Tuesday, March 5th, 2013 at
According to a press release issued by New York’s Department of Financial Services, the state’s debt collectors have been warned that it’s illegal to collect on payday loans in that state, since payday loans are illegal. Governor Andrew Cuomo was quoted as saying, “Studies clearly show that payday loans are not a solution for people with low incomes, but rather a high cost debt trap. That’s why they are illegal in New York, and the State will continue to protect consumers from these misleading loans.”
The release noted that, although payday lenders try and skirt the law by offering payday loans over the Internet, those loans are still illegal in New York. According to Superintendent of Financial Services Benjamin Lawsky, “All debt collectors in New York should know that it is illegal to try to collect payday loan debts. We will aggressively enforce the law to protect all New Yorkers and especially low income individuals who are all too often abused by unscrupulous lenders and debt collectors.”
Tuesday, January 22nd, 2013 at
On January 14, legislation was introduced in Minnesota that would mandate that debt buyers who seek to obtain summary judgments against consumers in court provide the court with documentation about the debt. Introduced as H.F. 80 in the House of Representatives and S.F. 33 in the Senate, the bill would require debt buyers to provide the court with evidence of a contract between the consumer and the creditor; evidence establishing that the consumer owes the debt; evidence that the debt amount listed is accurate, and enumeration of fees, interest, and interest rates; evidence that the debt was included in a bill of sale from the previous owner to the debt buyer; proof that the consumer was properly notified of the lawsuit and didn’t respond; and proof that the consumer was properly notified of the default motion hearing.
The House version of the bill was referred to the House Judiciary, Finance and Policy Committee; the Senate version of the bill was referred to the Senate Judiciary Committee. If passed and signed into law, the legislation would take effect on August 1, 2013. You can obtain a copy of the actual bill here.
Sunday, December 23rd, 2012 at
The New Jersey State Consumer Affairs Committee has approved the “Consumer Credit Fairness Act”, a bill that seeks to prevent debt buyers from harassing consumers. The legislation (A1535), sponsored by John Burzichelli and Celeste Riley, would prohibit unfair and deceptive practices. In a press release, Burzichelli said, “Scheming debt collection agencies that purchase outstanding consumer debt are finagling their way into the pockets of consumers by way of intimidation. Most of the time, the burden of proof is left to the consumer to prove it’s not their debt or the debt is paid. If you have no regard for NJ consumers, then you are an insult to the industry.”
The bill would prohibit debt buyers from trying to get a consumer to affirm that he or she owes a debt if the debt is past the statute of limitations or if the consumer has gone through the bankruptcy process. It would also prohibit debt buyers from collecting or trying to collect additional fees and interest, as well as filing suit against consumers for time-barred debt.
The bill also outlines the steps debt buyers must take when filing suit against a consumer. For example, the bill says that the debt buyer must have valid documentation that the consumer actually owes the debt in question, and that the debt buyer has verification of the amount of the debt. When filing a lawsuit, the debt buyer would have to include evidence of the original debt (such as credit card receipts), as well as evidence that the debt buyer actually owns the debt along with documentation about transfer of ownership. In addition, the bill would make it difficult for debt buyers to obtain default judgments, in that it would require them to submit authenticated records about the origins of the debt and payment history.
If a debt buyer were to violate the law, a consumer could obtain statutory damages of up to $1,000, along with court costs and attorney fees.
The bill will move to the full Assembly for consideration.
Saturday, December 22nd, 2012 at
According to a report from WCCO, the U.S. Attorney’s Office has charged debt collector Khemall Jokhoo with mail fraud, bank fraud, impersonation of a U.S. employee, and identity theft. Jokhoo was the owner of First Financial Services, a Minnesota debt collection agency, until the agency was shut down by authorities in 2009. The criminal charges carry a maximum 30-year prison penalty.
Thursday, December 13th, 2012 at
Minnesota Attorney General Lori Swanson, who has a strong track record of going after the bad players in the debt collection industry, announced that the court has approved a consent judgment against Midland Funding to settle a robo-signing case brought last year. According to Swanson’s press release, Midland Funding, one of the country’s largest debt buyers, was alleged to have “filed thousands of collections lawsuits against individuals in Minnesota courts, often supported by unreliable ‘robo-signed’ affidavits…. Several Midland employees admitted in sworn testimony to signing up to 400 affidavits per day, either without reading them, without personal knowledge of their contents, and/or without verifying the accuracy of the information contained in them.”
