Over $1 Million Settlement for Consumers In Class-Action Fair Debt Lawsuit

The Billings Gazette reported that an estimated 31,000 consumers won a total of over $1 million in settlement of a lawsuit alleging illegal debt collection practices. The federal class-action suit was filed last year in Montana under the Fair Debt Collection Practices Act (the “FDCPA”), and included allegations of civil racketeering.

Plaintiff, Jeannie Cole, claimed that the defendants used false affidavits to win judgments against consumers. The affidavits in question were signed with the name of a dead woman.

The defendants named in Cole’s complaint included CACV of Colorado, Portfolio Recovery Associates, Johnson, Rodenburg and Lauinger, a debt collection law firm, and the bankrupt Washington Mutual Bank and two of the bank’s employees.

The Cole case was initially filed in state court by Portfolio Recovery Associates, a debt collector, in order to recover a credit card debt allegedly owed by Ms. Cole. Portfolio attempted to prove the debt with an affidavit signed by a Martha Kunkle, purportedly an agent of Washington Mutual. When Ms. Cole’s attorney tried to verify the affidavit, he learned that Martha Kunkle had died in 1995. Her daughter, a Washington Mutual employee, had authorized other employees to sign her deceased mother’s name on thousands of affidavits.

All three of the defendants have reached tentative agreements in settlement of the lawsuit. Thousands of class members could receive $25 to $500 in potential recovery. More details regarding the proposed settlement can be found here.

West Virginia A.G. Sues Internet Lenders

West Virginia Attorney General Darrell McGraw’s Consumer Protection Division has sued 17 internet payday lenders, numerous collection agencies and their principals.

According to the official press release from the WV Attorney General’s office, the lawsuits are part of the Division’s efforts to end the “victimization of West Virginia consumers by Internet payday lenders and their collection agencies.”

The Charleston Gazette published an article covering the lawsuits that goes into greater detail than the press release. The first suit names a series of related ventures and individuals that operated websites that made loans with unlawfully high interest rates under the trade name “FFD Resources.”

Consumers who took out payday loans from the defendants ended up paying as much as ten times the principal in interest.

The companies named in the lawsuit had ignored McGraw’s investigative subpoenas and violated a court order prohibiting collection on their unlawful loans in the state.

The second suit requests that the court order four collection agencies, Capital Collections, LLC, Claims Investigators of America, Crime Monitoring Center and Premier Recovery Group, to comply with the Attorney General’s subpoenas and to stop collecting in West Virginia.

We applaud the WV Attorney General’s commitment to consumer protection. Some of the companies sued are notorious violators of the Fair Debt Collection Practices Act, and are extremely skilled at dodging the law.
coins

Complaints Against Aggressive Debt Collectors On The Rise

Nationwide, reports of abusive debt collectors are increasing. Complaints to federal officials are on pace to be about 6% higher than last year.

Unscrupulous collectors use illegal scare tactics, such as pretending to be calling from an attorney’s office, or threatening consumers with time behind bars if payment is not received for a debt. Last time I checked, America does not have debtor’s prisons. Whew.

Some collectors prefer keep it simple, eschewing more exotic intimidation tactics in favor of an industry classic: scorching verbal abuse. For example, this week a Florida news channel reported this threatening message one such collector left for a consumer:

Mr. —–, this is Mickey. When I see you I am going to (expletive) you up,” the collector says in a phone message. “I want my money and I want it now. My name is Mickey. I’m with Jacksonville ——. When I see you I will (expletive) you up. … I need my money. I will find your sister, your daughter, whoever Ms. Deborah (expletive) is, but I will find her and I will find you and I will (expletive) you up. Goodbye.”

The quotation above is full of Fair Debt Collection Practices Act (the “FDCPA”) violations. Many people are unaware of their rights under the FDCPA, and under various state statutes. Some collectors are willing to regularly break the law because, the fact is, they are making money off of unwary consumers.

Florida Cracks Down on Debt Collectors, Consumers Win!

Two Florida officials, Attorney General Bill McCollum and the state’s Chief Financial Officer Alex Sink, separately announced plans to aggressively pursue abusive debt collectors. You can read about some of their specific proposals here. The twin announcements are no coincidence: McCollum and Sink are front-runners in Florida’s 2010 gubernatorial race, and abusive collection practices are turning into a campaign issue. In the battle to crackdown on law-breaking debt collectors, consumers win!

McCollum proposed various measures to legislators:

“As Attorney General, I am willing to go above and beyond what the law currently requires so that people who have complained about abusive practices by debt collectors may finally get some relief,” said McCollum in a statement.

As did Sink:

There are clear, commonsense changes that are needed to better protect Florida’s consumers against these abusive debt collector practices,” said Sink. “I will continue to work in a collaborative way in order to put real teeth in the law and crack down on abusive debt collectors.”

We like the tone of this race! Apparently, an article in the Orlando Sentinental detailed failures by the state of Florida to effectively track consumer complaints and stop illegal harassment. The article caught the public’s attention, and McCollum and Sink both want to demonstrate their commitment to protecting consumers (a.k.a. voters). The Sentinel article highlights a important, but sometimes overlooked, issue - we must not only enact laws that protect consumers from abusive debt collectors, but also ensure that the laws are enforced, especially against repeat offenders.

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.

» About Us


Subscribe to RSS   Subscribe to RSS