Helping a Client with Performant Recovery

Tuesday, June 18th, 2013 at 5:00 am  
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On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Middle District of Pennsylvania, against Performant Recovery. Our client alleges that Performant Recovery began to call her home phone in order to collect a debt. The collector at Performant Recovery told our client that the debt belonged to a certain person, and our client informed them that she was not that person, that person did not live at her house and could not be reached at her number. Our client told Performant Recovery to cease any future calls to her residence line in its efforts to collect the debt. Even though Performant Recovery knew it was calling the wrong number, it continued to hound our client with their phone calls. Our client called Performant Recovery to try and inform them that they were calling the wrong number, but was told that since her number was the contact number on file for the debtor, they would continue to call. Performant Recovery continued to call our client, and she was forced to call them several times to repeat her request that they cease calling her residential line looking for the other person. During one of these calls, a representative from Performant Recovery accused our client of harassment for calling them to advise them that they had the wrong number for the debtor. In another call, the same representative told our client that she was “done listening to hysterics,” and that our client would have “problems” if she continued to call Performant Recovery. Later that day, our client told Performant Recovery that she would seek legal action for the harassing telephone calls, and a representative from Performant replied “Tell it to a judge,” and then terminated the call.

The lawsuit charges that Performant Recovery violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior; by using profane and abusive language; and by using unfair and unconscionable means to collect a debt. The lawsuit also charges that Performant Recovery violated the Pennsylvania Fair Credit Extension Uniformity Act, the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and that they violated our client’s privacy.

NRG Assets: From Our Case Files

Monday, June 17th, 2013 at 5:00 am  
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On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Southern District of Texas, against NRG Assets. Our client alleges that NRG Assets began to make phone calls to both her home telephone and place of employment in an attempt to collect a $700 debt. She told the representative at NRG Assets that she was prohibited from receiving such calls at her place of employment, and requested that they cease all calls there. Our client also wrote two letters to NRG Assets requesting that it cease all communication with her at both her home and work phone numbers. NRG Assets ignored her requests and letters and placed at least three more calls to her place of employment. When NRG Assets called our client at work, they repeatedly asked her to provide verification that she actually worked there. During one call, they demanded to speak to her manager. During another conversation, NRG Assets threatened our client that they would “send someone out” to serve her to pursue legal action against her. NRG Assets misleadingly informed our client that she had already missed her court date on another occasion. In other conversations, NRG Assets threatened to garnish our client’s wages, although they did not have the ability to do that without first obtaining a court judgment. Additionally, NRG Assets failed to send our client written validation of the debt.

The lawsuit charges that NRG Assets violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior; by using false, deceptive, or misleading representation in connection with the collection of a debt; by threatening to take legal action without actually intending to do so; by using unfair and unconscionable means to collect a debt; by failing to send a validation notice; by misrepresenting the character, amount, and legal status of a debt; by continuing collection efforts even though the debts had not been verified; by contacting our client at a place and time known to be inconvenient; by contacting our client as her workplace, knowing that her employer prohibited such calls and by employing false and deceptive means to collect a debt. The lawsuit also charges that NRG Assets violated the Texas Debt Collection Act, and invaded our client’s privacy.

Encore Capital Group Acquires Asset Acceptance

Friday, June 14th, 2013 at 12:20 pm  
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The publicly traded Encore Capital Group (NASDAQ: ECPG) finalized its acquisition of the publicly traded Asset Acceptance Capital Corp (NASDAQ: AACC). This represents a merger of two giant debt buyers. According to an Encore Capital Group press release, “Combined, Encore and Asset Acceptance have purchased over 60 million individual consumer accounts, including credit card, telecommunications, consumer loans and other related assets, with a face value of over $130 billion.”

As a result of the acquisition, Asset Acceptance will be delisted from NASDAQ.

New York Assembly Passes Consumer Credit Fairness Act

Friday, June 14th, 2013 at 6:00 am  
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In late April, the New York State Assembly approved the Consumer Credit Fairness Act, which aims to rein in abusive debt collection practices – particularly on the part of debt buyers. According to a press release issued by Assembly Speaker Sheldon Shilver, A. 2678 (Weinstein) would:

  • Require notice of a pending consumer credit action to be mailed to the defendants by the clerk of the court;
  • Require court filings to include more information about the debt targeted in a lawsuit, such as identifying the debt or account and providing proof that the debt is owed to the plaintiff;
  • Lower the statute of limitations for consumer credit transactions from six years to three years, and eliminating the right to collect the debt once the statute of limitations is expired; and
  • Terminate the ability of debt buyers to sue on expired debt.

