Archive for 'New York'

New York Debt Collectors Warned Not to Collect on Payday Loans

Tuesday, March 5th, 2013 at 7:26 pm  
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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.”

New York AG Settles with Two Debt Collection Agencies

Friday, June 22nd, 2012 at 2:46 pm  
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New York Attorney General Eric Schneiderman announced that his office entered into a settlement agreement with John Chebat, who runs several debt collection agencies in what seems to be the debt collection agency capital of the United States – Buffalo, NY. According to a press release issued by Schneiderman’s office, Chebat’s debt collection agencies include Western New York Capital, Inc.; International Asset Group, LLC; Unified Asset Solutions, LLC; Outsourced Legal Prep, LLC; Argos Alliance Group, LLC; and Check Systems Recovery, LLC.

The AG’s investigation uncovered a number of illegal debt collection practices, including contacting consumers’ employers; sending forms to consumers’ employers asking for information like social security numbers; sending letters to consumers on attorney letterhead; falsely threatening to take legal action without intending to do so; and using “Caller ID spoofing,” among others. The settlement mandates that Chabat pay $175,000 and undertake initiatives to ensure that debt collectors abide by the law.

In a separate investigation, the AG’s office tagged Frank Davis, owner of The Lombardo Davis Goldman Firm, LLC. Last year, Davis agreed to a settlement prohibiting him from using a business name that mimicked a law firm’s name. Because he violated the provisions of the settlement, the current agreement shutters the debt collection agency and prohibits Davis from engaging in debt collection activities in New York.

Whiplash: New York State to Outsource Debt Collection

Friday, November 19th, 2010 at 5:00 am  
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According to the New York Times, New York’s State Division of the Budget is seriously considering subcontracting collection activity to private debt collection agencies. This move can be considered either ironic or hypocritical, since the state’s Attorney General and Governor-elect Andrew Cuomo has prioritized cracking down on unscrupulous debt collectors, and has rarely had a kind word to say about the industry. According to the Times, the Budget Division will hand over at least $425 million in uncollectible debt, but will not do engage the services of any debt collection agency that has run afoul of the Attorney General. Still, given the huge amount of business the state represents, it will be tempting for debt collection agencies to underbid the contract (likely a percentage of the money recovered), and then to go to any means to collect as much as they can.

New York AG Files Felony Charges Against Debt Collector

Wednesday, September 29th, 2010 at 5:16 pm  
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As part of his ongoing commitment to hold debt collectors accountable for their actions, New York Attorney General Andrew Cuomo filed felony charges against the owner of a Buffalo-area debt collection agency for allegedly targeting military servicemembers and their families. Cuomo also filed a civil suit in order to shutter the debt collection agency and collect restitution, penalties, and costs.

American Heroes IIMany Americans are subjected to harassing and threatening debt collection calls, and all such illegal behavior is wrong. But there is something especially outrageous about a debt collection agency that makes it a point to go after our men and women in uniform, and to ratchet up the anxiety levels of their already-vulnerable families.

According to Cuomo’s press release, debt collection agency Stephanie Lowinger allegedly “instructed employees to find out where military members were stationed and identify their commanding officers. Lowinger had employees threaten to call and, in some cases, actually did call the commanding officers.”

Like many shady debt collection agencies, Lowinger’s debt collection agency went by many names, such as Neimen, Rona & Associates; Morgan, Stone & Associates; and Gordon, Cappolli & Associates.

Cuomo’s allegations against Lowinger include falsely claiming to be lawyers, investigators, detectives, and mediators; threatening consumers with arrest, jail, and lawsuits; threatening to seize assets; inflating the amount owed; attempting to collect debts without knowing whether or not they were valid; attempting to collect debts from family members; disclosing the existence of alleged debts to family members; harassing and abusive phone calls; and unauthorized charges to consumers’ credit cards.

