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Child Support Agencies Under Attack

June 12, 2002

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WASHINGTON (AP) _ Patricia Zipperer saw the TV commercials promising to wring money out of deadbeat dads. With more than $7,000 coming, she figured this private collection firm might be her answer. She signed up.

A year later, she’s suing the company, joining a growing number of people who say these for-profit firms mislead vulnerable clients and often get paid for doing virtually nothing.

The companies are becoming increasingly popular, with more frustrated parents agreeing to forgo some 30 percent of collections in hopes that a private agency will succeed where government, which does the same thing for free or very little, has failed.

``Here you have people who are already down, in need of the payments to support their kids, and these predators come along and rip them off,″ said Geraldine Jensen, president of the Association for Children for Enforcement of Support.

Private firms say their contracts are clear and, while their services aren’t for everyone, they collect millions of dollars that many families would have never seen.

``They don’t have to come to us. Nobody’s forcing them to,″ said Casey Hoffman, founder and chief executive officer of Supportkids, which has handled 10,000 cases and is the largest of about three dozen private collection companies.

The lawsuit against Supportkids, filed Tuesday in state court in Manitowoc, Wis., comes as the private companies push for greater access to confidential financial data to help them track down parents who don’t pay. Advocates, meanwhile, are pushing for greater consumer protections in this fast-growing field.

Clients like Zipperer typically sign contracts directing all child support payments to the company, which passes the money along after taking a cut _ 29 percent, on average, according to government auditors.

Zipperer agreed to give Supportkids 34 percent. But she assumed _ wrongly _ that the commission only applied to any back support the company collected, since that was the focus of the company’s ads. Instead, the company took 34 percent of the monthly payments being made, and never collected any back child support, she said.

``They just basically told me the same thing the county did _ that they’re working diligently on the case and this is the best they can do right now,″ Zipperer said in an interview Tuesday.

She said the father of her son was never contacted by Supportkids, and she soon tried to get out of the program. But she learned that she could not cancel her enrollment as long as the father had paid something in the past year. After six months of complaining, she finally was released from the contract.

The worst part, she said, was disappointing her son.

``He trusted me and I trusted the system and it let us down,″ she said.

Her suit charges that while Supportkids advertises itself as a ``risk-free″ service, there’s a substantial risk of losing a portion of child support already being paid.

Hoffman responded that the contract clearly states that the fee will be applied to both back-owed child support and current payments. He said clients are given an option to exclude from the commission any support being paid when they sign up _ an option Zipperer said she was never given.

Hoffman said he does not know how many clients have tried to leave the program but defended his company’s policy of not letting people quit. Otherwise, he said, the company would spend time and money to find a parent and people could quit once payments began.

He said his contracts are straightforward and easy to understand.

``We’ve benefited children to the amount of $66 million since we’ve been in business,″ he said.

Zipperer’s complaint is not an isolated one, said Vicki Turetsky, a child support expert at the liberal Center for Law and Social Policy who has examined hundreds of complaints from consumers.

``The complaints show a pattern of misleading people,″ she said.

Typically, she said, women complain that the companies take fees without doing any work.

One solution, she said, is to apply consumer credit law to these companies; under current law, they are unregulated.

But she’s most concerned about industry efforts to get access to the Federal Parent Locator Service, which includes data from tax forms, the federal new hire employee database, the Social Security Administration and the Department of Veterans Affairs.

``These are private, unregulated companies that are not under contract with the government, looking to get access to some of the most sensitive government data there is,″ Turetsky said.

The Bush administration convened a session this spring to discuss the issue but has not made any policy statements. An industry spokesman said private companies are hoping the administration will make some of the data available through regulation.

___

On the Net:

Association for Children for Enforcement of Support:

http://www.childsupport-ACES.org/

Supportkids: http://www.Supportkids.com/

Center for Law and Social Policy: http://www.clasp.org/

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