According to Silver, “There is an epidemic of unfair debt collection lawsuits in New York State. In many instances, these actions are brought against low and moderate income New Yorkers who are not aware a lawsuit has been filed against them, leaving them with little recourse and ruining their credit for many years. Unfortunately, the justice system is being abused by unscrupulous third party debt buyers and harming vulnerable New Yorkers. This bill would institute several measures to address these abusive debt collection practices and combat this menace.”

The bill has moved to the Senate, where it will be heard by the Judiciary Committee.

Helping a Client with GC Services

Friday, June 14th, 2013 at 5:00 am  
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On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Southern District of Texas, against GC Services. Our client alleges that during his first communication with GC Services, the representative asked him to verify his identity. Once he did, they requested his social security number, which our client refused to provide. This happened in every communication with GC Services, and each time when our client refused to provide his social security number, the collector from GC Services would terminate the call. Shorter after that, GC Services would place another call to our client and ask him to provide his social security number in an effort to harass and cause him a great deal of aggravation. During several calls, our client asked that GC Services identify their company name and the purpose of the call, but they refused to provide the information to him.

The lawsuit charges that GC Services violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior; by not disclosing the identity of the debt collection agency during a call and by failing to inform our client that the phone call was an attempt to collect a debt. The lawsuit also charges that GC Services violated the Texas Debt Collection Act and invaded our client’s privacy.

Mergers and Acquisitions: The Outsource Group

Thursday, June 13th, 2013 at 6:00 am  
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The debt collection industry is constantly shifting with a variety of mergers and acquisitions. It can be difficult to trace who owns what, and nearly impossible to connect the dots. A ClearLight Partners press release announced that they are selling The Outsource Group to Parallon Business Solutions, LLC. Parallon, in turn, is a subsidiary of HCA Holdings, Inc.

The Outsource Group is a debt collection agency that focuses on the collection of medical debt, and had acquired a dozen other companies. Parallon provides a number of services to hospitals and healthcare providers, including information technology, workforce management, and supply chain consulting.

Helping Clients with Alpha Recovery Corp

Thursday, June 13th, 2013 at 5:00 am  
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On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Middle District of Pennsylvania, against Alpha Recovery Corp. Our client alleges that Alpha Recovery Corp called her cell phone and place of employment in an attempt to collect a debt. During the first phone call to her work, our client informed Alpha Recovery Corp that she wasn’t able to receive personal calls at work and asked Alpha Recovery Corp to stop calling her workplace. They did not stop, and in fact they called her so much that her managers had to ask Alpha Recovery Corp to stop calling. The collection agency also called our client’s cell phone. On one day, our client alleges that Alpha Recovery Corp called her cell phone 4 times in a 20-minute period. On at least one occasion, our client told Alpha Recovery Corp that she was disputing the amount of debt that they claimed she owed. Alpha Recovery Corp responded by telling our client that she was refusing to pay the debt. Alpha also allegedly told our client that she should obtain a loan to pay the debt by noon on a certain date. They also told her that the matter had “gone to state” and that “they’re trying to figure out why you haven’t paid this debt!” Alpha Recovery Corp told our client that her credit would “suffer this month” if she did not pay the debt. They also told her that if she didn’t pay it, she would be responsible for their fees in addition to the amount of the debt.

The lawsuit charges that Alpha Recovery Corp violated the Fair Debt Collection Practices Act (FDCPA) by employing false and deceptive means to collect a debt; by contacting our client at her workplace, knowing that her employer prohibited such calls; by contacting our client at a place and time known to be inconvenient; by misrepresenting that our client had committed a crime; by misrepresenting the character, amount, and legal status of a debt; by using false, deceptive, or misleading representation in connection with the collection of a debt; by threatening to communicate false credit information; and by engaging in harassing behavior. The lawsuit also charges that Alpha Recovery Corp violated the Pennsylvania Fair Credit Extension Uniformity Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law.

Appellate Court Rules on Debt Collection Notices

Wednesday, June 12th, 2013 at 4:20 pm  
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The Second Circuit Court of Appeals has vacated a district court’s decision regarding how consumers can dispute a debt under the Fair Debt Collection Practices Act. In the class action lawsuit Hooks v. Forman, Holt, Eliandes & Raven, the plaintiffs argued that Forman Holt’s debt collection notice violated the FDCPA because it said that the consumers could only dispute the validity of a debt in writing. The district court granted the defendant’s motion to dismiss the case, saying that the consumers did not have a valid FDCPA claim. The appellate court vacated the lower court’s decision and remanded the case back to the district court.

The notice that the plaintiffs received said, in part, “Unless you notify us in writing within thirty (30) days…that the debt…is disputed, we will assume that the debt is valid.” The appellate court noted that the statute says that a consumer must send a written dispute in order to get collection efforts to stop until the debt is verified. However, the provision of the FDCPA that allows the debt collector to assume the debt is valid does not specify that the dispute must be in writing.

