Friday, June 14th, 2013 at
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.
Wednesday, April 17th, 2013 at
Ever feel like you fell down the proverbial debt collection rabbit hole? That was the case for one New Jersey man, whose insurance company paid his medical bill, yet was hounded by debt collector Financial Recoveries and saw his credit score plummet until he paid the bill – again – out of his own pocket.
According to the Newark Star-Ledger, the consumer provided the emergency room he visited with his health insurance information and his copayment. A few months later, he received a collection letter from Financial Recoveries. He contacted the hospital, which reported that it had the incorrect insurance information and assured him that it would call off the debt collector. Nevertheless, the consumer discovered that Financial Recoveries had reported the debt the credit bureaus, and that his credit score had plummeted 80 points.
Even though the consumer’s insurance company paid the bill, a year later Financial Recoveries was still dinging his credit report, and the consumer’s score took another nosedive. In order to stop the credit abuse, the consumer paid Financial Recoveries, and when he explained that the bill had been paid twice, the debt collection agency refused to send a refund. After the Star-Ledger intervened, the situation was corrected, but this is a good illustration of the damage that a rogue debt collection agency can do to a consumer’s credit score.
Thursday, March 21st, 2013 at
In August 2011, a federal judge approved a $5.7 million settlement in a class action lawsuit brought against Encore Capital Group and its Midland subsidiaries. The case revolved around the practice of “robosigning” affidavits, which in turn were used to sue consumers and obtain judgments against them. Because the case was precedent-setting, 38 state attorneys general, the Federal Trade Commission, and consumer advocacy groups filed amicus briefs urging the judge to reject the settlement proposal.
Late in February, the 6th Circuit Court of Appeals voided the settlement, which would have awarded each consumer a measly $17. The appellate court ruled that the lower court judge had abused his discretion in approving the settlement, and that the monetary relief to consumers was “perfunctory at best.” The court also noted that the order meant to prevent Midland from engaging in robosigning behavior was hollow, in that it didn’t prohibit false affidavits and expired after one year. The case was remanded to the district court.
Tuesday, March 12th, 2013 at
Encore Capital Group (NASDAQ: ECPG) recently announced that it will acquire Asset Acceptance Capital Corp. (NASDAQ: AACC), a move that amplifies the mergers-and-acquisition landscape of the debt collection industry. Both Encore Capital Group (which does business as Midland Credit Management) and Asset Acceptance are major players in the debt buying business, and the merger of the two will create a behemoth that, according to an Encore press release, represents the purchase of “over 60 million individual consumer accounts…with a face value of over $130 billion.”
While Asset Acceptance will continue as a subsidiary of Encore Capital Corp., Encore CEO Brandon Black said, “This acquisition moves our industry into a new phase of maturity defined by more efficient companies that are committed to operating ethically and treating consumers with respect.” According to Justia.com, during 2013 Encore has been named as a defendant in a dozen lawsuits alleging violations of the Fair Debt Collection Practices Act, while Asset Acceptance has been named as a defendant in three dozen lawsuits. The Better Business Bureau gives Encore and Asset Acceptance each a B+ rating, and has logged 1190 closed Encore complaints and 903 closed Asset Acceptance complaints within the past three years.
The proposed merger, which has to undergo review by securities regulators, is expected to occur during the second quarter.
Wednesday, February 20th, 2013 at
The Encore Capital Group (NASDAQ: ECPG) is a huge debt buyer. According to an article in the Wall Street Journal, Encore is also positioning itself to rake in more profits. The company is investing in cloud infrastructure and software that will enable consumers to access a self-service web portal. The article says that, once implemented, debt collection phone calls and concomitant telecommunications costs will go down. We suspect that, with fewer outbound calls from debt collectors, Encore will also reduce its liability risk for violations of the Fair Debt Collection Practices Act. That’s a good thing for everyone involved.
