Fintech platforms have made borrowing easier than ever. But I couldn’t help but feel sorry for young people who had borrowed a couple of thousand here and there to make ends meet and ended up in enormous debt.
Agents spend most of their time on the phone, chasing debtors and talking to them. Their pay is dire
By WANG Feixiang
As Chinese regulators put the brakes on lending by fintech platforms, attention has turned to their debt-ridden users, many of whom are quite young. According to HSBC, people aged between 20 to 29 have a total of 22 trillion yuan (US$3.4 trillion) in debt, at an average of 128,000 yuan, a huge amount in a customarily debt-averse society.
Curious to know who these young people are and what got them into debt in the first place, last year I applied to work for a Beijing credit management agency. After a cursory screening process and background check, I became a debt collector.
The agency manages credit for all types of lenders, collecting small business loans, credit card debt, and, the latest trend, microloans offered by fintech platforms. It’s a popular misconception that debt collection is generally threatening or coercive – almost all the agency’s employees are office workers who spend their days calling and texting debtors or searching for them online. Only a small number of them are on-the-ground investigators.
During training, I asked what happened to those who refused to be talked into paying their debt. My manager brushed it off, saying, “When they know that debt collectors are involved, well… everyone pays.”
After five days of training, I was assigned 141 overdue loans of less than 3,000 yuan, all from the same fintech platform. Most of them were marked “initial calls unanswered.” Experienced agents don’t want to waste time on such small cases, but my manager told me to get on the phone and learn the ropes.
Most of my time was spent simply chasing them. A coworker told me that less than 5 percent of calls get answered. After my 21st failed call, I asked my mentor, a senior credit manager, what happened if someone could not pay or refused to pay. He said I should chase them down first and worry about their attitude later, but went on to tell me about the recent case of a 32-year-old man from a village in Shaanxi Province.
On the phone, he insisted that he had no money. An investigator found him in hospital, recovering from heart surgery. For reasons that were not clear to me at the time, the investigator told the man’s parents about the debt. Shocked, they promised to pay in a month but were given only three days to find the 45,000 yuan owed, which they did. The man complained that the agency had taken advantage of his illness, but no one cared.
“We don’t want to piss off the debtor too much before he pays. Once the money is in, whatever,” my mentor said.
I quickly discovered that my agency’s code of conduct was a mesh of very fine lines to walk. Verbal abuse is forbidden, but shouting is allowed, encouraged even. An agent is not supposed to call the same debtor more than five times a day. Eight, my manager said: rules are made to be bent. Debt collectors are told to think of themselves as law enforcement, not customer service.
Agents are trained to look for a debtor's vulnerabilities and exert pressure, hence involving the family, especially when the family was kept in the dark. This backfires occasionally. An agent once called a debtor’s 12-year-old daughter, which triggered a tirade of complaints from the debtor. For those not highly educated, we threatened to instigate a credit investigation, which would convict them as dishonest enforcers; meaningless terms of course, but we said anything we could come up with, as long as it sounded suitably scary.
“It’s all coaxing and hoaxing,” a coworker told me.
When I had done my best with the small fry, I was given some bigger fish for my second assignment. The largest case was a 240,000-yuan balance, more than two years overdue. Notes from previous calls showed that the debtor had three companies in Henan Province: two small factories and a fruit shop. The factories went under during the pandemic, incurring even more debt, and the fruit shop, still open, did not make enough money to pay the enormous amount owed.
Many other cases also resulted from business failures. When I called about 30,000 yuan in a woman’s name, her husband picked up and told me she was at work in a daycare center and wasn’t available. He was polite, even obliging, and I could hear him lighting another cigarette and smoking forcefully on the other end of the phone: “We would have paid if we’d had the money.”
I was curious how they got in debt. He said it was from a delivery station they franchised three years ago that began to lose money when competitors opened nearby. The couple took out 30,000 to meet the last payroll. “We lost over 70,000,” he said. They were out of jobs for the most part of 2020, and his wife’s 2500-yuan salary is barely enough to make ends meet.
I tentatively asked if their parents would be able to help when he suddenly exploded: “DO NOT call them EVER AGAIN! They are retired and have no income!”
Eventually, he told me that a 20,000-yuan invoice would soon be due from a client of his and he should be able to pay some of the debt with it.
I hang up, confused. Our record showed that agents had called the couple 54 times but never their parents. We are not supposed to explicitly appeal to debtors’ friends and family unless there is no way to reach the debtor. My manager wasn’t interested. “It might have been another agency. Banks frequently hire a few agencies at the same time.”
I put in my own note: “Cooperative. Promised to pay part of the balance soon. Said we shouldn’t bother the parents.”
Gambling is another major cause of debt.
After a 28-year-old factory worker paid 100,000 yuan of his brother’s 800,000-yuan debt, seven collectors showed up at his home together and refused to leave until he had downloaded every fintech app he could find and borrowed up to his credit limit on each one of them.
I was sympathetic but thought he could easily pay the 2,600 yuan I was after. I told him it would affect his credit record, to no avail. “My credit record is already a mess,” he said, telling me had barely made a dent in the hundreds of thousands involved and had paid thousands in interest, which is still accumulating. “I might as well not pay anything at all.”
Another gambler even found a job as a debt collector after his debt was incurred but before it showed up on his credit record. He had lost more than 700,000 yuan in a lottery, some of it borrowed from fintech platforms. On his first day as a debt collector, by which time he was down to his last 300 yuan, he battled with debtors in one ear while his own creditors called him nonstop in the other.
The intelligence he obtained by “going undercover” turned out to be useful. When a high-profile bankruptcy of a company triggered a wave of defaults and even a few suicides, he noticed that the government had ordered a temporary halt to all related debt collection, so, when his own creditor called, he pretended to be a victim of the bankruptcy, successfully fending them off. He also learned the trick of provoking the agent on the phone and complaining about verbal abuse, which got him a six-month stay of execution at one agency.
His salary, however, is nowhere near enough to even pay off his interest. To get out of debt, he said, a salaried job would never be enough. He said his only recourse was to put more money in the lottery.
Nearly half of my cases were millennials or Gen Z. Most were working, but even full-time jobs were not enough to stop them from slipping deeper into debt, even without reckless spending. A 25-year-old girl I chased down works as a receptionist at a hotel. She had taken out 100,000 yuan in debt across three credit cards and two fintech platforms to pay off her parents’ debt, her brother’s tuition, and some of her own expenses. She was surprised to learn that penalty interest on some of her loans was as high as 50 percent, but her 6000-yuan salary was barely enough to survive.
I didn’t know what to tell her. I felt sorry for her, just as I did for most of my debtors, who borrowed very foolishly with no real prospect of ever repaying what they owed. The lenders were more than happy to pander to these borrowers’ needs, also without much thought as to how the debt would ever be repaid.
No snowflake in an avalanche ever feels responsible. And a financial avalanche may not be so far off. Has the world forgotten the horror of the subprime mortgage crisis? Eventually, someone somewhere has to pay.