On Facebook, Debt Collectors Aren’t Your “Friends”

It’s no secret that debt collectors will go to any length to find you. They’ll pose as old friends, roommates, and coworkers. They’ll call family members, they’ll use the data mining industry, and they’ll even use social networking sites. As the New York Daily News recently reported, debt collectors are doing all kinds of Internet searches to find folks, including tracking people down on Facebook, Twitter, and MySpace. The article quoted New York City Consumer Affairs Commissioner Jonathan Mintz as saying, “The biggest complaints we’ve been getting and finding to be true are about debt collection agencies who are trying to collect money that isn’t actually owed.”

Meanwhile, the President of the Association of Credit and Collection Professionals defended the practice, saying, “”It’s public information and if someone has a MySpace or Facebook page and they’ve incurred a debt than there’s absolutely nothing wrong with a debt collector using this information to locate them.”

The bottom line? First, be careful about how much information you put online, and be vigilant about checking sites’ privacy policies. Second, if a bill collector starts calling, demand documentation of the alleged debt. All too often, debt collection agencies go after people who have already paid the debt, or try and collect on debts past the statute of limitations.

Bank of America Backs Down After Tactics Go Viral

On September 8, a Bank of America customer posted a rant on YouTube saying that the bank raised her credit card interest rate to 30% APR - even though she’d made her payments on time and had a good credit rating. According to CNNMoney.com, “Debtor’s Revolt Begins Now!”, which has had over 350,000 views, led BofA senior VP Jeff Crawford to call her and offer here a 16.99% APR. The consumer, Ann Minch, convinced Crawford to lower it further, to 12.99% APR.

You can watch Minch’s original YouTube video here, and a follow-up video that she made after the BofA call here.

Top Debt Collectors: #10 - Nationwide Credit

We’re often asked about the top debt collectors in the country, so we’ve been doing a countdown of the top 20. Today we’re covering number 10, Nationwide Credit Corporation.

Nationwide Credit collects on a variety of types of debt, including health care, telecommunications, retail, utility, banking, property management, credit card, commercial, and government. They collect on a contingency fee basis, which means that they get a portion of what the collect - a powerful incentive to use whatever means necessary in order to get consumers to pay.

Regarding the Fair Debt Collection Practices Act, the company says that their collectors “are trained to work successfully within its framework.” Yet in 1998, Nationwide Credit paid what was then a record $1 million civil penalty to the Federal Trade Commission for violations of the Fair Debt Collection Practices Act. According to the FTC, “Nationwide’s debt collectors harassed consumers, made false and misleading representations, failed to send required validation notices, failed to verify debts when requested to do so by consumers, and made impermissible third party contacts regarding consumers’ debts.” This was on the heels of a 1992 civil penalty of $100,00 for the same charges.

FTC Gets $1 Million from Internet Payday Lender

The Federal Trade Commission recently announced that it has reached a settlement agreement with a group of Internet payday loan companies operating out of the United Kingdom. The defendants included Cash Today, Ltd., and The Heathmill Village, Ltd. (both registered in the United Kingdom); The Harris Holdings, Ltd. (registered in Guernsey, an island between England and France); Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Rovinge International, Inc.; and Lotus Leads, Inc. and First4Leads, Inc. (both now dissolved); each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and Big-Int, Ltd.

The settlement requires the companies to pay over $970,000 to the FTC and almost $30,000 to the State of Nevada. According to the FTC, the defendants violated the Fair Debt Collection Practices Act “by using unfair and deceptive collection tactics. The Commission alleged that they falsely threatened consumers with arrest or imprisonment, falsely claimed that consumers were legally obligated to pay the debts, threatened to take legal action they could not take, repeatedly called consumers at work using abusive and profane language, and improperly disclosed consumers’ purported debts to third parties. They also allegedly failed to make required written disclosures to consumers before consummating a consumer credit transaction, such as the amount financed, the annual percentage rate, payment schedule, total number of payments, and any late payment fees, in violation of the Truth in Lending Act (TILA) and Regulation Z.”

Top Debt Collectors: #11 - United Recovery Systems

We’re often asked about the top debt collectors in the country, so we’ve been doing a countdown for the top 20. Today we’re covering number 11, United Recovery Systems.

United Recovery Systems boasts over 1,000 collectors. Headquartered in Houston, they also have offices in Tulsa, OK, Phoenix, AZ, Bryan, TX, Harker Heights, TX, and Monterrey, Mexico. They deal in retail, commercial, credit card, and deficiency auto loans. They’ve recently had some high-level staff turnover, hiring a new recruiting director and new chief financial officer in the past month. Also over the past month, four lawsuits have been filed against the company for alleged violations of the Fair Debt Collection Practices Act.

