That must have been before credit card companies figured out just how profitable deadbeats are
You buy $500 of crap on a card. Cc company pays $485 or so to retailers.
You never pay. Between fees, interest, penalties, etc, the balance goes to $1500 before it goes to collections.
The account is sold to a collections agency for $500. The cc company is, in reasonable terms, up $15. They, however, can write off a $1000 "loss" on that account.