a day. And knowing your home is protected around the clock is just one less thing to stress about. We use SimpliSafe at our house. I recommend it to everyone that I know. No contracts, no hidden fees, just solid protection from a company that's ranked number one in customer service and trusted by millions.

[Jordan Harbinger]

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[Nick Pell]

This episode is also sponsored by NordVPN. Let me put it this way. If you're online, you're exposed. Whether you're at home, a cafe, some airport, using dodgy public WI fi, your personal data can get out there. And that's why we use NordVPN, especially when I travel. It protects your data, your passwords, your bank info, all the stuff you don't want floating around the Internet for anyone to grab. But it's not just about security. NordVPN also lets you change your virtual location, which is awesome when you want to watch something that is not in your region, stream sporting events, catch TV shows while overseas, you name it. Flip to the right country and boom, you're in. There's no lag, no buffering. It's the fastest VPN out there. Also, try using NORDVPN to save money on flights and hotel bookings. This is a real win here. Prices can change depending on where you're browsing from, so switching your virtual location can unlock deals you would not otherwise even see. There's also threat protection that blocks malware trackers, sketchy websites before they become a problem. One account works on up to 10 devices, costs less than a cup of coffee a month. For premium level security, privacy and access, it's kind of a no brainer. If you're not using a VPN yet, now's the time. Try NordVPN.

[Jordan Harbinger]

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[Nick Pell]

Thank you for listening to and supporting the show. It is your support of our sponsors that keeps the lights on around here. All of the deals, discount codes and ways to support the show are all searchable and Clickable over at jordanharbinger.com Deals now for the rest of Skeptical Sunday, that seems like a slam dunk. I mean, you spent the money, it's all in your credit card bills. They bought the debt. Isn't that a pretty clear chain of evidence here?

[Trevor]

You're assuming that they're actually good at record keeping, which is, in a lot of cases, they're not.

[Nick Pell]

I see.

[Trevor]

You may not even be dealing with the initial third party collection agency because the first one that bought it from the credit card company tries to collect it for a few months, decides it's not worth their time, money and effort, and they sell it to somebody else. That company does the same thing. After a few months, they're just like, ah, this isn't worth it. They sell it to a third company, and the third company is the one who decides they're going to take you to court. So now you're talking about validating a whole chain of ownership of your debt that passes through four different companies.

[Nick Pell]

But again, in the age of computers, is that not super easy to do? I mean, I can imagine back in 1978 or something that paperwork got lost all the freaking time, but how often does that even happen now? Come on. It's a database.

[Trevor]

So literally the first thing you should do if you're dealing with one of these companies breathing down your neck, threatening to take you to court or whatever, is tell them you want to validate the debt. Because up to a third of the time, depending on how many places have owned the debt, they cannot validate the debt.

[Nick Pell]

I'm guessing that you have to file paperwork somehow to get the debt validated. Like, you can't just ask the kid who's working a summer job who's calling you to pay the money. And he goes, oh, I'll do that right now.

[Trevor]

You have to write them, you know, in pen and paper or printer and paper or whatever. You have to submit a written request for debt validation. You need to send that letter registered mailed with return receipt requested, because there's a good chance they're going to claim they never got it.

[Nick Pell]

Okay?

[Trevor]

Now the cool thing is that once you ask them to validate the debt, they have to cease all contact with you until they can validate the debt. So if they can't, you're never going to hear from them again.

[Nick Pell]

And if they do validate the debt.

[Trevor]

Well, then you've just done most of the work involved in them winning a lawsuit against you.

[Nick Pell]

Okay, so this is a bit of a risky gambit from the sound of it. And yet you're saying their whole business model is built on the assumption that most people won't push back at all. And it's a volume game. So if you become one of the few people who actually asserts their rights and says, hey, validate this, suddenly you might not even be worth their time. Because if they paid 25 bucks for your $2,500 debt, they might say, going to request the records for this isn't worth your time. Just move it, scratch it off. Is that kind of what we're to understand here?

[Trevor]

Yeah. So according to statistics from the Consumer Financial Protection Bureau, third party debt collection agencies are unable or unwilling to validate the debt in 43% of cases. So a lot of times, yeah, they just, they don't even bother trying because it's a pain. There's no shortage of people coughing up money on the basis of a phone call because they don't know their rights. And their business model is not built around collecting every last penny they're entitled to. Their business model is built around getting people to pay quickly and without issue. And they know that if you're asking for debt validation, you're already more trouble than 90% of the people they're dealing with.

[Nick Pell]

So the point here isn't necessarily to win your case in court. The point here is to just be enough of a thorn in their side that they think, hey, this guy's a pain. Let's go collect money from somebody else.

