New York State just took a major step in protecting consumer rights in credit card collection cases.
The state recently updated its requirements for debt collectors when filing credit card collection cases against debtors, aiming to put a stop to default judgments and unfair claims. A default judgment is legally binding, decided when the debtor has not appeared in court or failed to respond to a summons.
Because of this, many debt collectors will attempt to work the system, making unfair claims and providing minimal information, making it less likely for the defendant to appear in court. This typically leads the judge to rule in favor of the collection agency through a default judgment.
Imagine having paid-off a debt only to receive a legal notice years down the line insisting you owe more money.
That’s what happened to Eduardo Austin of Atlanta, GA, who paid off a $2,400 credit card bill only to discover that Frederick J. Hanna & Associates – a law firm based out of Marietta, Georgia – was trying to garnish another $970 in interest charges. And he’s not the only one.
The law firm is said to have sent out over 350,000 credit card collection complaints against consumers in a large volume, including claims against individuals who – in actuality – may not owe anything at all.
“Convenience fees” never seem to be all that convenient, do they?
Although convenience fees are common to countless businesses and service providers, these charges become an entirely different monster when a company illegally pushes them on its customers.
RTB Enterprises, Inc. (d/b/a Allied Data Corporation) – along with the company’s president and sole shareholder, Raymond T. Blair – have been accused of such devious actions and will now pay a $4 million penalty because of it. The agreement, reached through a federal court order, also demands that the company cease similar practices when collecting convenience fees in the future, requiring both Blair and RTB Enterprises to disclose info regarding fees charged to consumers, along with what they can do to avoid paying them.
Receiving threatening collection calls from National Credit Adjustors? You are not alone and there is help to stop collection calls.
FDCPA Attorney Amy Bennecoff was featured in an NBC Nashville investigation into National Credit Adjustors. The story highlights victims of threatening collection calls from National Credit Adjustors. If you receive threatening collection calls, you have the right to secure free legal help. You could also receive up to $1,000. Call 1 800 NOT FAIR or visit www.creditlaw.com for more information.
A Maryland federal judge has refused to dismiss a class action accusing Burger King Corp. of sending unsolicited fax advertisements in violation of the Telephone Consumer Protection Act.
Judge Paul Grimm of the U.S. District Court for the District of Maryland denied Burger King’s motion to dismiss the proposed class action or strike the class allegations, according to a court opinion on April 18.
Burger King argued that plaintiff Jay Clogg Realty Group Inc. failed to state a claim under the act because it failed to allege that the faxes were received on an ink-and-paper fax machine, and that, in any event, claims under the act can’t be brought as a class action.
Disagreeing, Grimm said that “there is nothing in the TCPA that precludes a class action” and that in fact “the law in this district allows TCPA claims to be pursued as class actions.”
Even though the plaintiff didn’t expressly allege that it received the faxes on a traditional in-and-paper fax machine, Grimm said, “common sense” demanded hearing the case. The “natural conclusion reasonably inferred from Plaintiff’s allegations is that it received the Facsimile Advertisements on a fax machine.”
The realty group alleged that it received several unsolicited faxes from Burger King advertising its food delivery service. The advertisements didn’t include an opt-out notice as required by the act, the complaint alleged. Potentially thousands of similarly situated persons might have received the faxes, it added.
The plaintiffs seeks to define the relevant class as U.S. persons or entities to whom fax ads were sent within four years prior to the filing of the complaint.
Grimm denied plaintiff’s motion for class certification with leave to refile once plaintiff obtains adequate factual support for that motion, saying that “at this time there are no facts in the record that indicate that Defendant’s advertising campaign spanned four years.”
Michael O’Reilly, a commissioner at the Federal Communications Commission, caught the attention of consumer advocates, businesses, debt collectors, legal professionals, and others when he wrote in a March 25 blog that the Telephone Consumer Protection Act needs clarification.
TCPA lawsuits have increased more than 30 percent in the last year, he said, while several dozen petitions are being submitted to the Commission in search of clarification.
O’Reilly also wrote that the FCC should take a hard look at its own precedent that may have contributed to enlarging the scope of TCPA violations.
