Archive for the ‘Fair Debt Collection’ Category
Firm Also Will Notify Consumers with “Time-Barred” Debt That It Will Not Sue to Collect
One of the nation’s largest consumer debt buyers has agreed to pay a $2.5 million civil penalty to settle Federal Trade Commission charges that it made a range of misrepresentations when trying to collect old debts. In addition, the company, Asset Acceptance, LLC, has agreed to tell consumers whose debt may be too old to be legally enforceable that it will not sue to collect on that debt.
The proposed settlement order resolving the agency’s charges also requires that when consumers dispute the accuracy of a debt, Asset Acceptance must investigate the dispute, ensuring that it has a reasonable basis for its claims the consumer owes the debt, before continuing its collection efforts. The proposed order also bars the company from placing debt on consumers’ credit reports without notifying them about the negative report. The U.S. Department of Justice filed the proposed settlement order this week at the FTC’s request.
“Most consumers do not know their legal rights with respect to collection of old debts past the statute of limitations,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “When a collector tells a consumer that she owes money and demands payment, it may create the misleading impression that the collector can sue the consumer in court to collect that debt. This FTC settlement signals that, even with old debt, the prohibitions against deceptive and unfair collection methods apply.”
The FTC’s action – alleging that Asset Acceptance violated the FTC Act, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act – is part of the FTC’s continuing efforts to protect consumers adversely affected by the struggling economy. The agency today also issued a new publication for consumers, “Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts”.
Michigan-based Asset Acceptance buys unpaid debts from credit originators such as credit card companies, health clubs, and telecommunications and utilities providers, as well as other debt buyers, and attempts to collect them. Asset Acceptance has purchased tens of millions of consumer accounts for pennies on the dollar. It targets accounts that other collectors have pursued and are more than a year past due, and in some cases attempts to collect debt that is more than 10 years old. Some of this debt is too old to be legally enforceable – state statutes of limitations cut off the right to sue to collect the debt after some period of time has passed, depending on the state and the type of debt. And many consumers do not know that making a partial payment of a debt may reset the state law’s clock on the collector’s ability to take legal action.
The FTC’s nine-count complaint charged Asset Acceptance with:
- misrepresenting that consumers owed a debt when it could not substantiate its representations;
- failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
- providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
- failing to notify consumers in writing that it provided negative information to a credit reporting agency;
- failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
- repeatedly calling third parties who do not owe a debt;
informing third parties about a debt;
- using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
- failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.
The proposed settlement requires that when Asset Acceptance knows or should know debt may not be legally enforceable under state law – often referred to as “time-barred” debt – it must disclose to the consumer that it will not sue on the debt and, if true, that it may report nonpayment to the credit reporting agencies. Once it has made that disclosure, it may not sue the consumer, even if the consumer makes a partial payment that otherwise would make the debt no longer time-barred.
The order also prohibits the company from:
- Making any material misrepresentation to consumers and making any representation that a consumer owes a particular debt, or as to the amount of the debt, unless it has a reasonable basis for the representation. To ensure it has such a basis, the order requires Asset Acceptance to investigate consumer disputes before continuing collection efforts;
- “Parking” – or placing – debt on a consumer’s credit report when it has failed to notify the consumer in writing about the negative report, and;
- Violating the Fair Credit Reporting Act and the Fair Debt Collection Practices Act, in the ways alleged in the complaint.
The FTC has issued a new publication to help consumers understand how debt collectors attempt to collect old debts, along with their rights in these cases. “Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts” provides information on when a debt is too old for a collector to sue, what consumers should do if a debt collector calls about a time-barred debt, and whether a consumer should pay a debt that’s considered time-barred. It also provides advice on what consumers should do if they are sued for a time-barred debt, including defending themselves in court and asserting their rights under the Fair Debt Collection Practices Act. Finally, it has links to other FTC publications and videos about dealing with debt.
The Commission vote authorizing the staff to refer the complaint to the Department of Justice was 4-1, and the vote to approve the proposed consent decree, was 3-1, with Commissioner J. Thomas Rosch voting no for both. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Middle District of Florida today. The proposed consent decree is subject to court approval.
NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the District Court judge.
Story Source from: Under FTC Settlement, Debt Buyer Agrees to Pay $2.5 Million for Alleged Consumer Deception
Hackensack law firm Forster, Garbus & Garbus has agreed to pay $35,000 to settle claims that it filed hundreds of debt collection suits against consumers without individual attorney review.
