News and information about the debt collection industry, fair debt law, and consumer law issues.
CNN Money recently ran an article that outlines debt collector abuses that are all too familiar to clients of Lemberg & Associates. Threatening consumers with wage garnishment, arrest, or even taking away children is a shocking yet common occurrence. The Federal Trade Commission is going after Goldman Schwartz, a Texas-based collection agency. You can read more about the allegations here.
The Hartford Business Journal reports that Richard Pinto, former Chairman of Oxford Collection Agency, has been sentenced to five years in federal prison and ordered to pay $12.3 million in restitution. As we mentioned in a blog post from last May, Pinto and his son pled guilty to a $10 million fraud scheme that involved diverting the money they collected. Pinto’s son, as well as three other former executives who pled guilty, are awaiting sentencing.
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.
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.
When it comes to debt collection, just when you think you’ve heard it all, another allegation comes forth that makes your stomach turn. RT.com reports that a debt collector from Gurstel Chargo allegedly told a disabled Army veteran, “If you would have served our country better you would not be a disabled veteran living off Social Security while the rest of us honest Americans work our [butts] off…. Too bad, you should have died.”
The debt collection agency, which was attempting to collect on a $6,000 defaulted student loan, seized money the veteran’s wife’s bank account – even though she was also on disability and the money is exempt from garnishment.
Although the couple is suing the collection agency for alleged violations of the Fair Debt Collection Practices Act, the $1,000 in damages provided for by the FDCPA doesn’t begin to make up for this type of egregious behavior against our nation’s heroes. There’s never been a better argument for updating the FDCPA to give it some teeth.
The Cosumerist reports that a debt collection agency is hounding former employees of Hollywood Video. According to The Consumerist report, employees were allowed to rent older movies and never pay late fees from the now-defunct company. Now, however, these former employees are getting late fee notices from a debt collection agency. While The Consumerist redacted the name of the debt collector, it may be National Credit Solutions. In May 2011, we covered an AP story that reported National Credit Solutions’ tendency to report – or threaten to report – movie rental late fees to credit reporting agencies. Movie Gallery’s (Hollywood Video’s owner) bankruptcy trustee reached a settlement with attorneys general from every state in the country that prohibited Movie Gallery from submitting or threatening to submit negative credit reports, as well as from collecting most additional fees.
However, the website of debt collection agency A.R.M. Solutions has a FAQ about Hollywood Video that is identical to one quoted in The Consumerist report, as does a PDF from Universal Fidelity LP debt collection agency:
Q:“I was an employee of Hollywood Video and didn’t get charged late fees, how do I have a balance due?”
A: Hollywood Video/Movie Gallery had no such policy allowing employees to rent for free or have no late fees.
So, it appears as though several debt collection agencies believe that former Hollywood Video employees are liable for late fees the employees thought they never incurred.
The Ninth Circuit Court of Appeals issued a ruling regarding debt collection validation notices, saying that informing the consumer of his or her right to dispute a debt is only in violation of the Fair Debt Collection Practices Act if the letter “expressly” requires the dispute to be in writing. In Riggs v. Prober & Raphael, the Court ruled against the consumer, who argued that the debt validation notice she received implicitly required a written dispute. Implicitly requiring written disputes and expressly requiring written disputes represents a fine point of law, but one that is important. The court assumed that the least sophisticated consumer (a standard used in the FDCPA) “could understand Prober’s validation notice to imply that any dispute of her debt must be in writing,” but ruled that the FDCPA itself is at fault for being unclear regarding “what a consumer must do in writing versus what she may do in writing.”
Consumerist reports on an all-too-common phenomena, namely when wireless carriers send debt collectors after consumers. In some cases, a wireless carrier like Verizon sells what it believes are charged off accounts to debt buyers, who then go after consumers – sometimes the wrong consumer and sometimes a consumer who doesn’t actually owe any money.
