Kimmel & Silverman, P.C. has filed a complaint against national debt collection company Virtuoso Sourcing, Inc., on behalf of Crystal Monroe. The lawsuit was filed on May 21 in United States District Court, Eastern District of Pennsylvania.

The complaint alleges that the Aurora, Colo.-based company violated the Fair Debt Collection Practices Act (FDCPA).

“The FDCPA is really written towards explaining the rules of the game for debt collectors — what they can do, what they can’t do and what they must never do,” said Monroe’s attorney Craig T. Kimmel.

“Some of the things that must never do is to be abusive, harassing, deceptive and misleading or raise their voice.”

Beginning in February and continuing through May, representatives of Virtuoso Sourcing continuously contacted Monroe in an attempt to collect a debt. Monroe, who is legally blind, said the debt collection stemmed from a Sprint phone bill that ballooned to more than $2,000. She disputes the charges.

Virtuoso’s representatives attempted to collect the debt by calling Monroe’s cell phone on average one to two times a day, causing her to receive more than 10 collection calls a week. Monroe asked Virtuoso to stop calling her, however the calls continued.

The complaint alleges that the debt collectors would speak to Monroe with raised voices when demanding payment, causing her to feel degraded and humiliated.

According to the complaint, Virtuoso collectors claimed they could “make a deal” with Monroe to settle but only if payments were made immediately. Monroe was told that if she did not make payment on the debt, her credit report would be adversely affected and she wouldn’t be able to buy on credit anymore.

Kimmel said if Virtuoso is found to be in violation that the company may be required to pay Monroe as much as $1,000, forgive the debt and report to credit reporting agencies that there is no debt and pay his attorney fees.

Monroe said she turned to Kimmel for assistance after she learned about the free assistance provided by the firm when she attended a community meeting at West Philadelphia High School.

“I was looking for someone who understood that every mistake is not the client’s, businesses make mistakes too,” Monroe said.

Kimmel’s firm has been conducting community outreach to let consumers know that free legal services are available to handle these types of cases.

“This is a free legal service provided for by private attorneys because the law encourages pursuit of unlawful debt collection,” Kimmel said.

Virtuoso could not be reached for comment as of the Tribune’s deadline.

The FDCPA penalizes debt collectors up to $1,000 per violation, gives the consumer the right to stop the calls and requires them to pay any and all attorney fees and costs incurred on behalf of the consumer.

Original story published here:
West Philly Resident Takes Debt Collector to Court

The scope of the inquiry is unclear, but those familiar with it say the Office of the Comptroller of the Currency is expanding a probe that began in 2011 with allegations that JPMorgan Chase was using error-filled documents in lawsuits against debtors.

The regulatory agency is examining the process several banks use to verify consumers’ outstanding debt before taking legal action, according to several people familiar with the matter who were not authorized to speak about an ongoing investigation. An OCC spokesman declined to comment.

The concerns about credit card debt collection echo the wave of shoddy foreclosures after the housing market collapsed. In those cases, as homeowners defaulted on their loans in droves, mortgage servicers were accused of falsifying records and “robo-signing” hundreds of documents without reviewing them.

Similarly, banks have filed hundreds of thousands of lawsuits against delinquent credit card holders in the wake of the financial crisis. As millions of Americans fell behind on payments, the charge-off rate for credit cards soared to $85 billion by the end of 2009, according to the credit card comparison Web site Cardhub.com.

Consumer lawyers began noting a number of collection cases built on shoddy records. Authorities in California, for example, say JPMorgan flooded the courts with lawsuits against credit card holders based on flimsy evidence that cardholders were in default, according to a lawsuit filed this month by the state’s attorney general. The complaint says the bank signed off on hundreds of legal documents “without any knowledge of the facts alleged in the document and without regard to the truth and accuracy of those facts.”

Regulators began examining the debt collection practices of JPMorgan in 2011 after a former bank employee, Linda Almonte, said nearly 23,000 delinquent accounts were riddled with inaccuracies, according to people with knowledge of the probe. Almonte, who sued JPMorgan for wrongful termination, claimed she was fired after warning her supervisors about the records.

Officials at JPMorgan declined to comment on the whistleblower lawsuit or the OCC investigation.

The Almonte case, which was settled out of court, raised concerns among regulators that the same sorts of haphazard practices that plagued the foreclosure process might have crept into debt collection.

The OCC’s investigation reflects the agency’s increasing focus on fair lending and consumer protection coming out of the financial crisis. The agency, for example, teamed with the Consumer Financial Protection Bureau in July to bring a $210 million action against Capital One for deceiving millions of customers into buying costly and unneeded credit card services.