Those in the debt collection industry and other businesses were pleased with the commissioner’s comments, saying they are cautiously optimistic that the FCC could issue clarifications that can help reduce lawsuits.
Consumer advocates, however, said they are concerned that the so-called clarifications that are being sought are nothing more than an attempt to limit the scope of the TCPA and make it less useful in protecting consumers.
The TCPA was enacted in 1991 amid consumer complaints over unwanted solicitation calls to American homes. As technology evolved over the years, so did the courts’ interpretation of the TCPA, which now applies to robocalls, text messages, junk faxes, and calls to cell phones.
Mark Schiffman, a spokesperson for the American Collectors Association, a trade group representing debt collectors and creditors, said the confusion was compounded when attorneys used the lack of clarity to file lawsuits against debt collectors who were contacting debtors. He said that that was one of the reasons there has been a rise in TCPA lawsuits.
He said that one area that would need clarification from the FCC is that the TCPA should not apply to debt collectors.
“Debt collector calls are not telemarketing calls,” he said, adding that the TCPA was enacted with telemarketers in mind. “They are calls to consumers over a legitimate business issue.”
Schiffman also said the TCPA allows the use of autodialers to contact consumers at home, but prohibits autodialing to cell phones. That imposes a burden on businesses that may need to contact a large number of consumers, he said.
Such rules affect not only debt collectors but also other businesses that need to communicate with consumers, not for telemarketing but for other business purposes, he said.
“This is a broader business issue, not just a debt collection issue,” he said.
Schiffman added that the ACA is among those who have submitted a petition to the FCC asking for clarification on a number of TCPA issues.
Matthew Gibson, an attorney at the Paul Hastings law firm who represents clients on regulatory issues, including the TCPA, said that one of the thorniest issues with the law relates to the definition of what is an autodialer.
He said there is uncertainly on what devices and systems can be considered autodialers – which cannot be used for calling consumers’ cell phones without the consumers’ consent.
“The FCC has not fully weighed in on what does and does not constitute an autodialer under the TCPA, so it has been left to the courts on how best to interpret the law’s definitions, and there are varying interpretations,” he said.
In one ruling from November 2012, the FCC said that an automatic dialing system includes “any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.”
That definition is broader than the one in the TCPA, in which a device must use a random or sequential number generator in order to be considered an autodialer.
In interpreting that definition, some courts have gone as far as ruling that callers may violate the TCPA even if they manually dial a number if the device they used is capable of making automated calls.
Aside from the definition of autodialers, not everyone agrees on what constitutes consumer consent, what types of faxes are considered unsolicited, or what it means to initiate a call, to name a few.
Gibson said the FCC recently released two decisions (this and this) that clarified issues relating to automated text messages.
“The FCC’s actions were great first steps in clarifying some of the ambiguities,” Gibson said. “This is encouraging, and we look forward to action from the FCC on the remaining positions.”
Consumer advocates, however, say the petitions for clarification are really not a quest for clarification, but an effort to leave the consumer with little legal protection.
Scott Nelson, an attorney at Public Citizen, a Washington, D.C. consumer advocacy group, said the FCC has held the position that autodialers cannot be used to call consumers’ cell phones.
Through petitions for so-called clarifications, “the [collection] industry wants to use autodialing equipment to call people’s cell phones,” he said.
If there is a need for clarification, it is in those areas where the collection industry is not pushing for clarity, he said.
One example is whether companies are responsible for robocalls or junk faxes that their agents send to consumers at their behest, he said.
Nelson said he was surprised by O’Reilly’s blog post, and said he hoped that the position is O’Reilly’s own opinion and not one shared by the entire Commission.
“I think he is sending a signal that he is amenable to giving industry a break and limiting the protection that the law gives to consumers,” Nelson said. “I am not really sure why there is any reason to do that.”
Article Source: TCPA Clarification Efforts May Undercut Consumer Rights
The Federal Trade Commission Thursday announced a settlement in a long-running case against two debt collection agency owners and their network of companies that threatened lawsuit and arrest over debts consumers often did not owe.
