(Philadelphia, PA) -A woman saying she was harassed by Capital One for a disputed $4,000 credit card debt has filed suit after the bank demanded more than $ 286 million dollars. Attorney Craig Thor Kimmel of Kimmel and Silverman, P.C., an Ambler-based consumer law firm, has filed the suit on behalf of Patrice Perry in Philadelphia County, Pennsylvania.
According to the complaint, Capital One first demanded Perry pay $3,845 for purchases on a credit card. Perry disputed the debt and turned the letter over to her family lawyer, who wrote Capital One to cease and desist contacting Perry directly. Disregarding the letter, Capital One allegedly stepped up collection efforts, placing more calls to Perry and claiming that it was doing so because the lawyer did not make a substantial settlement offer to resolve the account. Telephone calls were made to her home and workplace, where she alleges, her employer does not allow personal calls.
Subsequently, Perry received more letters, each demanding different amounts, some higher than others, all threatening legal action if not paid promptly. The letters failed to state how the varying amounts were calculated or if amounts sought were based upon any contract between Capital One and Perry authorizing such charges. After a second cease and desist letter from the family lawyer was disregarded, Capital One in response sent a letter demanding immediate payment of $286,651,237 from Perry. The letter went on to instruct Perry to mail full payment in the envelope provided. It was at this time that Perry’s family lawyer contacted Kimmel, who assumed representation.
The complaint alleges the $286 million demand was so outrageous that it could not be the result of a computer glitch, and that it required human intervention to be sent. Perry alleges the basis for sending it was embarrass, humiliate, intimidate and cause emotional distress, of amounts incapable of being understood.
The lawsuit alleges that Capital One was compelled to cease communication upon receipt of the initial letter from her family lawyer and used false, deceptive and misleading communications to collect a debt.
Perry further claims that Capital One threatened to report the disputed debt to the credit reporting agencies, which would adversely affect her FICO credit score and unnecessarily make her other creditors insecure.
“Harassing calls, disregard for a lawyers written instructions on two occasions, demands for payment of differing and arbitrary amounts and the final letter seeking more than $286 Million, demonstrates serious abuses at the collection office of Capital One.” says Attorney Kimmel. “From this example we see how a financial terrorist works in today’s economic times and that is by escalating tensions, pushing the person to the limit, and making threats, without regard for civility, accuracy or the legal rights of the individual. No one should ever suffer the indignity and humiliation my client has experienced.”
Kimmel advises consumers to be guarded with creditors and debt collectors working for them. He recommends seeking legal advice before paying disputed debts, entering repayment agreements or providing/confirming personal information. Under the federal Fair Debt Collection Practices Act consumers have substantial protection from this type of behavior with the debt collector, who must pay all legal fees of the consumers lawyer”, says Kimmel, “and most states, like Pennsylvania in this case, offer similar protections from creditor abuse of the type Capital One undertook with Ms. Perry.”
For more information regarding consumers’ rights in dealing with debt collection harassment, please visit www.creditlaw.com.
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Should Facebook be off-limits for debt collectors on the prowl? One Florida woman thinks so.
Melanie Beacham, of St. Petersburg, Fla., filed a complaint against MarkOne Financial, LLC, alleging that employees of MarkOne harassed her and her family members over Facebook to intimidate her into paying an alleged debt. A representative of MarkOne contacted Melanie’s sister and cousin through Facebook and a screen capture included in the complaint shows a message stating, “Please Have Melanie D Beacham call me” and the message included his phone number.
Although MarkOne declined comment because of pending litigation, the company stated that its policy is to use Facebook to locate the person when their profile is fully public and when he or she has not responded to requests through “conventional means”.
The legal issues surrounding the usage of Facebook in debt collection are somewhat vague because the Fair Debt Collection Practices Act (FDCPA) was written decades ago, long before the advent of social media.
Regardless of what kind of medium debt collectors use to reach consumers, they are prohibited from revealing information to third parties and cannot make false, deceptive, misleading or harassing representations.
Read the full story from ABC: Women Sues Debt Collector Over FB Messages.
The collection agency of Pressler & Pressler has a track record of wrongfully identifying consumers and strings of violations of the Fair Debt Collection Practices Act. In a recent case, Mr. Mark Hoyte was wrongfully identified by Pressler & Pressler as a debtor who owed $919 on a Sears-Citi credit card.
Pressler & Pressler hired a law firm specializing in debt collection to contact Mr. Hoyte about collecting on the debt. When Mr. Hoyte explained to them that he had never owned a Sears-Citi card, the law firm asked for personal information to verify the debt was not his. They asked him about the last 2 digits of his Social Security Number and his Date of Birth for verification. They didn’t match.
Despite this, Pressler & Pressler continued onward and the law firm prepared a lawsuit against Mr. Hoyte, who received a summons to appear in court to defend himself.
Read more on this story here: Hello, Collections? The Worm Has Turned
When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen.
“They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”
The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect.
His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly.
Sound familiar?
Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.
But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.
“The difference is that in the case of debt buyers, the abuses are much worse,” says Richard Rubin, a consumer lawyer in Santa Fe, N.M.
“At least when it comes to mortgages, the banks have the right address, everyone agrees about the interest rate. But with debt buyers, the debt has been passed through so many hands, often over so many years, that a lot of time, these companies are pursuing the wrong person, or the charges have no lawful basis.”
The debt in these cases — typically from credit cards, auto loans, utility bills and so on — is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue.
Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.
Problems with this torrent of litigation are legion, according to the Federal Trade Commission, led by Jon Leibowitz. The agency issued a report on the subject, “Repairing a Broken System,” in July. In some instances, banks are selling account information that is riddled with errors.
More often, essential background information simply is not acquired by debt buyers, in large part because that data adds to the price of each account. But court rules state that anyone submitting an affidavit to a court against a debtor must have proof of that claim — proper documentation of a debt’s origins, history and amount.
Without that information it is hard to imagine how any company could meet the legal standard of due diligence, particularly while churning out thousands and thousands of affidavits a week.
Analysts say that affidavit-signers at debt-buying companies appear to have little choice but to take at face value the few facts typically provided to them — often little more than basic account information on a computer screen.
That was made vividly clear during the deposition last year of Jay Mills, an employee of a subsidiary of SquareTwo Financial (then known as Collect America), a debt-buying company in Denver.
“So,” asked Dale Irwin, the plaintiff’s lawyer, using shorthand for Collect America, “if you see on the screen that the moon is made of green cheese, you trust that CACH has investigated that and has determined that in fact, the moon is made of green cheese?”
“Yes,” Mr. Mills replied.
Given the volume of affidavits, even perfunctory research seems impossible. Cherie Thomas, who works for Asta Funding, a debt buyer in Englewood Cliffs, N.J., said in a 2007 deposition that she had signed 2,000 affidavits a day. With a half-hour for lunch and two brief breaks, that’s roughly one affidavit every 13 seconds.
Executives at debt-buying firms say they have systems to ensure the accuracy of their affidavits. Robert Michel, chief financial officer at Asta Funding, says his company hires outside lawyers to read over affidavits, then has staff employees check their work.
“The people who work in this area are well trained, and they know that when they sign a statement they have to follow certain procedures,” he said. “They know what they are doing.”
He added that the pace of affidavits filed by Asta had dwindled since 2007 and was now closer to “several hundred” a day, rather than 2,000.
Even if debt buyers purchase the requisite information directly from a bank, it may be flawed. Linda Almonte oversaw a team of advisers, analysts and managers at JPMorgan Chase last year, when the company was preparing the sale of 23,000 delinquent accounts, with a face value of $200 million. With the debt sold at roughly 13 cents on the dollar, the sale was supposed to net $26 million.
As the date of the sale approached, Ms. Almonte and her employees started to notice mistakes and inconsistencies in the accounts.
“We found that with about 5,000 accounts there were incorrect balances, incorrect addresses,” she said. “There were even cases where a consumer had won a judgment against Chase, but it was still part of the package being sold.”
Ms. Almonte flagged the defects with her manager, but he shrugged them off, she says, and he urged her and her colleagues to complete the deal in time for the company’s coming earnings report. Instead, she contacted senior legal counsel at the company. Within days, she was fired. She has since filed a wrongful termination suit against Chase.
A Chase spokesman declined to comment, citing the pending litigation.
The majority of lawsuits filed in debt collection cases go unanswered, which is why most end with default judgments — victories for creditors that allow them to use court officers or sheriffs to garnish wages or freeze bank accounts, among other remedies.
There is a persistent argument about why so few consumers respond in these cases. Consumers often know they owe the debt and conclude that fighting about it is pointless, said Barbara Sinsley, general counsel at DBA International, a trade group of debt buyers.
Lawyers for consumers, on the other hand, contend that few debtors ever learn about the legal action until it is too late, often because the process server charged with alerting them never actually delivered a notification. In those instances when a consumer hires a lawyer, the consumer often prevails.
“I’ve lost four and I’ve taken about 5,000 cases,” said Jerry Jarzombek, a consumer lawyer in Fort Worth. “If the case goes to trial, I say to the judge, ‘Your honor, imagine if someone came in here to give eyewitness testimony in a traffic accident case and they didn’t actually see the crash. They just read about it somewhere. Well, this is the same thing.’ The debt buyers don’t know anything about the debt. They just read about it.”
Every plaintiff’s lawyer and consumer advocate in this field has a theory about why there has been so much fury over mortgage paperwork abuses but so little about debt collections. The stakes in collections cases are smaller, and of course, debt buyers were never given a taxpayer bailout.
“But what people don’t realize,” said Daniel Edelman, a plaintiff’s lawyer in Chicago, “is that the mortgage issue and debt collections are intimately connected. The millions of default judgments out there — you better believe that’s one reason that homeowners can’t afford their homes.”
