Archive for the ‘FDCPA’ Category
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
Debt Collectors can be nasty and have earned their reputation for not being easy to deal with. It is easier it seems to avoid them altogether, hoping that the problem will go away on its own. Unfortunately, collection agencies have a hard time giving up. They know they are supposed to work within the rules set forth in the FDCPA and yet they often continue to violate them one way or another. They know that a debt collector can do more to make life difficult and aggravating for consumers when it comes to student loans, than other collections, and can take a judgment against you without even filing a complaint. Federal loans also carry with them the opportunity for debt collectors to have employment wages garnished or have a tax refund paid to the lender directly.
If you have a Federally sponsored student loan and cannot pay, and wish to avoid debt collectors, either write a letter demanding the collector to cease contact; or, ask in writing for a deferment on your loan; or better yet, negotiate the balance, perhaps through an attorney (not a “debt settlement company”). Because student loans are different types of debt than typical consumer purchases, debt collectors are often instructed by the lender to agree to deferments or in some cases a reduction of the entire amount, payable over time. Whether it is because of a difficult economy, finding and keeping a job, a disability, care for a family member, personal illness or military service, these options can be very helpful and make things easier for you to handle.
Graduation season is upon us. On campuses around the country the sights of robes and graduation caps, the sounds of “Pomp and Circumstance,” and the photos of loved ones celebrating the day fill the senses of graduates, friends, and families as one chapter comes to an end and they embark on a new one. Unfortunately, as the excitement calms, many recent graduates are confronted with the harsh reality of overwhelming amounts of debt. Most will then truly enter the world of responsibility by having to come up with ways of paying down their debt and fielding the phone calls from debt collectors. So, how can they pay down debt and stop collection calls?
Inevitably, that credit card is the main source of problems. Students spend more than they can afford and as they transition to their adult lives, and the interest payments alone can be overwhelming. It doesn’t take long after graduation for the bills to start coming in. Just as they congratulate their kids on a job well done, parents undoubtedly ask their children in shock, “You owe how much?”
A blog post on Forbes.com says that credit card companies want college students to be in debt because, frankly, that’s how they make money, pointing out that “students are easy targets” because they live in the moment, and are “deluded into thinking the credit card won’t present a problem when it comes time to pay.” Just when it couldn’t get any worse, the collection calls begin.
Even grads who have secured a job in this difficult economy may find it all too easy to fall behind on their bills. Defaults and past-due balances go from being something on paper to something they are confronted with in their lives. The same students that were “easy targets” for credit card companies now are “easy targets” for collectors and their tactics. They must come up with a plan to address their immediate financial well being and their long term needs, and they must learn what rights they have to stop the collection calls once and for all. Here are some tips for the indebted and the frustrated grad:
1. Take any job. You may not find your dream job right way, but you will be making money and creating networking opportunities.
2. Learn to save. Throwing away money at the club like you did in college has to become a thing of the past.
3. Deal with student loans NOW if at all possible. Pay what you can. If you don’t have a job, contact the lender and work out a plan.
4. Stop collection calls. This is easy. Consumer lawyers can stop the collection calls quickly and without charge. Learn your rights under the FDCPA and hire an attorney if you are experiencing debt harassment.
5. Pay off credit card debt and stop using that card! Spend only what you can pay in a 30 days cycle and don’t overdo it. Come up with a payment plan to get out of the red and into the black.
The Federal Trade Commission (FTC) alleges that debt collection agency, West Asset Management, violated the Fair Debt Collections Practices Act (FDCPA) on multiple occasions, leading to thousands of consumer complaints.
Century Negotiations President Amy Michalo-Rojas urged clients, and the general public, to stay informed about these types of cases so they can recognize when a debt collector violates their legal rights.
West Asset Management allegedly violated the FDCPA—the law designed to protect consumers against deceptive and harassing debt collection tactics—by calling consumers multiple times a day, using rude and abusive language, taking funds without consumer permission, falsely claiming consumers would be jailed or sued, and even contacting consumers regarding debts that did not belong to them.
“Many factors can inspire a debt collector to break the law, from an unethical work environment to the challenge of collecting in a recessed economy,” explained Michalo-Rojas. “But individual consumer awareness and reported complaints can stop these violators and warn potential lawbreakers against similar behavior.”
Read the entire story here: Unscrupulous Debt Collection Agency Pays Record Settlement, Offers Lesson in Consumer Awareness, Says Century Negotiations
Foreclosures and falling home prices continue to plague Americans all over the country. According to a report by 60 Minutes, banks that want to foreclose on homes can’t find the original ownership documents. Where did they go? It turns out that corners were cut by lenders and their investors on Wall Street by not maintaining the documents at all, saving costs, back when home sales were strong and banks never worried about foreclosure. Now, some companies are routinely using forged paperwork to cover up these practices so they can move forward with the foreclosure process – a clear violation of consumers’ rights and resulting in people being removed from their homes under deceptive circumstances.
What does this mean for the millions of Americans who have fallen behind on their mortgage payments?
The Fair Debt Collection Practices Act was passed in the 1970’s to protect consumers against unfair and abusive tactics by collection agencies. Debt collectors for mortgage loans are subject to the guidelines of the Act so homeowners who are dealing with foreclosure at this time could have a valid claim to keep their homes if fraudulent practices like those described above have occurred.
NewOrleansCityBusiness.com reported that a Louisiana couple who defaulted on their mortgage following Hurricane Katrina was awarded $10,000 for the years of debt harassment they endured, including continued and persistent telephone collection calls. During foreclosure proceedings, CitiMortgage Inc. admitted to “lost” paperwork. Ultimately, a state judge ruled in favor of the couple, after finding that the FDCPA was violated.
It is important for consumers to know their rights in order to protect themselves from unfair debt collection. Anyone who is facing the possibility of foreclosure should learn the FDCPA and how collection laws defend their rights as a consumer. Debt harassment is against the law, and we have experienced attorneys that enforce the Act on behalf of consumers.
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.
The story surrounding Capital One’s $286 million demand letter is making headlines across the Country, everywhere from National Public Radio to The Consumerist to the UPI wire. Patrice Perry will make her first national television appearance, along with her attorney Craig Thor Kimmel, Friday morning at 6:45am Eastern on Fox & Friends, airing on Fox News Channel.
Related Discussion:
Holding Court With Izzy: Woman sues Capital One after getting $286 million credit card bill
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 Fair Debt Collections Practices Act, or FDCPA, was enacted to protect consumers from overzealous debt collectors whose methods include harassment, threats and coercion. To these businesses a consumer is nothing more than a number representing dollars and cents, part of the profit margin and nothing more.
These debt collectors view their violations of the FDCPA as a business decision instead of a lawful requirement that may must abide by. Their disregard of this law is clearly expressed in the following insider marketing documents that were sent out to various debt collectors offering litigation services.
UNCOVERED! One Illinois lawyer bragging to Debt collectors how they can skirt the FDCPA!