The firm allegedly violated the federal Fair Debt Collection Practices Act, 15 U.S.C. 1692e(3), by giving a false impression that an attorney was involved in the filing of those complaints, when in fact they were mass-produced.
The suit, Krug v. Forster, Garbus & Garbus, 10-cv-1844, touches on an inchoate area of law — namely, how much investigation an attorney must perform to determine the validity of an alleged debt before filing a collection suit.
“It’s a new area and the case law hasn’t developed yet,” says the named plaintiff’s lawyer, Philip Stern, head of a Maplewood firm.
A joint motion filed Monday in District Court in Newark seeks approval of the settlement, which calls for Forster Garbus to pay $7,500 to class members and $27,500 in legal fees.
The plaintiffs are debtors who were served with complaints filed by Forster Garbus on behalf of Arrow Financial Services in Special Civil Part in Cumberland County for a one-year period starting in April 2009.
Named plaintiff Karl Krug, of Millville, was alleged to have defaulted on a $4,947 credit card bill to Washington Mutual Bank. The bank sold the debt to Arrow Financial Services of Nile, Ill., which, in turn, retained Forster Garbus in an attempt to collect from Krug.
In April 2009, Forster Garbus sent Krug a dunning letter which stated, in part, that “at this time, no attorney with this firm has personally reviewed the particular circumstances of your account.” In June of that year, a nonattorney at the firm left two phone messages on Krug’s answering machine. On June 5, the firm sued Krug on behalf of Arrow. Partner Glen Garbus signed the complaint.
Krug retained Stern, who won dismissal of the collection case in April 2010 after Arrow was unable to present business records to show the debt was valid. The current suit was filed that month.
Stern says a ruling in the Eastern District of New York, a few months before Krug’s suit was filed, was the first to hold that an attorney violated the FDCPA by filing a collections suit without anything more than a cursory inquiry into whether the debt is valid. In Miller v. Upton, Cohen & Slamowitz , 687 F. Supp. 2d 86 (E.D.N.Y. 2009), which stemmed from an alleged default on a Lord & Taylor charge account, the court rejected the lawyer’s assertions that his general knowledge of credit practices at the retailer and its national collections counsel were a substitute for specific knowledge of an individual file.
Krug’s complaint cited New Jersey Court Rule 1:4-8, which requires a lawyer signing a complaint to have read it and to have conducted a reasonable inquiry that the allegations of the case have factual support.
The suit also claimed that Forster Garbus placed telephone calls to class members that falsely conveyed the impression that the person calling was an attorney, and those calls failed to provide meaningful disclosure of the law firm’s identity as caller or to disclose that the firm is attempting to collect a debt and that any information obtained will be used for that purpose — all in violation of the FDCPA.
Of the $7,500 payable to class members under the settlement, $2,500 is to go to Krug and the rest will be distributed among the roughly 200 class members, who stand to receive around $25 each. Stern says that although the recovery may seem modest, it’s more than the class members would get as damages under the FDCPA if the case were tried.
The pool of $5,000 distributed to class members is greater than would be available if the case was tried, says Stern. The FDCPA limits recovery in such cases to the 1 percent of the defendant firm’s net worth, but Forster Garbus agreed in the settlement to go over the 1 percent limit, says Stern. He is bound to keep the firm’s net worth confidential.
Forster Garbus was represented in the case by Gregg Kahn of Wilson Elser in Newark, who did not return a call. Garbus, a named defendant, also did not return a call.
Source: New Jersey Law Journal
In most cases, people who receive collection calls accrued the debt themselves and have fallen behind on their payments. In some instances, however, these charges are a result of identity theft. Because people rely on technology to pay bills and make banking transactions, it is important to stay protected against hackers and Internet fraud. The best way to avoid collection agency harassment is to reduce the risk of having your identity stolen in the first place.
Consumers who use debit cards should check their account activity frequently. Every major bank has an online banking option which makes it quick, convenient, and free to monitor checking accounts. Anyone who comes across questionable or suspicious transactions on their statement should contact the bank as soon as possible.
Credit cards are better protected against fraud. Therefore, they should be used for online shopping and other Internet transactions instead of debit cards. Information shared online runs the risk of being stolen by hackers and used without your knowledge or consent. Again, people who suspect their accounts have been used fraudulently should contact the credit card company immediately.
Collection calls only begin once payments have not been made for a significant amount of time. Regular credit checks are a surefire way to stop theft in its tracks. Some criminals can open new cards in the victim’s name; in some cases, the only way a person knows that this new account exists is by seeing it on their credit report. Credit scores are very sensitive to missed payments, and even a fraudulent card can have a negative impact on your score for a while.
