A utility company in Michigan will be required to publicly disclose sales of charged-off debt portfolios to the state’s Public Service Commission, and successfully fended off an effort to end the practice altogether, according to a published report from ProPublica.
The Background: DTE Energy used to sell portfolios of debt — it’s last sale was in 2017. The company that purchased the debt would, in some cases, file collection lawsuits to recover the unpaid balances. This lead to garnishments on wages and income tax refunds and liens being placed on homes, according to the report.
- What caught ProPublica‘s attention was the DTE Energy was the only utility that served at least 400,000 households in Illinois, Indiana, Michigan, Ohio, and Wisconsin to sell portfolios of charged-off debt. Half of the 11 utilities that met that threshold also disclosed they do not file lawsuits for unpaid debts.
The Big Picture: DTE Energy filed a petition with the Michigan Public Service Commission to raise its rates. A brief on the petition written by Commission staff mentioned “hardship-inducing collection tactics” and suggested that the company be prevented from selling debts.
- The brief also mentioned the potential for a “double recovery” in that DTE would profit from the sale of the portfolios and then profit because the uncollected accounts would be factored into the rate increase that would affect all customers.
- An administrative law judge intervened and said that it was ok for DTE Energy to sell portfolios, but only if it was publicly disclosed. DTE will have to file an annual report, detailing debt sales for the past five years and providing information on the number of accounts, the amount of debt associated with those accounts, and how much DTE made on the sale.
- A spokesman for DTE said it had no current plans to sell any uncollected debts.
