Credit and debit card data from the major card brands has potentially been compromised due to a data breach at a payments processing company, reports CNN Money. “Card data may have been accessed,” said Global Payments (GPN), the card processor in question. The company first publicly acknowledged the unauthorized intrusion in early March.

However, prominent blog Kreps on Security says that the incident took place long before then. Kreps reports that the break-in “dates back to at least early June 2011.”

Global could not or would not initially reveal the number of accounts that were compromised, but eventually reported that it was less than 1.5 million. Kreps claims that it is still “unclear” whether or not that figure represents the maximum number of cards affected. The blog had earlier stated that as many as 10 million cards could potentially have been compromised.

Global still has not made precisely what data was taken during the intrusion. It also has not gone public with the names of credit card companies that were involved in the incident. Visa, however, was more forthcoming.

“Visa Inc. is aware of a potential data compromise incident at a third party entity affecting card account information from all major card brands,” it said in a prepared statement. CNN has confirmed that Sandra Chu, a spokeswoman for the credit card titan, had confirmed to the news outlet that Visa had removed Global Payments from its list of preferred credit-card processors in the aftermath of the malicious break-in.

Visa said it alerted its card issuers and that they “can take steps to protect consumers through independent fraud monitoring and, if needed, reissuing cards,” it said.

MasterCard made a similar move, informing issuers of the breach and how it could have put some MasterCard accounts “potentially at risk.” Neither MasterCard nor Visa had their own networks illegally accessed.

When a customer runs a credit card through a payment terminal, that data is transmitted to a processor such as Global, which then forwards the info along to the appropriate card company. In the fiscal year ending May 31, 2011, Global Payments processed $167.3 billion worth of transactions. The processor focuses on handling transactions at small merchants. It confirmed that the breach was not the fault of any of those merchant partners.

A U.S. Secret Service representative says that the agency is currently investigating the security breach of credit card data at GPN.

The idea is that homeowners can avoid damaged credit scores, stress and embarrassment by not being foreclosed on and being subsequently forced out. So what’s the problem that has Credit Law talking about it?

First off, even if the program ends up being beneficial to borrowers and the bank, there is little proof that it will end up being a blanket solution to the foreclosure mess the country currently finds itself facing down. It’s difficult to picture Bank of America, with all of its balance sheet woes, including homes with second liens on them – the second lien would be a complete loss for them. And there are far more borrowers with second liens who need help than those who only have a first lien, meaning those most in need of relief will likely be left off the guest list.

Another issue is property management. Have you ever had a lousy landlord? If so, you know what a mess that can be. Imagine if your landlord was your mega-corporation of a bank. Is BoA going to come rushing to your aid if your air conditioner dies or a tree falls on your house during a storm? The jury’s still out on that one.

And what, pray tell, is going to be the outcome if investors undervalue operating costs or find themselves unable to turn homes around upon expiration of the leases? It’s a safe bet that even basic maintenance will be ignored when that happens. That’s not even the worst of it: rent is likely to be inflated.

Furthermore, one has to wonder just who exactly investors are going to sell to when it dawns on them that the prices a few years down the road aren’t going to match their target returns. How that will work itself out is anyone’s guess.

Last year alone banks completed 860,000 foreclosures, according to Corelogic, Inc. While that figure is down from 2010′s 1.1 million, it’s still pretty worrying. Plus, part of the reason for the decline is that it is now more difficult for banks to foreclose thanks to the heavily publicized “robo-signing” scandal. As a result, BoA and its competitors are now exploring more cost-effective options.

Although it is too early to make a ruling on how Mortgage to Lease will ultimately turn out, Credit Law thinks everyone should keep in mind the fact that the project was undertaken to explore how Bank of America could save its own money, not that of American homeowners.

It all began back in 2009 when Chase’s credit card team sold off credit card judgments valued at around $200 million to a debt collector at a discounted price. The debtors in question have already been brought to court in these types of sales, making them extremely attractive to collections agencies. It’s a practice that has become incredibly commonplace in the industry, and it usually results in consumers suffering debt harassment. The bank makes what money it can on the debt, then the collector does the same and consumers end up paying the price.

Getting back to the story, as the Rolling Stone reports, one Linda Almonte arrived at Chase in the summer of 2009 to take over a mid-level executive position in the firm’s credit card division. It wasn’t long before she discovered something was seriously amiss with these judgments. Almonte would later become a whistleblower who Rolling Stone fears could still land in some hot water for summoning the courage to reveal the truth about what was going on at Chase.