In the case reported by Consumerist, a consumer and his wife switched mobile carriers. After doing so, the consumer called T-Mobile to verify that he didn’t owe any money on the account. He was told he was in the clear, but several months later was on the receiving end of a debt collection letter. When he called T-Mobile back, he was told that his account had been sold to a debt buyer, and that T-Mobile had tried to contact him about his outstanding balance (even though he was previously told he had a zero balance). Given that mobile contracts have fine print, the consumer thinks there’s a small chance he may owe something, but isn’t sure.
Many folks would interpret this as an annoying mix-up, but the consumer understands that having a debt collector on your tail can have serious implications. Consumerist reports that the consumer and his wife are in the process of buying a house, and so are understandably concerned that the debt buyer will submit a negative item on his credit report, which could impact the interest rate they’ll pay and even whether or not they can get a loan.
Where Consumerist misses the boat is in saying, “Art is in a bit of a pickle here. See, if he was 100% sure that he owed no money to T-Mobile he could challenge the collections agency to prove documentation showing he owes the debt. But as he admits it’s possible he owes some amount of money, his best bet is to keep trying T-Mobile.”
Not true. The Fair Debt Collection Practices Act says that a consumer can dispute the debt, and that the debt collector has to provide proof that the consumer owes the money. A consumer has a window of 30 days to dispute the debt after receiving written notification from the debt collector. Moreover, the debt collector has to notify credit reporting agencies that an item is in dispute, which in this case could help the consumer with the home loan process.
According to a report in the Star-Ledger, a New Jersey woman has been paying on a debt that should have been paid off by now, but a debt collection agency for Capital One won’t account for the money. The consumer found out last November that Eichenbaum & Stylianou had gotten a court judgment against her totaling $1,286.55. She offered to pay $100 per month, but the debt collection agency said that wasn’t enough. She made monthly $100 payments to the court, and the debt collector garnished her wages for $169.03 every two weeks.
In a case of the right hand not knowing what the left hand is doing, one court department accepted the consumer’s payments while another tracked her wage garnishments. In the meantime, Eichenbaum & Stylianou wouldn’t give her an accounting of the payments she’d made, nor the balance due. A consumer advocate at the Star-Ledger called the debt collection agency, which told her that the debt was in the process of being sold to another debt collector, so they couldn’t retrieve a current account statement. Ultimately, the reporter spoke to an officer of the court, who said that it was up to the debt collector to provide the consumer with information about what she owes and to halt the wage garnishments when the debt is paid off.
The most interesting twist is that the reporter discovered that the Fair Debt Collection Practices Act doesn’t require that a debt collector update the consumer’s outstanding balance, and that it’s up to individual state law to address that issue. New Jersey’s state law doesn’t cover it, and we suspect that most state laws fail to hold debt collectors accountable.
On behalf of a client, Lemberg & Associates recently filed a complaint in U.S. District Court, District of Massachusetts, against Capital Recovery Systems. Our client alleges that the debt collector who contacted him didn’t tell our client the name of the debt collection agency or that he was calling in an attempt to collect a debt. Moreover, our client says that, when he asked for a letter indicating the name of the debt collection agency, the Capital Recovery Systems debt collector refused to do so, and instead asked for our client’s email address. Our client did not want to share his email address, and asked that the letter be mailed to him. The debt collector refused.
The lawsuit charges that Capital Recovery Systems violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior, by not disclosing the identity of the debt collection agency, by not saying that phone call was an attempt to collect a debt, and by not sending a validation notice within five days of contacting our client.
If you have been the victim of harassment or illegal or unfair debt collection practices, contact the Fair Debt Attorneys at Lemberg & Associates immediately to discuss your options and protect your rights.
When you owe creditors money, you are protected by the Fair Debt Collection Practices Act, as well as other federal and state laws.
If a debt collector has violated your rights, you may be entitled to up to $1000 in damages, and they may even have to pay your attorney fees. Sergei Lemberg, and the attorneys at Lemberg & Associates have helped countless people to assert their legal rights with debt collectors.
Don't be intimidated by illegal debt collection practices. For immediate consideration contact Lemberg & Associates today at .