“The OCC’s interest in [consumer protection issues is] a part of that overall focus in Washington,” said Christopher J. Willis, a partner at the law firm Ballard Spahr.

If the OCC finds evidence of abuses in debt collection, it could levy fines and issue an order compelling a bank to amend its practices. Banks could also face enforcement action from the CFPB, which is responsible for enforcing laws to protect consumers from abusive practices.

The bureau took its first debt collection action in October against American Express, which agreed to pay $112.5 million to resolve allegations of abusive collection practices, late-fee charges and deceptive marketing. Customers, in some cases, were misled to believe that if they partially paid off their debts, the remaining balance would be forgiven.

CFPB officials said they are taking a close look at debt collection practices but declined to comment on whether the agency is pursuing any individual companies.

Peter Holland, who runs the Consumer Protection Clinic at the University of Maryland Francis King Carey School of Law, said the problems in debt collection extend from the banks to the companies who purchase delinquent accounts for pennies on the dollar.

Iowa Attorney General Tom Miller, the architect of last year’s $25 billion national mortgage settlement, is leading a multi-state investigation of these so-called debt buyers and overall debt collection practices, according to his office.

Debt buyers often purchase just a spreadsheet with names of delinquent borrowers from banks after accounts become more than 180 days past due, Holland said. Judges, he noted, grew alarmed by the number of cases involving debt buyers that lacked proof of outstanding debt or that contained generic testimony.

Chief Judge Ben C. Clyburn of the District Court of Maryland said he dismissed 3,168 debt collection cases in October because the debt buyer, in part, misstated the amounts owed. The state Court of Appeals adopted new rules in 2011 that required debt buyers to provide more evidence when seeking judgments against consumers based on sworn statements.

“Most of the abuses that we’ve seen have been in the affidavits of the debt buyers,” said W. Thomas Lawrie, assistant attorney general in Maryland’s Department of Labor, Licensing and Regulation. “There are debt buyers signing affidavits without having the consumer’s account files. There’s evidence that some are signing upwards of 400 affidavits a day.”

Original Story posted on May 28th, 2013 by The Washington Post, source:
Regulators probing banks’ debt collection practices

The Military Lending Act sought to protect service members and their families from predatory loans. But in practice, the law has defined the types of covered loans so narrowly that it’s been all too easy for lenders to circumvent it.

“We have to revisit this,” said Sen. Dick Durbin, D-Ill., who chairs the defense appropriations subcommittee and is the Senate’s second-ranking Democrat. “If we’re serious about protecting military families from exploitation, this law has to be a lot tighter.”

Members of the military can lose their security clearances for falling into debt. As a result, experts say, service members often avoid taking financial problems to their superior officers and instead resort to high-cost loans they don’t fully understand.

The Department of Defense, which defines which loans the Military Lending Act covers, has begun a process to review the law, said Marcus Beauregard, chief of the Pentagon’s state liaison office.

The act mainly targets two products: payday loans, usually two-week loans with annual percentage rates often above 400 percent, and auto-title loans, typically one-month loans with rates above 100 percent and secured by the borrower’s vehicle. The law caps all covered loans at a 36 percent
annual rate.

That limit “did do a great deal of good on the products that it covered,” Holly Petraeus, the Consumer Financial Protection Bureau’s head of service member affairs, said in an interview. “But there are a lot of products that it doesn’t cover.”

Representatives from payday and other high-cost lenders said they follow the law. Some defended the proliferation of new products as helpful to consumers.

Read about the “400 Percent Loan” here:
Lenders Target Naive Military with Usurious Payday Loans
(Article Source)

Robo-signing is the mass-production of “sworn” affidavits used to prove outstanding debt in lawsuits against consumers. Most common among large debt collectors and debt buyers, the person signing has no personal knowledge of the facts of the debt and doesn’t make any effort to investigate when swearing under oath that the debt is valid. Thus, the signature, which is supposed to evidence proof of good faith of a claimed debt, is entirely lacking in credibility or evidentiary value. Unfortunately, debt collectors engaging in this practice when filing lawsuits against consumers, are successful in winning judgments because their practices either go unchallenged by unsuspecting consumers or have become so common as to be accepted by the court.

Until a flurry of recent class-action lawsuits, robo-signing usually flew under the radar, as the courts turned a blind eye to the rubber-stamping practice because it allowed cases to be processed through the system faster, even if it sacrificed fairness and justice. In a case against Midland Funding, LLC, for example, employees testified to signing up to 400 affidavits a day; and a lack of documentation and disregard for proper procedures resulted in consumers being victimized (aka “railroaded”) into being held accountable for debts either paid or not owed. In some cases, liens were secured against titles to homes, wages were garnished and information was sent to credit reporting bureaus, devastating credit for many Americans and their families. This in turn increased the cost of credit or caused credit applications to be denied entirely until the robo-derived judgments were satisfied.