Saturday, February 16th, 2013 at
The Federal Trade Commission issued a report to the Consumer Financial Protection Bureau (CFPB) regarding the FTC’s enforcement of the Fair Debt Collection Practices Act (FDCPA). The Dodd-Frank Act of 2010 created the CFPB and tasked the agency with taking over the annual FDCPA report to Congress. Because the FTC is still responsible for FDCPA enforcement actions, it produced the report for use in the CFPB’s Congressional report, expected to be released in March.
According to the FTC’s press release, the agency brought cases against seven debt collectors. The agency settled charges and banned Rumson, Bolling & Associates from debt collection activity. It also settled with Luebke Baker, which was accused of caller ID spoofing and threatening wage garnishments, among other things. Two cases, those pertaining to Goldman Schwartz and AMG Services, are still in litigation.
The FTC also highlighted its work in what it termed “phantom debt” cases, where defendants collected money that wasn’t owed or that wasn’t applied to the debts. The three defendants are American Credit Crunchers, Pro Credit Group, and Broadway Global Master.
RJM Acquisitions got off the hook when the FTC closed a case alleging that the debt collector attempted to collect time-barred debt. In exchange, RJM Acquisitions included language in its debt collection notices so that consumers wouldn’t think they could be sued for the debt.
Finally, and arguably most importantly, the FTC, CFPB, and Department of Justice filed an amicus brief in a U.S. Supreme Court case that will determine whether or not consumers who file FDCPA lawsuits in good faith and lose are required to pay defendants’ attorney fees.
Thursday, February 7th, 2013 at
Bloomberg reports that the ways in which the debt collection industry uses social media may be scrutinized by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) in the coming year. With the passage of the Dodd-Frank Act in 2010, the CFPB was created. Among its designated functions is oversight of the Fair Debt Collection Practices Act (the FTC is still responsible for FDCPA enforcement actions, however).
On January 2, 2013, the CFPB began exercising its supervision authority over approximately 175 debt collection agencies, all of which have more than $10 million in annual receipts. CFPB examiners will be evaluating debt collection agencies for their practices surrounding proper disclosures to consumers, providing consumers with accurate information, and dispute resolution.
Tuesday, January 22nd, 2013 at
Debt collection industry insider WebRecon has listed Sergei Lemberg as the “most active consumer attorney” of 2012, saying that he represented 365 consumers during the year. Although seemingly intended as a warning to debt collectors, Lemberg embraces WebRecon’s label. He says, “I’m passionate about empowering our clients to stand up against debt collection agencies that use illegal tactics and break the law. If that makes me a target of the debt collection industry, so be it.”
Taking a moment to reflect on 2012, Lemberg says that he’s gratified that Lemberg & Associates accomplished so much. “I’m not only proud of the clients we’ve helped, but also that we expanded our practice areas and launched three new websites to help consumers learn more about their rights under the Telephone Consumer Protection Act.” The websites, www.do-not-call-complaints.com, suejunkfaxers.com, and suespamtexters.com, explain the TCPA and that consumers rogue telemarketers, junk faxers, and spam texters can be made to pay $500 for each violation – or triple that if they knowingly and willfully violated the law.
Friday, January 18th, 2013 at
The Federal Trade Commission announced that it had reached a final settlement with Rumson, Bolling & Associates and owner David M. Hynes II over charges that the company engaged in illegal debt collection practices. The FTC’s complaint alleged that the debt collection agency used profane language, spoke to third parties about consumers’ debt, and threatened consumers with physical harm, arrest, garnishment, and so forth. The FTC also alleged that the company ripped off its clients by working on a contingency basis but not turning over money recovered to the creditors.
Hynes and his team operated under a variety of names, including Forensic Case Management Services, FCMS, Commercial Recovery Solutions, Commercial Investigations, Specialized Recovery, Joseph Steven & Associates, Specialized Debt Recovery, Commercial Receivables Acquisition, Commercial Recovery Authority, and The Forwarding Company.
The FTC settlement permanently bans the defendants from operating in the debt collection industry. The companies agreed to a $33.8 million judgment, but that judgment will be suspended because of the defendants’ inability to pay. Instead, they will pay $700,000.