It is important to understand why collection calls feel like harassment in order to deal with the stress they create.
Many Americans have fallen behind on their credit card, mortgage, and/or car payments because they have experienced some form of financial difficulty. This causes stress on the individual, as well as family and friends that are affected. To make matters worse, collection agencies are making harassing collection calls about past-due accounts on a daily basis. These agencies use fear tactics on vulnerable people for one purpose: to make money.
When a consumer falls behind on their payments, creditors often retain debt collectors or sell the debt to them for a fraction of the total debt. Now, it is up to the collection company to turn a profit for themselves by collecting as much money as possible. It is typical for these agencies to pitch a “deal” to settle for less than the original debt; in fact, they are still making a profit because they bought the debt for far less. This is when the debt harassment starts.
Debt collectors will often use threats and lie to the consumer to try to force a payment out of them. They will up the ante even further to squeeze as much money out of the person as they can. This causes added stress and anxiety on the consumer who is already overwhelmed by their finances in the first place. Even though some of the tactics they use are unethical, collections companies continue to use them for financial gain.
It is important for people in this situation to remember to stay calm. Many of the intimidation practices used by debt collectors calling the home or office are empty promises. If the threats feel like harassment then an experienced debt collection lawyer can help you learn your rights and stop the deception once and for all. Otherwise, taking positive steps to get out of debt is the best way to stop collection calls.
According to the “Top 10 List of Complaints” by Illinois consumers last year, phone calls regarding consumer debt harassment topped the list at number one. This statistic proves two things: that the state is still suffering from high unemployment rates and other financial troubles as a result of the failed economy, and people are as annoyed as ever by debt collection calls. This problem is not limited to the residents of Illinois; in fact, this is a nationwide dilemma.
Many of these complaints were made by people who experienced collection agency harassment. Abusive tactics were reported, including illegal practices used to scare people into making a payment. These scare tactics can be very convincing at times, but as the old saying goes “you can’t get blood from a stone.” In most cases, the consumer does not have enough money to pay off their debts otherwise their accounts would not be in collections in the first place. Until consumers are able to come up with enough money to make a payment, how can they stop debt collectors from abusing their power?
Consumers have two options: turn them in and/or sue them. There are laws in place that regulate debt collection practices, and agencies should be held accountable when they break the rules. First, go to the Fair Trade Commission to complain then do the same with your state’s attorney general. A last resort to make the harassment stop is to take legal action against the offending agency. Some debt collectors are so ruthless that it seems as though they want your happiness and peace of mind along with your money. Don’t let them control your life – find an attorney that will fight for your health and your wealth against illegal and unfair debt harassment practices.
Our law firm Kimmel & Silverman, P.C. -CreditLaw.com- 800-NOT-FAIR, pledges to stand against unfair debt collection acts and practices. We promise to ensure our clients are treated fairly and with respect by debt collectors and their collection lawyers. We will not stand for abuse or collection harassment towards our clients, nor allow them to be contacted at unusual times and places. We will not stand for our clients to be contacted regarding another person’s debts, or for debts they have paid or don’t owe. We pledge to put a stop to these violations of law, in a quick and efficient manner.
We further pledge to make fair debt collection acts and practices the rule and not the exception; we will never cease in vindicating the rights of our clients. We pledge to uphold the Fair Debt Collection Practices Act, its provisions and rules so that debt collectors feel compelled to act with civility and appropriate conduct towards others. We will defend the standards of fair debt collection laws.
We pledge to battle any collectors who put payment above fairness or civility, and will stop abusive practices that are inconsistent with that ideal. We will fight to ensure that consumers no longer feel the collector has the upper hand.
We pledge to stop abuse by collectors who cannot govern themselves appropriately. We will fight those who violate your rights. We pledge to stop unfair practices that result in money being taken by deception, tricks or taken unfairly.
We will make the collector prove that they are entitled to what they seek, and have proof that the consumer actually agreed to be charged those amounts. We will not permit debt collection based solely upon what a collector says.
We will review letters our clients receive and we will pursue collectors whose letters violate the mandates of the fair debt collection practice act. We have no tolerance for deception, threats or half-truths. If a collector cannot prove its claim to payment of the amounts sought, we will work tirelessly to have it removed in full and stop collection calls.
Our attorneys pledge to do all of this and will litigate all claims where the fair debt collection practice act has been violated. We will put the pressure on the debt collectors and remove it from our clients. We will not allow calls before 8:00 a.m. and after 9:00 p.m. There will be no excusing telephone calls filled with false information, threats or intimidation.