Article Source: Robo-Signing at Companies that Buy Consumer Debt
A Pennsylvania debt collector conducted fake court hearings in a mock courtroom in its offices and even sent uniformed officers who appeared to be sheriff’s deputies to serve civil subpoenas demanding that consumers appear for “hearings” and “depositions,” the state attorney general’s office contends in a lawsuit.
Intimidated consumers allegedly provided their bank account numbers and even turned over the title to their cars.
The action seeks an order from a real state court freezing the assets of Unicredit America Inc. and prohibiting the company from continuing to collect debts or conduct further proceedings at its Unicredit Debt Resolution Center in Erie, according to a press release from the office of Pennsylvania Attorney General Tom Corbett.
The suit, which was filed by the office’s Bureau of Consumer Protection, alleges violations of the state Consumer Protection Law and federal Fair Debt Collection Practices Act.
“This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection,” says Corbett in the release. “Consumers also allegedly received dubious ‘hearing notices’ and letters–often hand-delivered by individuals who appear to be sheriff deputies—which implied they would be taken into custody by the sheriff if they failed to appear at the phony court for ‘hearings’ or ‘depositions’.”
The president of the company declined to comment Friday, reported the Pittsburgh Channel, a local ABC affiliate.
Attorney Larry D’Ambrosio is accused of orchestrating the hearings in the mock courtroom, the Pittsburgh Tribune-Review reported. He could not immediately be reached for comment on the Erie County lawsuit.
Original article by ABA Journal: Article Source
When Melanie Beacham was on medical leave from her job last summer, she got behind on her car payments.
Although she called the finance company to explain, debt collectors not only telephoned her repeatedly but found another way to make her life difficult, the 34-year-old Florida resident says: Facebook.
Locating her social networking site also helped them find relatives’ Facebook pages. Then, she alleges in a lawsuit, they sent messages on the social networking site to a sister and a cousin of hers, prompting a wider family discussion about Beacham’s financial situation, reports the St. Petersburg Times.
She is seeking damages from Mark One Financial of Jacksonville for harassment and invasion of privacy, as well as a court order prohibiting the company from contacting friends and family members through Facebook or any other social networking site.
A representative of Mark One declined the newspaper’s request for comment.
However, the company’s managing director, Bruce Newmark, told WKMG, speaking generally, that the company will use Facebook to contact a client when it can’t reach an individual by phone.
Beacham’s lawyer, Billy Howard of Morgan & Morgan, says he’s never heard of another case alleging harassment by bill collectors via a social networking site. But, he predicts, there will be more such suits:
“Debt collectors,” he says, “are like any other business. They change according to their environment.”
Article Source: http://www.abajournal.com/news/article/lawsuit_points_to_alleged_new_tool_in_debt-collection_arsenal_facebook
Timothy McCollough freely admits that he stopped making payments on his Chase Manhattan credit card in 1999. He says he did not have the means to pay after he was disabled by a head injury that cost him his job as a school security guard.
But more than a decade later, Mr. McCollough, who is 52 and lives in Laurel, Mont., is still haunted by the unpaid balance, which was originally about $3,000.
In 2007, he was sued a second time over the debt, and this time the suit contended that he owed significantly more: $3,816 in credit card debt, plus $5,536 in interest and $481 in legal fees. As he did the first time, Mr. McCollough sent a handwritten note to the court explaining that the statute of limitations on the debt had passed.
“I have had no dealing with any credit card in 8 1/2 years,” he wrote to the court. “The pain they caused is worth more than the money they want.”
Mr. McCollough is not the only borrower being pursued for a balance that has expired. Such claims are routinely sold on debt collection Web sites, where out-of-statute debt is for sale for a penny or less on the dollar.
In most states, it is legal for collectors to pursue out-of-statute debt, as long as they do not file a lawsuit or threaten to do so.
But some lawsuits are filed anyway, and consumer groups and even some industry consultants argue that collectors routinely harass debtors for unpaid balances that have exceeded the statute of limitations. In some cases, collectors have unlawfully added fees and interest.
“It’s so cheap, if you can work it smart, you don’t need to collect that much,” said John Pratt, a consultant to the debt-buying industry and an author of “Debt Purchasing: An Investor’s Guide to Buying Debt” (Morris Publishing, 2005). He said investors in old debt generally hoped to recoup two and half times what they paid for a group of claims.
Because collectors cannot sue on old debt, he said, they are more likely to resort to abusive tactics. “Time-barred debt is where the worst abuse has occurred towards the debtor,” he said.
In a report issued July 12, the Federal Trade Commission called for “significant reforms” in the debt collection industry and recommended that states change the murky laws that govern out-of-statute debt.
The statute of limitations for debt varies by state, generally from three to 10 years. In many states, collectors can restart the clock if they can persuade the consumer to make even a tiny payment toward the old debt. Debt collectors generally do not tell consumers that making a payment will revive the debt so it can be legally pursued.
Read more of this NY Times article here.