The Attorney General’s press release says, in part:

Military service members can be vulnerable targets for abusive debt collection practices since their status, rank, or security clearance can be adversely affected. Complaints already received and evidence uncovered during the investigation show that military service members and their families were subjected to wrongful practices, including:

  • Unauthorized calls to commanding officers
  • Threats of arrest by military police
  • Threats of a dishonorable discharge
  • Threats of loss of security status
  • Threats of court martial

Kudos to Attorney General Cuomo continuing to shine the spotlight on shameful debt collection practices.

Mayor Bloomberg Issues New Debt Collection Regulations

Wednesday, May 19th, 2010 at 1:36 pm  
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On Monday, Mayor Michael Bloomberg announced new regulations governing how debt collectors can conduct business when collecting from New York City residents. Together with the Department of Consumer Affairs Commissioner Jonathan Mintz, Bloomberg highlighted the underhanded tactics that debt collection agencies are currently using. Essentially, debt collectors take a name from their collection list and call everyone in the five boroughs with that same name.

According to the Mayor’s office, “Under the new regulations, any debt collection agency attempting to collect a debt from a New Yorker must provide proof the debt is owed at the consumer’s request. The collector must provide a copy of the original debt documentation, a copy of the final account statement of the originating debt, a document itemizing the remaining amount due, including any additional fees or charges claimed to be due and the basis of the consumer’s obligation to pay them. Other provisions of the new regulations include disclosing the consumer’s rights regarding the statute of limitations, and providing written confirmation of the debt payment schedule or settlement within 21 days of the agreement. In addition, debt collection agencies must provide New Yorkers with a phone number that must be answered by a live operator and not an answering service.”

Bloomberg noted that, over the course of the Great Recession, debt collection agencies have resorted to ever-more brazed tactics. Indeed, the Department of Consumer Affairs found that New York City residents were wrongfully pressured to pay more than $1 million in debt that they didn’t really owe. According to Mintz, “Wrongful debt collection is more than just annoying and stressful. Such wrongful collection attempts can cause serious and long-term damage to a family’s finances, including seized bank accounts, damaged credit ratings, and more.”

If you live in New York City and have been the victim of improper debt collection calls, you can call 311 or file an online complaint by clicking here.

Buffalo Collections Industry Profiled in AP Story

Monday, January 18th, 2010 at 1:30 am  
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About 10% of all complaints received by the Better Business Bureau last year involved a company in western New York.  One of the largest industries in the area is debt collection. A recent AP story, published in the New York Times, briefly profiled the Buffalo-based collections industry.

Debt collection companies were drawn to Buffalo by its inexpensive office space, affordable work force and government grants.

Almost everyone knows someone whose son or daughter has worked for a collection agency,” said David Polino, president of the Better Business Bureau of Upstate New York. ”This is one of the industries that used to be Bethlehem Steel, the Chevy plant — all the places where you used to get out of high school and find employment 35 or 40 years ago, it’s now call centers.

The debt collection industry has brought many jobs to Buffalo. The article reports that between 5,000 and 6,000 people work at 110 collection agencies in and around Buffalo, the nation’s third-poorest city of its size. However, state and federal authorities have increased scrutiny of abusive debt collection practices in Buffalo.

Debt collectors, some of them convicted felons, have illegally posed as lawyers or unlawfully browbeat people — threatening to have them arrested or stripped of custody of their children — to scare them into making payments.

There are law-abiding collections firms in Buffalo, however, we have heard from many consumers who have been harassed by collectors based in the area. Glad the issue is getting some press attention!

Nationwide Asset Services Must Post Bond to Do Business in NY

Tuesday, October 20th, 2009 at 10:39 pm  
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New York Attorney General Andrew Cuomo recently won a lawsuit against Nationwide Asset Services. The court’s decision mandated that the company pay $200,000 in penalties and post a $500,000 bond if it wants to do business in that state.

Nationwide Asset Services is a national debt settlement company that promises consumers a 25 to 40 percent reduction in their debt. According to Cuomo, only a fraction of one percent saw such savings, while the vast majority continued to be harassed by debt collectors.