[Trevor]

Correct. And there are a lot of ways to do that without requesting debt validation and specifically giving them the ammunition they need to win against you in court.

[Nick Pell]

Okay, so if you don't think you really owe the money, ask them to validate the debt and they won't be able to. However, if you do owe the debt and ask them to validate it, they still won't be able to or willing to do it about 43% of the time. But if you do owe them and they can validate it, then they have just assembled the proof that they need to win in court, and then it's just a matter of whether or not the cost of going to court is justified for them. Does that about sum it up?

[Trevor]

Yeah. But anecdotally, I've had debt validated by a collection agency and they still didn't sue me.

[Nick Pell]

Right. It probably just wasn't worth them getting a lawyer to your jurisdiction and dealing with that. So what are some of the pro tips from your experience when dealing with collection agencies?

[Trevor]

The main thing is just don't talk to collection agencies. I mean, it's fun to get clever. Ask them for their name, their full name, the full name and address of the company that they work for who the original creditor was. They're legally obligated to answer all of these questions. They have to answer how much you owe, how much of it is principal, how much of it is interest and fees, what it was for. Chances are good they're going to try and be vague to you when they answer all this, but once you ask, they have to answer you in writing within five days. Really hate answering questions of any kind. It throws them off. They're following the script and you're deviating from it. And this is usually when they start getting irritated with you. And you know, I would record the call if you're going to do this.

[Nick Pell]

But your advice is to not speak to them.

[Trevor]

Right? There's just no upside in it. It's the cell phone era. Who's answering weird phone calls from numbers they don't recognize?

[Nick Pell]

Yeah, that's true.

[Trevor]

If you're getting hassled by a debt collector, the best thing to do is ignore them until they start threatening to sue. Then ask them to validate the debt. If they successfully do that, start negotiating with them, they're going to be far more open to a lump sum payment that pays the whole thing off. And remember, they paid pennies on the dollar for your debt. So you're negotiating from a position of strength because they absolutely want to take care of this as quickly, quietly, and easily as possible.

[Nick Pell]

Okay, so I'm sure a lot of people have seen debt relief services advertised around maybe on TV during the day, right? I mean, they're promising to get you out of debt for a fraction of the cost. But clearly, if it were that simple, people could just run up their debt and then go running to one of these companies and pay it off for 10% of the actual cost. Right.

[Trevor]

One thing I should say that's relevant here is that when I walked away, and by the way, this was like a decade ago, I pay my bills on time. Like a normal perspective. When I walked away from that debt, I just did not care about my credit score. If you want to buy a house and a car easily live a functional life in modern society, you need to pay your bills on time. You want to rent a car, you want to rent an apartment, your credit score matters.

[Nick Pell]

On that we can agree. So that's one reason why people wouldn't just want to run their debt up and go running to a debt relief agency. But are those companies legit? Do they even do the thing that they claim to do? Because people get vulnerable. They're scared. They're in over their head and they're looking for a lifeline. But desperation makes you real easy to exploit, which is why due diligence is non negotiable.

[Trevor]

There are basically three different kinds of companies that advertise themselves as being able to get you out of debt quickly. Two of them are very much not legit. One of them is probably legit, but you need to look into it a little deeper. For profit companies are the first shady option. They run a kind of gambit where you stop paying your bills and start paying their company instead.

[Nick Pell]

I see, what do they tell people that that's going to do for them?

[Trevor]

Basically the idea is that you pay them until they have enough saved up in escrow in big giant, screaming neon air quotes. And once they have enough money in your account with them, they reach out on your behalf and start negotiating.

[Nick Pell]

What happens while you're paying them? I mean, do the debt collectors stop calling you?

[Trevor]

Precisely nothing happens that wouldn't happen otherwise. In fact, you might get sued while you're building up your negotiation nest egg.

[Nick Pell]

So this is, wow, that's a complete and total waste of money. And if you get sued, I'm going to go ahead and guess the credit relief agency doesn't go, oh man, sorry dude, here's all your money back. I hope everything goes well for you in court.

[Trevor]

Of course they don't. It's not a savings account. The next version of shady companies are those who do absolutely nothing but act as lead magnets for those of you who aren't in the marketing. Bizarre. They're just collecting information to sell to telemarketers or whoever else.

[Nick Pell]

What about the legitimate version of debt relief companies, if that even exists.