The court went on to discuss the contradictory findings of the Third and Ninth Circuits in similar cases, and found the reasoning of the Ninth Circuit more persuasive. They said that this section of the FDCPA “does not incorporate the writing requirement included specifically in other sections of the same statute. We see no reason to ignore this difference in statutory language.”

The Second Circuit decision went on to say, “The right to dispute a debt is the most fundamental of those set forth in SS 1692g(a), and it was reasonable to ensure that it could be exercised by consumer debtors who may have some difficulty with making a timely written challenge.” The court reasoned that consumers can “protect certain basic rights through an oral dispute, but can trigger a broader set of rights by disputing a debt in writing.”

This is an important decision for consumers, and one that will hopefully pave the way for consumers to get more accurate information about their rights in the letters sent by debt collection agencies.

Report: Debt Collection Industry Perpetuates Economic Inequality

Wednesday, June 12th, 2013 at 2:12 pm  
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The New Economy Project, a nonprofit that works to promote community economic justice, recently issued a report entitled, “The Debt Collection Racket in New York: How the Industry Violates Due Process and Perpetuates Economic Inequality.” The report shines a spotlight on the ways in which debt buyers and debt collection agencies target low-income neighborhoods and communities of color.

One of the most egregious practices is using the court system to drain consumers’ financial assets. The report notes that, in 2011, approximately 200,000 debt collection lawsuits were filed in New York. Often, debt collectors who file these lawsuits engage in “gutter service” or “robo-signing.” Gutter service occurs when notifications of lawsuits aren’t delivered to consumers and are instead metaphorically thrown in the gutter. As a result, consumers don’t know that they are the defendant in a debt collection lawsuit and can’t come to court to defend themselves.

In robo-signing cases, debt collection agencies have employees attest that the debt in question has been researched and validated prior to bringing suit in court. In reality, though, employees often sign the affidavits without ever having reviewed the files. The study found that, “In 9 out of 10 cases, an employee of the debt buyer – who had no connection to the original creditor – fraudulently testified to facts that only the original creditor could possibly know.”

The New Economy Project analyzed the debt collection lawsuits from 2011 and released startling findings:

  • “Debt collectors filed 195,105 lawsuits against New Yorkers.
    Debt collection lawsuits accounted for 8 out of 10 of all default judgments entered.
  • Overall, 42% of debt collection lawsuits resulted in default judgments — but debt buyers obtained default judgments in an estimated 62% of their cases.
  • Only 2% of all New Yorkers sued had legal representation.
  • Debt buyers brought more than half of all debt collection lawsuits.
  • Debt buyers obtained an estimated $230 million in judgments against New Yorkers.
  • Among the 90 debt buyer lawsuit files examined, not a single case went to trial or was resolved on the merits.
  • Debt buyers virtually never prevailed in contested cases, but relied on winning cases by default or by intimidating unrepresented people into making settlement agreements.”

But the study also correlated the highest number of default judgments with New York communities that are predominately non-white and low income. It concludes, “Abusive debt collection practices are directly linked to broader economic discrimination, financial distress, and wealth inequality.”

The study concludes by recommending measures that could be taken to help correct these inequalities. For example, it urges the New York State Office of Court Administration to require that debt buyers submit affidavits from original creditors. It suggests that the New York State Department of Financial Services require debt buyers “to document debts when attempting to collect on them.” It also urges aggressive enforcement actions when bad players break the rules.

The full study can be downloaded here: http://www.nedap.org/resources/documents/DebtCollectionRacketNY.pdf

Helping Clients with Allied Fidelity Services

Wednesday, June 12th, 2013 at 12:18 pm  
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On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Southern District of Texas, against Allied Fidelity Services. Our client alleges that Allied Fidelity Services began contacting her in an attempt to collect a debt by placing numerous calls to her place of employment. During the first call, she told them that she could not take personal calls at her workplace and asked that Allied Fidelity Services cease all calls to her work phone number. Immediately after this call, Allied Fidelity Services called her back at work and continued to call her there on a daily basis. This was despite her demand that they cease all phone calls to her workplace. In fact, they called her at work so frequently that her employer warned her about the prohibition of receiving personal calls while at work. In addition, Allied Fidelity Services failed to send our client written validation of the debt, including a notice of her rights under federal law.

The lawsuit charges that Allied Fidelity Services violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior; by causing a telephone to ring repeatedly, with the intent to annoy or abuse; by failing to send a validation notice; by contacting our client at a place and time known to be inconvenient; and by contacting our client at her workplace, knowing that her employer prohibited such calls. The lawsuit also charges that Allied Fidelity Services violated the Texas Debt Collection Act.

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