We pledge this to you, our current and future clients. If you are a victim of unfair debt collection practices, or think you might be, call us and see what we can do. Remember, when debt collectors called you, they never expected you to call us! © 2009-2011 Copyright, Kimmel & Silverman P.C. – CREDIT LAW.COM- 800-NOT –FAIR- All Rights Reserved
Consumer Attorney Craig Kimmel discusses consumer rights on KYW TV’s Talk Philly Program:
MORGANTOWN – A man has filed a punitive class action lawsuit against the Kentucky-based law firm that he says illegally sent him a debt collection letter.
Nicholas Davis claims he received a letter from defendant Mapother and Mapother in June 2008 telling him he owed it $861.96. According to Davis’ complaint filed Jan. 11 in Lewis Circuit Court, the letter contained Steven B. Mulrooney’s stamped signature.
In February 2009, Mapother mailed a second letter into Lewis County threatening to proceed with further legal action if it was not paid money, the suit states.
Making Davis angrier, the letters were sent to an incorrect address in Weston and not to his Morgantown home.
“Even a cursory examination of credit report information would have provided Mapother or any other collection agency with the correct address,” the suit states.
However, Mapother claims it and co-defendant Midland Funding sent collection letters to the address Davis supplied to Midland.
“Nowhere in the counts does Plaintiff state either how attempting to contact the debtor at the last address he provided is a violation of any law, nor how there is any duty under any law imposed upon Mapother or Midland to engage in excessive efforts to find new addresses, other than the one provided by the debtor previously, searching for where a debtor might be found,” the suit states.
Davis claims he never should have received letters because West Virginia law requires that any collector or collection agency hold an approved collection agency license and a collection surety bond, neither of which Mapother possessed.
Mapother disputes the claim, saying it is not a collection agency, but instead an attorney-at-law handling claims in its own name.
Davis also argues attorneys must be familiar with a case before signing their name to a debt collection letter, the complaint says.
“If the attorney has not reviewed the consumer file, he or she could not sue as no facts would be known to the attorney and threats of legal action would be deceptive,” his suit states.
But Mapother claims a Second Circuit Court ruling allows attorneys the opportunity to send debt collection letters as long as they include a disclaimer clearly stating that the attorney is not acting as such.
“The Second Circuit made it clear that the disclaimer language complained about in the Complaint, rather than making the letter confusing or deceptive, actually accomplishes the opposite; clearly and unambiguously informing the debtor of the exact role the attorney currently holds,” Mapother’s motion to dismiss states. “For example, a letter from an attorney could easily be misconstrued by the ‘least sophisticated consumer’ as an actual legal process. The disclaimer language makes it clear this is not the case.”
Davis is seeking an unspecified judgment, plus pre- and post-judgment interest, costs, attorney’s fees and statutory damages.
But Mapother and Midland say he should receive no reward.
“When critically examined, the entire Complaint is grossly deficient,” the request for dismissal states. “It is completely lacking in legal and factual support. As the situation stands, it alleges counts that are directly in opposition to the statutory and case law applicable in this case. In such a situation, there is no choice but to dismiss the Complaint for failure to state a claim.”
Mapother and Midland, Kentucky and California corporations respectively, removed the case to U.S. District Court for the Northern District of West Virginia, alleging Davis and the defendants are residents of different states and that Davis is seeking more than $75,000.
Franklin D. Cornette of Cornette Law in Weston will be representing Davis.
E. Taylor George of Mapother and Mapother in Huntington will be representing Mapother and Midland.
Original story from The Record.
Debt Collection Attorney Craig Kimmel is featured in this story from the Concord Monitor detailing the aggressive tactics that debt collectors employ to collect on debts they purchase for pennies on the dollar. Consumers reported being harassed and threatened. They said collection agents failed to investigate disputed debts and disclosed alleged debt to relatives and employers.
Third-party debt collectors generated 78,000 complaints to the Federal Trade Commission in 2008, twice the number received in 2003, according to the agency’s most recent report. That same year, the agency won more than $1 million in civil damages against collection agencies.
You can read the entire article here: Suits Piling up for Debt Collectors.
Debt Collection Harassment Attorney Craig Thor Kimmel was recently interviewed by the radio talk show, “The Voice”, on WEEU 830AM in Berks County, PA. In this interview Craig explains how CreditLaw.com helps consumers with debt collection harassment and violations of the Fair Debt Collection Practices Act while answering questions from consumers who called into the show. Please use the following link to listen to the entire radio interview:
Radio Interview