Did Debt Collectors Contribute to Death?

Tampa Bay’s WTSP recently reported that a debt collection agency is being sued for allegedly contributing to a consumer’s death. According to the story, Stanley McLeod fell behind on his mortgage payments after having to quit work following a heart attack. McLeod’s widow says that the collection calls were so frequent and abusive that, “He’d get very red in the face and short of breath.” She is suing the debt collector, saying, “They humiliated him, they harassed him, and they didn’t care…. You know that if things had been handled differently, he may still be here.”

New York Consumer Protection Board Takes a Stand

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.”

Debt Collector Association Offers Options for Reform

In the wake of a report by the National Association of Attorneys General that listed debt collection as the number one consumer complaint, the debt collection industry association, The Association of Credit and Collection Professionals (ACA) proffered two remedies to combat debt collector abuses.

A press release issued by the organization noted that ACA International’s board voted to “explore the development of a national debt collection dispute resolution program that would seek to resolve complaints consumers have against debt collectors in a timely, cost-effective and unbiased manner.”

The organization is also engaging in “further discussion on and research the concept of creating a national debt collector registry. In theory, the registry would require every individual debt collector as defined by the Fair Debt Collection Practices Act or applicable state law to be registered and pass an examination based on critical job benchmarks. Also, the registry would increase accountability by enabling industry employers to track complaints filed against individual collectors.”

It seems apparent that both moves are preemptive actions designed to head off further debt collection industry regulation by the federal government, namely through the Consumer Financial Protection Agency. Such self-regulatory organizations are a bit like the fox guarding the henhouse.

While a national debt collector registry would be a step in the right direction, we’re leery of a binding dispute resolution program. From our extensive experience in vehicle lemon law complaints, we’ve seen that state-run arbitration boards give auto manufacturers, with their teams of legal experts, an unfair advantage over self-represented consumers. It’s not unreasonable to assume that consumers who have been victimized by debt collection agencies would find themselves in a similar situation. As it stands, the Fair Debt Collection Practices Act provides consumers with remedies, in that debt collectors who violate the FDCPA can be required to pay fines of $1,000 for each violation, and pay the consumer’s attorney fees.

Ohio AG Points to Uptick in Debt Collection Complaints

Ohio Attorney General Richard Cordray recently announced that there has been a noticeable uptick in debt collection complaints in that state. He noted, “In Ohio, we have received 2,067 complaints about debt collection in 2009 year-to-date, which is on pace to be almost double the number of complaints we received just three years ago,” Cordray said. “It’s a clear reflection of today’s economic stress. Ohioans’ tolerance of illegal debt collection tactics along with credit and home loan scams has reached its limit.”

A press release issued by his office goes on to say:

In 2008, the Ohio Attorney General’s Office received 2,446 debt collection complaints; 2,123 were received in 2007, and 1,699 were received in 2006. Earlier this year, Cordray filed a lawsuit against National Enterprise Systems, Inc., a collection agency based in Solon, Ohio, for routinely harassing consumers and using illegal practices to collect debts.

“A line must be drawn to keep debt collection from crossing over into harassment,” Cordray said. “Consumers have the right to be treated with respect and dignity. Overly aggressive tactics, such as making threats and repeated phone calls, are not allowed. Ohioans have enough financial worries without the added stress of harassing collection practices.”

Top Debt Collectors: #12 - ER Solutions

We’re often asked about the top debt collectors in the country, so we’ve been doing a countdown for the top 20. Today we’re covering number 12, ER Solutions.

ER Solutions is a subsidiary of Convergent Resources, Inc., which in turn is part of Convergent Resource Holdings, LLC. The collection agency boasts over 1,500 employees at five call centers (Renton, WA, Glendale, AZ, Atlanta, GA, Houston, TX, Montgomery, AL). It touts an “unblemished regulatory compliance record,” but in describing what the company does, says, “We collect money. We understand the psychology of delinquent customer/debtor resistance to paying their obligations and we’ve become skilled at effectively dealing with this resistance by using proven strategies and collection techniques to encourage voluntary payment.” Sounds more than a little unnerving. It could be why close to a dozen lawsuits have been filed since July for allegedly violating the Fair Debt Collection Practices Act.

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Sergei Lemberg, Esq., focuses his practice on defending consumer rights in the areas of Fair Debt Collection Law, Consumer Fraud, Auto Warranty and Auto Injury litigation.

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