[Trevor]

Legitimate companies are almost universally nonprofits. That doesn't mean they don't make any money off of getting you out of debt. They do, but because they're non profit, there are stricter rules that mean they have to provide actual services to you. So the deal with these companies is the first thing they do is sit down with you and figure out why you got it over your head. They look at your bills, they look at your bank records, they help you come up with a budget that you can live on. That probably includes helping you figure out how you're going to be able to make monthly payments that don't just keep you treading water with your credit card bills. They want you to actually start reducing your debt. Then they bundle all your debt together, negotiate with your creditors to reduce the principal or the interest, then you pay them monthly instead of your creditors but they're dispersing the money. They're not just holding onto it and hoping they can negotiate something for you later.

[Nick Pell]

How successful are they at helping people get out of debt, though?

[Trevor]

Somewhere between 50 and 70% of the people who work with them get out of debt. It usually takes three to five years. They're actually really good at getting interest rates reduced. I think most importantly, they're not offering quick magical fixes. They're offering a way to get your life back on track by playing by the rules. If you're committed to getting out of debt and you have stable income and discipline, that's very important, they can help you get out of debt without declaring bankruptcy.

[Nick Pell]

Huh. Okay. I would think that's probably the plan for people to follow if they're trying to get out of debt rather than just putting your head in the sand and rolling the dice.

[Trevor]

I mean, like I said, if you're behind on your bills to the point of charge off, the damage to your credit has basically been done. Most of the debt relief agencies are not going to negotiate lower rates with credit card companies. I think that's probably nigh impossible. They're going to do it with the collection agencies where it's a lot easier. I think it's all down to the individual situation. If you're getting threatened with a lawsuit and getting absolutely nowhere with negotiations, go ahead and reach out to one of these companies. But in my experience, Simply being the 1 in 10 people who don't just pay up is enough to get them off your back.

[Nick Pell]

Well, as not your attorney or anyone's, I'd advise everyone to play by the rules and pay their bills. If that means going to a nonprofit for help, do that. The main thing I want people to take away from this is that you have rights when it comes to dealing with third party debt collection agencies. So if one of these companies is violating the law when they talk to you, you should report them whether you hope to get a thousand bucks out of it or not. And I think Nick is totally right about not talking to these people. It's like trying to argue with a lawyer. Third party collection agencies do this for a living and you don't. So if you get caught on the phone with them, your best bet is to hang up that phone, block their number, tell them to validate the debt in writing, and wait until they've actually proven that they own the debt they are trying to collect. And if it's outside the statute of limitations in your state, you might be off the hook. If they can't validate it, don't pay it. If they validate the debt successfully, then it's probably time to start looking into one of those nonprofits to help you get out of debt the right way. Check out the show notes for links to those if you're interested. And of course you need to get your own lawyer if you are in trouble with debt or legal trouble of any kind. I am a lawyer, but not your lawyer. Thanks as always to Nick Pell for helping us settle accounts here, and thank you for listening. Topic suggestions for future episodes of skeptical Sunday to Jordanordanharbinger.com advertisers, deals, discounts and ways to support the show, [e-mail] deals I'm ordanharbinger on Twitter and Instagram. You can also connect with me on LinkedIn and this show. It's created in association with podcast one. My team is Jen Harbinger, Jace Sanderson, Tata Sidlowskis, Robert Fogarty, Ian Baird, and Gabriel Mizrahi. Our advice and opinions are our own. I'm a lawyer, but not your lawyer. Do your own research before implementing anything you hear on the show. Remember, we rise by lifting others. Share the show with those you love. If you found the episode useful, please share it with somebody else who could use a good dose of the skepticism and knowledge that we dulled out today. In the meantime, I hope you apply what you hear on the show so you can live what you learn and we'll see you next time. Imagine a world where money, religion, and nations are shifting under the rise of AI capable of making decisions beyond human control.

[E]

Humans are very good in solving problems, but they often focus on the wrong problem. The idea that information is truth. People will have more knowledge. Everything will be okay. This is extremely naive. Most information isn't truth. It is fictions and fantasies and delusions and errors and lies and so forth. The truth is a very rare and costly kind of information, which is why if you flood the world with information, the truth will not float up. It will sink to the bottom. Democracies all over the world are currently in crisis. They are undermined because of manipulations by AI. The one thing everybody should know is that AI is not a tool. It is an agent. AI can make decisions by itself. We already have autonomous weapon systems. It can even invent new weapons. Social media algorithms are currently the most powerful, powerful editors in the world. They increase user engagement by manipulating billions. The easiest way to capture people's attention is by spreading outrage. I'm not saying oh, we should stop all development of AI? No, of course there is enormous positive potential, otherwise we wouldn't develop it. The key question is how do we enable the positive potential of of AI to flower while avoiding the really existential risks this technology poses?

[Nick Pell]

Join me on episode 1068 as Yuval Noah Harari explores the risks and responsibilities we face as AI transforms our society.

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