The two principal owners of Rincon Debt Management, Jason R. Begley and Wayne W. Lunsford, will surrender more than $3.3 million worth of assets that will be used to provide refunds to victims, under the settlement with the FTC. The two defendants also are permanently banned from the debt collection business.
Litigation continues against several companies that Begley and Lunsford (no relation to the author of this report, by the way) used as part of their debt collection scheme. The Corona, California-based operation collected debts nationwide.
The settlement resolves FTC allegations that from April 2009 until October 2011, when a court shut down the operation at the FTC’s request, Begley and Lunsford deceived and abused Spanish- and English-speaking consumers – making bogus threats that consumers had been sued or could be arrested over debts they often did not owe.
“These debt collectors focused on Spanish-speaking consumers and other people who were strapped for cash, and preyed on them by using abusive collection tactics in violation of federal law,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
The FTC’s complaint alleged that the defendants violated the Federal Trade Commission Act and the Fair Debt Collection Practices Act (FDCPA) by calling consumers and their employers, family, friends, and neighbors, posing as process servers seeking to deliver legal papers that purportedly related to a lawsuit. In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls. The defendants and their employees also masqueraded as attorneys or employees of a law office – demanding that consumers pay “court costs” and “legal fees” – even though the operation did not file lawsuits against consumers, the FTC alleged. Also, in many instances, consumers did not even owe the debt the defendants were trying to collect.
In addition to the permanent ban on participating in debt relief services, Begley and Lunsford are prohibited from misrepresenting the features of any financial products or services, including lending, credit repair, debt relief, and mortgage assistance relief services.
The order imposes a $23 million judgment against the defendants, which will be suspended due to their inability to pay, except for the $3 million in frozen funds held by the receiver and the personal assets both agreed to surrender. Begley is required to surrender the rights to more than 3,500 American Eagle silver and gold coins. He will also pay a $176,115 contempt judgment for having sold his home and some other coins in violation of the asset freeze that was imposed as part of the FTC’s case. Lunsford is required to pay a $134,000 contempt judgment for the proceeds he received when he sold his home in violation of the asset freeze.
If it is determined that the financial information the defendants gave the FTC was untruthful, the full $23 million judgment would become due.
The Commission vote approving the proposed consent judgment was 4-0. The FTC filed the proposed consent judgment in the U.S. District Court for the Central District of California and the Court approved it on March 28, 2014.
The old formula to build better credit went something like this: apply for a few credit cards, use them for affordable purchases such as groceries, utilities or gas; and then pay them off completely when the statement arrives each month, to show the bank that you can manage your credit responsibly.
In today’s world, that old advice needs to be updated. Try these ideas:
Like an annual medical checkup, make sure your credit report is in good shape.Once a year, all consumers are entitled to a free credit report. We recommend logging onto www.annualcreditreport.com and getting yours there, as the report you’ll receive is comprehensive and generally more reliable than those companies that like to advertise such things on television. A credit report is your “resume” for banks and other creditors to review when considering how much credit to extend to you. The report includes both good and bad information, but also can hurt you by including old, outdated, disputed, or inaccurate information. Make sure to check for accuracy too. If you find errors, it is vital to dispute the item with the reporting credit bureau(s) immediately. This can have the positive impact of increasing your credit score, making you a more attractive consumer to creditors and make it much cheaper to borrow money.
Schedule payments through online banking or set alarms on your cell phone to remind you when payments are due. About a third of your credit score is comprised ofwhen payments are made. Your payment history is important, making it a good idea to schedule recurrent bills on “auto-pay” using your online banking profile with your bank. As to one-time bills which are not recurrent, set up reminders on your cell phone to make sure they are not forgotten. Doing both makesa tremendous difference on your credit score!
Think outside the box. Another way to keep a credit score moving in the right direction is by being vigilant about what is reported and taking the time to dispute chargesthat are not accurate or not owed.A dispute in writing requires the credit reporting agency to respond properly and do an investigation. If your position is correct, the item must be removed from your report, and if not, permits legal action to be pursued to force removal, along with the recovery of damages. If correcting inaccuracies is too difficult or time consuming for you to do yourself, enlist the help of a consumer attorney who specializes in Fair Debt Collection Practices (FDCPA) and Fair Credit Reporting Act (FCRA) cases, as mistakes are made and they can be costly to you.