Legal advocates have for years loudly cried foul over the absence of documentation by collectors suing consumers in small claims court and the tolerance by the courts in allowing it to continue. To understand how heinous the robo-signing method is in the real world, watch the cartoon shown in this link: Robo-signing machine.

Since the mid-2000s, there has been a relatively cheap, sometimes free way to combat new-account fraud: a security freeze. The trouble is, it doesn’t make any money for the credit-reporting agencies that trade in your personal data, so Experian, Equifax and TransUnion do little to publicize it. In essence, the bureaus are encouraging you to pay monthly fees for credit-monitoring and -alert services, so you’ll be quick to discover, after the fact, that you’ve been victimized. Meanwhile, they’re almost hiding a better alternative: By giving you control over who can obtain data from your credit report, a security freeze can block new-account fraud before it happens.

How do you impose a security freeze (also known as a credit freeze)? Because they were required by a series of state laws mostly enacted half a dozen years ago, the details vary. But according to the Consumer Financial Protection Bureau, 47 states plus the District of Columbia now authorize freezes, and the bureaus voluntarily offer the service to at least some residents of Alabama, Michigan and Missouri, the holdouts.

As a New Jersey resident, a consumer is entitled to a free “security freeze” – the name varies state to state – from each of the three major credit bureaus. A consumer might have to pay $5 for a temporary thaw if he wanted to give a particular creditor access to his credit file, or give any creditor access for the next week or two – say, if he knew he was about to go car shopping and wanted to obtain a variety of loan offers. Isn’t that a hassle, too? Perhaps, and that’s what the credit bureaus will warn you about if you choose to freeze your credit file. But for most people, shopping for more credit is hardly an everyday thing.

The New Jersey Department of Banking and Insurance explains Jersey’s procedures here – a consumer would have to make requests by certified mail, which adds a little extra cost. Pennsylvania allows each credit bureau to charge $10 to impose a freeze, but that fee is waived for victims of identity theft.

When it comes to financial security, our laws and rules sometimes seem to have it backwards. Armed with your name, address, and Social Security number, an imposter might find it easier to get $1,000 in “instant credit” in your name in the checkout line of Home Depot than you’d find it to get $200 – from your own bank account – at a nearby ATM.

Article source – read more here: Credit bureaus’ little secret: A cheap way to foil ID theft

The FTC alleged in its complaint that the defendants – a debt buyer and a debt collection law firm, both based in Mississippi – violated the FTC Act and the Fair Debt Collection Practices Act by deceptively charging consumers a fee for payments authorized by telephone. According to the FTC, the defendants led consumers to believe that the fee was unavoidable when, in fact, those who paid by mail or online did not incur the fee. The FTC also alleged that the companies violated the laws by falsely threatening to sue consumers as a means of getting them to pay. A debt collector is prohibited by law from using false, deceptive, or misleading representations or tactics when collecting a debt.

Under the terms of the proposed settlement, the defendants will pay $799,958 in restitution for consumers. The defendants also are barred from making any misrepresentations when collecting a debt, including false claims that consumers must pay an extra fee when making payments on a debt or that they will be sued for not paying a debt.

According to the complaint, debt buyer Security Credit Services, LLC, and Jacob Law Group, PLLC have worked together since 2006 to collect debts nationwide. Security Credit buys consumer debt accounts, and contracts with Jacob Law to collect on them. The complaint alleges that Jacob Law called and pressured consumers to immediately make payments on their debts by authorizing electronic checks or credit or debit card payments over the phone. Jacob Law allegedly told consumers they were required to pay an additional fee of $18.95 for this service, but routinely failed to mention that they could avoid the fee by mailing the payment or paying online. Since 2008, the defendants have collected at least $799,958 in fees from consumers.

Source: Mississippi-Based Security Credit Services LLC Ordered to Stop Deceiving Consumers Through Debt Collection Scandal – also see the FTC.

Encore Capital, though MCM has been accused of numerous Fair Debt Collection Practices Act (FDCPA) violations including deceptively collecting debts past the statute of limitations, difficulty validating amounts claimed and inaccurate reporting to credit bureaus among others. While these allegations are common throughout the industry, given the size and now increased portfolio of accounts by Encore, consumers are urged to be more careful than ever and to scrutinize any collection letters they receive, to fully document disputes, to know their rights and to seek legal advice immediately if needed.