A press release issued by the Attorney General’s office quoted Cuomo as saying, “This company made promises to people who were searching for financial help and trying to turn their lives around. But the promises never came true and, in many cases, New Yorkers were left in worse condition than when they started. Thanks to this ruling, the company has to put its money where its mouth is with a performance bond if it wants to do business in New York.”

The decision also applies to the company’s affiliates, ServiceStar and Universal Debt Reduction, as well as its marketer, FGL Clearwater (dba American Debt Arbitration).

The AG’s press release noted:

Debt settlement companies represent that they can substantially reduce consumer debt by negotiating directly with creditors, on behalf of their customers, to pay off outstanding balances at less than the amounts owed. However, Attorney General Cuomo’s Office has found that many of these debt settlement plans are often flawed and, based upon complaints, often mislead consumers about the nature of their services. The debt settlement plans are generally premised on consumers’ aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their already-precarious financial situation.

In addition, the companies often take their substantial fees up-front and keep these fees even when they do not provide the promised services. As a result, many consumers find themselves worse off financially because of these debt settlement plans.

Dirty Dozen: New York AG Files Criminal Charges Against 12 Collectors

Tuesday, October 6th, 2009 at 5:00 am  
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New York Attorney General Andrew Cuomo filed criminal charges against a dozen employees of debt collection agencies in the Buffalo area. The charge? Posing as law enforcement officials and threatening to throw consumers in jail unless they immediately paid debts they were told they owed. All of the debt collection agencies were owned by Tobias Boyland, the subject of a Dateline NBC “sting” earlier in the year. Cuomo shut down the agencies in June, and has compiled more than a thousand complaints against the companies.

According to an AG office press release:

“The tactics allegedly used here are some of the worst of the worst in the debt collection business,” said Attorney General Cuomo. “The defendants’ alleged lies, deceit and intimidation caused many innocent people to pay money they didn’t owe just to stop the terrifying calls. My office will continue to seek out and punish companies that prey on consumers and violate clearly written laws regarding debt collection.”

According to the felony complaints, the defendants stole thousands of dollars from consumers from across the country by using the threat of criminal charges and incarceration to collect debts that often did not exist, had passed the statute of limitations or had been previously discharged through bankruptcy. The collectors also regularly inflated the amount owed on an actual debt and would falsely tell consumers that they were being sued in civil court.

The complaints allege that the collectors used false law enforcement identities to coerce and cajole terrified consumers into agreeing to make the payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, wired money, or sent money orders to the collectors. Consumers were intentionally given misleading names, addresses and telephone numbers that led them to believe the businesses were located far from the Buffalo area.

New York Consumer Protection Board Takes a Stand

Wednesday, September 16th, 2009 at 5:00 am  
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In an opinion piece in the Times Union New York Consumer Protection Board Chair and Executive Director Mindy Bockstein calls on the New York Senate to take action to enhance consumer protections against unscrupulous debt collectors and creditors. Bockstein says of Program Bill #61:

It increases penalties for violators; affords consumers the right to sue and receive attorney fees, court costs and actual damages for successful actions against debt collectors and creditors; compels collectors to contact debtors between 8 a.m. and 9 p.m. only; requires that notice be provided to consumers if a debt is transferred or sold; and increases the state award limit for statutory damages to $2,500 on behalf of wronged consumers, among other provisions.

She points out – and rightfully so – that “Thirty-year-old laws which do not account for new technologies and business practices or provide an adequate flow of information within the collection system to consumers and others must be changed.”

NY Attorney General Creates Web Portal for Debt Collection Abuse

Tuesday, August 25th, 2009 at 5:00 am  
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In case you haven’t seen it, New York Attorney General Andrew Cuomo recently launched a website, www.NYDebtHelp.com, that explains consumer rights, allows victims of debt collection and debt settlement companies quick access to the Attorney General’s office to file complaints, and outlines the actions that Cuomo is taking in regard to debt collection and foreclosures.

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