Private Firms Giving Ventura County D.A. a Run for Money
When Patricia McDonald’s ex-husband stopped paying his child support two years ago, she asked the Ventura County district attorney’s office to track him down.
After months passed with no progress, McDonald turned to a private collection agency she found on the Internet. Within seven months, Child Support Enforcement Inc. of Austin, Texas, sent her first $150 support check.
“I was surprised how fast they worked,” McDonald, 30, of Oxnard said. “With the D.A.’s office, I always felt like my case was sitting on a desk somewhere.”
Already under attack by Sacramento legislators for failing to make deadbeat parents pay up, district attorneys are increasingly facing competition from the private sector.
A fledgling industry of private child support collection agencies has sprung up across the nation in recent years, boasting success rates far higher than the government’s.
Child Support Enforcement says it collects payments in 65% of cases, significantly higher than Ventura County’s 33% success rate and much better than the national rate of 20%.
The companies make their money by taking a cut--up to 40% in some cases--of the dollars they collect. By carefully choosing which parents they will serve, and controlling the number of cases, they are able to provide faster and more efficient service than child support divisions run by district attorneys, industry officials say.
“The real advantage we have is time,” said Richard “Casey” Hoffman, founder of CSE, the largest private agency in the nation.
But prosecutors in Ventura County view private collectors with a wary eye. The only reason they do a better job is because they can pick and choose clients, district attorneys say.
Two-thirds of Ventura County’s child support cases are families with at least one parent on welfare, said Greg Totten, chief deputy district attorney. The private sector won’t touch them.
“We are required to help anyone who is running into a block wall collecting support,” Totten said. “They only take cases where they have a good likelihood of success.”
Totten defended Ventura County’s child support division, saying enforcement officers move aggressively to obtain court orders against deadbeat parents, an essential step in collecting dollars. In Ventura County, 82% of cases have an order for child support, compared with the statewide rate of 46%, he said.
But he admitted that the criticism district attorneys have received in recent months is bringing about needed change. In Ventura County, a new computer network is being established to increase efficiency.
Private collection agencies say they are not trying to compete with government. They just want women to have another choice.
“We are not there to make government look bad, to make them look like they’re not doing their job,” said Denise Landers, president of Child Support Assistance Network of Houston.
“We really think we should work cooperatively.”
Currently, private companies serve less than 1% of the 20 million support cases nationwide.
“There is not a fight over cases here,” Hoffman said. “There are more than enough cases for everyone.”
Providing a Service and Charging a Price
Until a decade ago, many women had little choice but to seek the government’s help getting child support payments.
Private attorneys charge $75 to $150 per hour, placing their services out of reach for all but the wealthiest clients, most of whom are women, since 90% of the delinquent payers are fathers.
Collection agencies sprouted in the late ‘80s in response to demand for a faster and less costly alternative, industry veterans say.
CSE’s Hoffman, 56, headed Texas’ child support enforcement program for four years before growing discouraged by his agency’s low collection rate. He decided to quit and open a private agency in 1991, with three employees.
CSE started by serving Texas residents but expanded nationwide last year, running radio advertisements in California, Texas and Florida as well as commercials on Lifetime, a cable television network aimed at women.
Today it has 120 workers managing 50,000 cases a year. Each investigator has about 400 cases, far below government’s average of 1,200, Hoffman said.
CSE’s typical client is a mother in her 20s who has been pursuing child support payments for three or four years with little success. The company only accepts clients who already have court orders, are owed at least $5,000 and aren’t on welfare.
He doesn’t accept welfare mothers, Hoffman said, because federal law requires that money recovered be used to reimburse the government for public aid.
Although it charges no fees up front, CSE takes 34% of the total amount of money collected.
Other agencies offer similar arrangements, with varying fees. Landers’ company, for instance, charges a $35 application fee and takes 30% of back support collected, plus a $300 administrative fee taken from the first payments collected.
The companies don’t do anything particularly sophisticated. They use the same tools available to government caseworkers, including garnisheeing wages, revoking drivers’ licenses, placing liens on property and asking a court to issue an arrest warrant.
Private collectors do need the government’s help to intercept income tax refunds, Hoffman said. And that is when some bureaucrats bristle, he said.
“From time to time we will run into a government that feels threatened by the private sector,” he said. “But we generally get good cooperation.”
Listen First, Then Collect
Deadbeat fathers offer a variety of reasons why they haven’t paid, said Janice Babcock, CSE’s communications director. Common excuses are that his ex-wife or girlfriend has not allowed him to visit his children, or that she will use the money on herself, Babcock said.
Landers tries first to coax the money out of the parent by appealing to his or her better side.
If that doesn’t work, tougher tactics are used, such as tracking down lawsuit settlements or insurance awards, said Greg Warmink, a CSE investigator. Some men hide assets in a girlfriend’s or second wife’s name. Others work under the table or are self-employed, which makes it tougher to attach earnings, Warmink said.
The company found Patricia McDonald’s ex-husband working as a mechanic in Denton County, Texas.
After the man ignored CSE’s letters, the company went to court to garnishee his wages and attach a lien to his house. The first payment, forwarded by his employer, was collected earlier this month.