The consent judgment requires that, before filing a lawsuit, Midland must provide consumers with debt validation, verify the address of the consumer, and investigate disputes. It even goes a step further, prohibiting Midland from reselling an unsubstantiated debt and requiring that unsubstantiated accounts be closed and adverse credit reports be corrected.
The judgment also mandates that Midland follow procedures to stop robo-signing practices, to prevent lawsuits on debt that is past the statute of limitations, and to ensure that consumers can respond to lawsuits in a meaningful way. Further, the company will pay $500,000 to Minnesota.
The press release also contains an interesting factoid: “Along with its parent corporation (the publicly traded Encore Capital Group, Inc.), Midland has paid more than $2.1 billion to purchase about 40 million accounts with a face value of about $66.4 billion, or an average of three cents on the dollar to acquire the debt.”
Monday, October 15th, 2012 at
As part of a large class action settlement against Worldwide Asset Purchasing, a Maryland District Court judge has dismissed more than 3,000 cases brought by the debt collector against Maryland residents. The suit alleged that Worldwide Purchasing filed lawsuits on time-barred debt, that the debt collection agency was not properly licensed, and that it erred in stating amounts owed.
This isn’t the first time that Worldwide has found trouble in Maryland. In September 2010 we reported that the Maryland Commissioner of Financial Regulation had announced a settlement for alleged violations of the Maryland Collection Agency Licensing Act, the Maryland Consumer Debt Collection Act, the Maryland Rules of Civil Procedure, and the federal Fair Debt Collection Practices Act.
Friday, September 21st, 2012 at
According to an article in the Columbus Dispatch, Ohio Attorney General Mike DeWine has filed suit against Collection and Recovery Bureau (CRB) for alleged violations of Ohio’s Consumer Sales Practices Act and the Fair Debt Collection Practices Act. The Attorney General alleges that the debt collection agency, which went out of business at the end of August, harassed consumers, damaged their credit reports, and threatened lawsuits – all over debts the consumers did not owe. The Attorney General is seeking a $175,000 fine plus restitution to affected consumers.
Friday, August 17th, 2012 at
According to a news release issued by Arkansas Attorney General Dustin McDaniel, the AG’s office has filed a lawsuit against National Credit Adjusters. The suit charges that National Credit Adjusters, which collects on payday loans, violated the Arkansas Deceptive Trade Practices Act. The state law prohibits high-interest installment loan debts such as payday loans. In the lawsuit, the AG asked the court to mandate that National Credit Adjusters, which purchased delinquent payday loans, be prohibited from collecting from Arkansas residents on high-interest loans, cancel outstanding loan contracts, and return any money collected from payday or high-interest installment loans.
Tuesday, August 14th, 2012 at
Since the start of the Great Recession, municipalities have increasingly turned to third-party debt collectors to recoup fines owed by residents. According to the Associated Press, Louisiana is kicking it up a notch. The state legislature has authorized a two-year pilot program that enables the state to sell old debt to debt buyers. This sets a dangerous precedent, since debt buyers are notorious for using shady collection tactics, and often go after the wrong person. Louisianans who have similar names as those who owe money, or who live at an address formerly occupied by a person who owes money, are particularly vulnerable.
Friday, August 3rd, 2012 at
The New York Times reports that Accretive Health has settled with the Minnesota Attorney General’s office for $2.5 million over allegations that it violated federal law. Minnesota Attorney General Lori Swanson went after Accretive Health with a vengeance amidst allegations that the debt collector intercepted patients in the emergency room in an attempt to collect past healthcare-related debts. The Times quoted Swanson as saying, “A hospital emergency room should be a sanctuary for the sick and wounded, not a hunting ground for collectors.” The settlement also prevents Accretive Health from contracting with Minnesota hospitals for a period of two years, and requires the company to obtain permission from the AG’s office before operating in Minnesota for the following four years.
The allegations against Accretive Health prompted U.S. Senator Al Franken (D-MN) to hold hearings on patient access and privacy, and the U.S. Treasury Department to propose regulations that would, among other things, protect patients from abusive debt collection practices in a healthcare setting.