Almonte eventually told her co-workers that half of the files involved in the sale were actually sans proof of judgment. They were also missing other important information. Worse still, approximately one fourth of the files incorrectly stated how much money particular borrowers owed. The actual amounts that were owed turned out to be less than “what Chase was representing,” she would later claim in a suit.

It still gets worse. In some instances the customers were actually owed money by Chase. Just thinking about how many consumers may have been the victims of debt harassment when they were actually the ones owed money is sickening. Furthermore, the collections agency was also ripped off by being bamboozled into purchasing “judgments.”

Almonte brought the errors to the attention of her managers. The reception wasn’t what she was hoping for. She was essentially told to pipe down and sell the stuff anyways if she knew what was good for her. Jason Lazinbat, her boss, supposedly told her “she had better go along with the plan to sell the misrepresented asset.”

Almonte was fired in November of 2009 as a result of her pushback. She had great difficulty finding work afterwards and even had problems getting regulatory issues to look into the matter. The Comptroller of the Currency is now supposedly on the case, though.

This despite the errors that amounted to millions of dollars worth of accounts being fraudulently sold and a clear internal desire at Chase to push ahead and avoid the truth getting out: “We did not verify a single one” of the affidavits attesting to the amounts Chase was seeking to collect, says Howard Hardin, who oversaw a team handling tens of thousands of Chase debt files in San Antonio. “We were told [by superiors] ‘We’re in a hurry. Go ahead and sign them.’” Numerous other employees throughout the company would eventually go on to corroborate the reports.

Just as many debtors, and many individuals who aren’t actually even in debt, lived in fear of harassment by collectors, Almonte now fears prosecution by Chase. She accepted a modest pay-out to keep quiet on the matter since she was so hard pressed for cash and was having trouble finding employment. Thanks to her brave actions, though, the public now knows the truth about Chase.

While you can verbally demand that calls stop, and to keep calling you is indeed harassment under the law, you may have a greater degree of success with a formal letter telling the debt collector to cease and desist all contact. Once the collector receives your letter the Fair Debt Collection Practices Act (FDCPA) only allows the collector to contact you one final time in writing, to set forth what action the collector will take next. Most collectors will not respond at all but will cease all contact as required.

We’ve provided a template for a good cease-and-desist letter. Insert your own personal information where indicated. If the debt collector does not honor the instructions, you have every right to take legal action, all without charge if you are a client of our firm. Feel free to call us about this or other FDCPA issues or consult our website: www.creditlaw.com.

Date
Your Name
Address
City, State Zip
Debt Collector’s Name
Address
City, State Zip

Re: Account Number

Dear Debt Collector [SPECFIC COMPANY NAME]:

Pursuant to my rights under federal and state debt collection laws, this is notice to cease and desist communications with me in any form, as well as my family and friends, in connection with the above account and all other alleged debts you claim I owe.

You are hereby notified that if you do not comply with this request, I will immediately contact private legal counsel and file a complaint with the Federal Trade Commission and the [YOUR STATE HERE] Attorney General’s office.
Sincerely,

[YOUR NAME]

MSN recently interviewed consumer attorney Craig Thor Kimmel for a story about how debt collectors use social media sites to contact consumers or gain information about them. Read the story on MSN here: Facebook, a debt collector’s friend

The following are useful strategies from that article to pre-empt unwanted calls or other communication from collectors:

1. Respond within 30 days of receiving a collection letter. For many people who receive a letter from a collection agency, the impulse is to bury their heads and ignore it. That’s a mistake. All you have to do is send them a letter within 30 days and tell them, ‘Do not contact me anymore through any method.’ They can still sue you for the debt, so the act of collecting doesn’t necessarily stop, but they can’t send you emails or call you anymore.

2. Use those privacy settings. Setting your profile to private reduces the likelihood that a collector has access to your wall or photos.

3. Be selective about what you post. Social networks like Facebook can create a false sense of intimacy because you’re communicating with friends. Even with a private profile, your friends’ accounts could still get hacked or someone could be peeking over their shoulder, so it’s smart to err on the side of privacy. Debt collectors use social media profiles to look for an address or employment information. A lot of people put what their occupation is, where they work, cellphone numbers.

4. Don’t accept friend requests from strangers. For reasons described earlier, don’t approve requests from people you don’t know. It could be a friend of a friend, but it could also be a collector or spammer.

5. Skip the “like” button. Liking your bank or credit card issuer on Facebook may open the door to the company collecting information about you that you haven’t given them.