San Diego-based Encore is by measure of revenue alone, the largest publicly traded debt-buying company in the United States. The purchase of Asset Acceptance will likely bring a deluge of collection activity and pressures compelling the Wall Street-backed firm to collect on accounts to the fullest extent possible, favoring its investors, at the cost of even more consumers.

If you are contacted by Midland Credit Management, Asset Acceptance, Encore Capital or any other debt collector, be cautious, know your FDCPA rights and don’t delay in protecting yourself from the consequences that often accompany such contact.

Filed in Kansas City last year, a Federal Racketeer Influenced and Corrupt Organizations (RICO) class action lawsuit claims that the owner of a payday loan company, a felon, used a so-called “rent-a-tribe” scheme to avoid criminal and civil liability for illegal loan practices.
According to court records, Scott A. Tucker is not licensed to issue payday loans, and cannot obtain a license, due to his felony convictions for mail fraud and making false statements to a bank. Tucker disregarded his past and entered into a rental agreement with the Miami Tribe of Oklahoma in 2003, and later with the Santee Sioux Tribe in 2005.

Under the Miami of Oklahoma contract, Tucker agreed to provide $5 million in capital to the tribe in exchange for permission to staff his office on tribal lands, allowing him he believed, to use the Tribe’s name as a front, and giving him immunity from state and federal lending laws.
One plaintiff in the case states that he received a loan from Tucker’s company in the amount of $300 but an interest rate of 608.33 percent, far in excess of the maximum rate allowed by Kansas law.

As a “tribal enterprise” Tucker operated various payday loan trade names, including United Cash Loans, which provided money online from an office in Overland Park, Kansas.
Until January 2012, payday lenders were regulated by a patchwork of laws without federal oversight. Today however, the Consumer Financial Protection Bureau (CFPB) provides supervision to ensure compliance with federal laws so that the type of arrangement described above can be shut down.

CreditLaw.com attorney, Amy Bennecoff, sat down with Action News’ Nydia Han to talk about the case of Frank Stack v. Palisades Collections, warning viewers about the deceptive practices of the New Jersey-based debt collector and advising consumers of their rights under the Fair Debt Collection Practices Act (FDCPA).

Out of nowhere in early May 2012, Vietnam veteran Frank Stack began being bombarded with phone calls from debt collector Palisades Collections for a credit card debt he paid 10 years earlier. In support of his assertion, Stack told Palisades that he has passed numerous government-mandated background checks for jobs he has held with nothing showing up and has a current credit score of 780. But Palisades ignored him and continued their pursuit.

It was bad enough that Stack was being contacted at all hours of the day on his home and cell phones, but the debt collector contacted him repeatedly as he worked at McGuire Air Force Base as a ground security coordinator with U.S Customs & Border Protection. Stack told Action News he simply wants the harassment to stop.

Since 2005, there have been 598 federal lawsuits filed against Palisades, and an overwhelming majority alleged violations of the Fair Debt Collection Practices Act (FDCPA), according to court documents. Of those, 95 suits were filed in 2012, and there were seven new suits as of mid-February 2013.

See more: Debt collector accused of harassing innocent consumers

While several states are fighting to ban what many officials consider to be legalized loan sharking, big-name banks like JPMorgan, Chase, Bank of America, and Wells Fargo have found inventive ways to profit by supporting the payday lending industry. Acting as a behind-the-scenes partner, some large banks enable payday lenders to withdraw loan repayments automatically from borrowers’ bank accounts, even in states where such loans are banned. In other situations, the same banks are allowing payday lenders to debit checking accounts even after the consumer has tried to stop such withdrawals.

While lenders counter that debtors are free to stop such deductions, cooperative banking agreements often require at least three days notice or more before the next withdrawal. Even then, there are no guarantees that the account will not be debited as some banks do not honor instructions and others are too slow to stop payments before they are made.

Why do large banks help payday lenders? The payday loan arrangement can provide a big payoff to them as withdrawals often cause an avalanche of account fees such as overdrafts, minimum balance requirements, withdraw limits, and surrender of interest. According to a report released this month by the Pew Charitable Trusts, “roughly 27 percent of payday loan borrowers say that the loans caused them to overdraw their accounts” (Silver-Greenberg). To banks, revenue from fees and costs is coveted “free” money, in which the aftermath of tougher financial regulations that have curtailed fees on debit and credit cards then replaces money lost from those former practices.

While there is no definitive list of all the lenders who lend support to payday lending activities, it is estimated that roughly three million Americans took out an Internet payday loan in 2010, according to the July reporting of the Pew Charitable Trusts.

Consumers beware, even your “friendly” bank may not be as friendly as you think.

Bibliography
Silver-Greenberg, Jessica. “Major Banks Aid in Payday Loans Banned by States.” NYTimes.com. 23 February 2013