Fight with debt collectors if you are right. If a debt collector is violating your FDCPA rights, an experienced consumer attorney can help, and can win you a statutory award of up to $1,000. Better still, they can represent you for free, by requiring the debt collector to pay all attorney fees and costs as required by law.
Whether you follow any of the above suggestions, remember that your good credit can often make the difference in being approved at reasonable rates, It is worth the effort!
The following article is written by Michelle Singletary of the Washington Post. The Consumer Financial Protection Bureau is looking for your input in making debt collection laws even tougher. If you would like to share your input or suggestions, visit www.regulations.gov.
WASHINGTON — If you owe a debt, you should make every effort to pay it. After all, you’ve enjoyed the services or goods that your debt bought. And companies have a right to try to collect or even sell that debt to recoup their money. The more they can collect, the less likely they are to pass on their debt troubles to other consumers in the form of higher prices or the cost of credit.
But consumers have a right to accurate documentation to back up the collection efforts. And certainly folks who don’t owe a debt shouldn’t be harassed or bullied because of some computer error or faulty debt data.
And this is where the Consumer Financial Protection Bureau comes in. The watchdog agency is considering rules for the debt collection market, but before it writes any new regulations or strengthens those already on the books, the agency wants the public to weigh in on an array of issues involved in debt collection.
Among the agency’s chief concerns is making sure debt collectors have the correct person, debt and documentation.
“It is widely recognized that problems with the flow of information in the debt collection system is a significant consumer protection concern,” the agency said in its advanced notice of proposed rule-making.
Often when debt is sold to collectors for pennies on the dollar, the sale doesn’t include a lot of information about the debtor or his or her debt. The documentation might include nothing more than the person’s name, last known address, Social Security number and debt amount. Several states have implemented new laws, court rules or administrative orders requiring more specific proof of debt from companies who sue consumers to collect on outstanding debts.
Even ACA International, a trade group for the consumer debt-collection industry, believes some updating is in order.
“Current federal debt collection laws are woefully outdated when it comes to areas such as communication, documentation, verification and statutes of limitations,” ACA said in a statement. “We agree that modernizing the nation’s consumer debt collection system is important so long as changes are based on common-sense solutions that preserve balance between consumer protection and the ability of a creditor or debt collector to lawfully recover debts.”
Collectors have a limited number of years in which they can sue someone for payment. After the time runs out, unpaid debts are considered “time-barred,” meaning that collectors can contact you about the old debt but not seek a remedy through the courts.
You may not have the inclination to read the CFPB’s 114-page rule-making proposal. I wouldn’t blame you. It’s pretty dense and includes nine parts with 162 sets of questions about debt collection. Yet the first set of questions in the proposal gets to the heart of this issue for consumers, which is what information is transferred during the sale of debt or the placement of debt with a third-party collector and whether the information transferred varies by type of debt (e.g., credit card, mortgage, student loan, auto loan).
Other questions ask whether the length of time that debt collection records are retained should relate to how long a debt may generally be noted in a consumer report or how long a consumer has to bring private action under the Fair Debt Collection Practices Act, which was enacted in 1977.
I think the core of any rule proposal has to require that when debt is sold or transferred, it should include specific and standardized proof or underlying documents related to someone’s debt as part of the sale.
Consumers can submit comments at Regulations.gov. But a far easier place to learn about the issues and problems with debt collection is RegulationRoom.org, which is not a government-run site. Instead, trained students and staff at Cornell Law School run it. The CFPB is working with Cornell to make it simpler for people to submit comments about debt collection.
Even if you aren’t interested in commenting, you can learn a lot about debt-collection practices and your rights. In discussion forums, people can submit comments and moderators keep things civil and provide background information. They also probe, asking follow-up questions to those who submit comments or gripes in order to dig deeper into the issues they face.
Comments submitted at RegulationRoom.org will be summarized and submitted to the CFPB before the end of the official public comment period.
I know you may not think you have a voice. But you do. Here’s your chance to put in your 2 cents’ worth. What’s been your experience with debt collectors? What changes do you think should be made? Don’t be a spectator in this debate about debt.