While the amount of child support payments that go uncollected continues to rise, state and federal agencies charged with enforcement continue to suffer budget and staffing cutbacks.
So with as much as $25 billion in uncollected funds on the line in the United States each year, it's not hard to understand why the number of private child support collection agencies has grown as well – some experts believe the number has doubled in just the past 10 years to about 50 agencies nationwide, but no one really knows for sure.
What is known, though, is that there are growing warnings from legal experts, government officials and parents about predatory payment practices, shady contracts and expensive surprises that go along with the promises of these agencies, who often operate with little or no government oversight or regulation. As recently as this past September, for example, the state of Florida went so far as to ban one such agency from operating in the state and fined it $250,000 for what prosecutors said amounted to outright theft of funds that were collected on behalf of clients and their children.
Collection agency agreements typically charge anywhere from 25 percent to 40 percent of the total amount collected. They often require that clients sign over rights so the any payments must be made directly to the agency. Then the agency can take its cut before passing the rest on to the client. Watchdog groups and experts say some agencies add on hidden fees during this transfer and charge additional fees for ending the contract and processing the paperwork for signing payments back over to them directly.
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