If, despite these steps, a collector contacts you via a social media site, Kimmel suggests printing out the message or saving a screen shot to your computer to create a paper trail. “Once you have that, report the sender as spam on Facebook and file a grievance with the Federal Trade Commission,” he suggests. The consumer could be entitled to up to $1,000 plus legal fees and actual damages “if a debt collector engages in unauthorized debt collection contact, through, for example, social media,” says Kimmel, adding that a consumer attorney could help the person seek redress.

PA Home Page posted the video on their website here:
Know Your Rights with Debt Collectors

The fines handed out this week certainly send a message that debt collectors should not see themselves as above the law. The Fair Debt Collection Practices Act protects consumers from harassment, abuse and deception. A common way that debt collectors violate the FDCPA is through threatening legal action that is not intended to be taken, in hopes of collecting the debt. Another way is by placing telephone calls to the consumer at unreasonable hours or by placing calls to the workplace when told that the calls are not permitted or inconvenient to the consumer. Debt collectors often will disregard the statute because doing so is more likely to result in collection of the debt.

Michigan-based Asset Acceptance was fined over various practices, such as failing to state that the debt being collected could be beyond the statute of limitations; false credit reporting and attempting to collect a debt that was known to be invalid. Such conduct is not uncommon by many debt collectors large and small, as their business model for making money often is based upon buying debt for pennies on the dollar and collecting the full value or more from the consumer. When the debt is so old the statute of limitations has expired, the consumer who pays is under no legal obligation to do so, but that information Asset apparently did not disclose.

A consumer can be sued for an outstanding debt but if it is so old that the statute of limitations has passed, the consumer may still be sued, but has the limitations defense to assert, showing he is therefore under no longer under a legal obligation to pay. As to Asset Acceptance, the FTC did not want consumers to receive threats of suit, without mention that the debts may be beyond the statute of limitations.

The FTC also concerned itself with Asset Acceptance was not reporting correct information to consumer reports nor investigating claims to ensure the debts were valid. The settlement reached forces Asset Acceptance to disclose more information with greater accuracy.

While the FTC action is a big step in the right direction, debt collectors must be constantly monitored for conduct that violates the FDCPA and can never be left to be self regulating. Where there is more money to be made by violating the FDCPA standards that by comply with them, consumers should not expect collectors to change. A consumer is best protected by knowing his rights and by knowing who to contact if their FDPCA rights are violated. Contact an attorney at Kimmel & Silverman today at 800-NOT-FAIR or www.creditlaw.com for more information and a free case 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

Once the collector purchases a debt, it will proceed to contact the debtor – even though that person can no longer be legally forced to pay if the statute of limitations has passed and it is raised as ad defense.. Collection calls and emails then come pouring in as the collector tries anything that will work ,to get the consumer to agree to pay something, then ratchet up the demands to push for as much as can be obtained. If the consumer makes payments, whatever is received is found money because there is no way, other than empty threats and harassment, to force payment. Even the smallest payment results in substantial profit for the debt collector when the debt is stale.

The Fair Debt Collection Practices Act protects consumers who have been harassed or deceived into paying stale debts. An important thing to remember however is that the consumer must not give in to threats and must know how to assert the statute of limitations as a defense. The best way to start is with a cease and desist letter sent to the collector by certified mail, retaining copies for record-keeping purposes. Such a letter forces the collector to quit harassing you and if they fail to do so, a violation of the FDCPA results.

Want to know more? Call us today for advice on how to deal with collection agencies that won’t play by the rules regarding your debts.

Countless consumers are hounded by unfair debt harassment practices every day. While no action has been taken by the authorities yet, regarding Encore Capital, the accusations are precisely the type of type that we stop here at Credit Law. Of note is that Encore recently settled a similar suit in Texas after the state’s Attorney General alleged that the agency violated the law and falsified documents in lawsuits used it had filed against Texas residents. The agency has since agreed to settle by paying an undisclosed amount of money.

We wish these sorts of business practices by debt collectors were uncommon, but the reality is that many debt collectors across the country see only the profit potential collecting old debt, even if it means violating consumer rights on a widespread basis. We’ve heard every horror story there is, from debt collectors who call neighbors and relatives of debtors, to others that collect far in excess of the amounts actually owed, if the consumer can be convinced to pay it.

Don’t let creditors and collection agencies push you around with unfair debt harassment practices. Get in touch with us today to find out what your rights are as a consumer. We’ll fight for you, and put an end to those annoying calls.