Yesterday, we gave you an overview of Wood v. Capital One. Lemberg & Associates is charging that the letter Mr. Wood received is deceptive and misleading, and therefore violates the federal Fair Debt Collection Practices Act (FDCPA). The FDCPA says that a debt collector can’t falsely represent the character, amount, or legal status of any debt. In other words, declaring that the letter was a “Pre-Legal Notice,” without actually ever intending to take Mr. Wood to court, is a violation. The FDCPA also says that a debt collector can’t use false representation or deceptive means to collect a debt. By making it look as though the letter came from Mr. Wood’s original creditor, Capital One Collections and NCO Collections were acting deceptively.
In addition, the notice didn’t mention Mr. Wood’s right, under the FDCPA, to dispute the debt or to obtain verification of the debt. Plus, the letter didn’t effectively communicate that it was sent by a debt collector (that information was on the back of the letter in fine print) – another FDCPA violation.
Tomorrow, we’ll discuss why Lemberg & Associates is filing a class action lawsuit on behalf of consumers who experienced similar abuses.
Lemberg & Associates, which maintains the StopCollector website, works tirelessly to help consumers stand up to rogue debt collection agencies. From time to time, we’ll bring you news about some of the firm’s most prominent cases. Today, we’ll take a look at how Gareth Wood was victimized by Capital One Services and NCO Financial Systems on behalf of Capital One Bank.
Mr. Wood received a “Pre-Legal Notice” letter on Capital One letterhead saying that his account with the creditor Capital One Bank was “seriously delinquent and meets the guidelines for legal action if payment is not made….” The front of the letter also told him he could call a toll free number or visit a website “to see what your options are or to make a payment.” It was signed, “Capital One Services, LLC.”
Mr. Wood understandably thought that the notice was from his creditor, Capital One Bank. In fact, the letter was sent by Capital One Collections and NCO Collections. NCO Collections comes into play because the toll-free number was automatically redirected to NCO Collections.
Tomorrow, we’ll discuss why these debt collectors violated the Fair Debt Collection Practices Act.
Recently, there’s been quite a bit of chatter about the Department of Education’s policies and procedures for collecting on defaulted student loans. While it’s widely known that the Department contracts out collections to third-party debt collection agencies, Kim Clark over at U.S. News & World Report has blown the whistle on the knee-jerk reaction of the Department to pull its collection procedure manual off the Web. This move is particularly troublesome against the backdrop of the Obama Administration’s pledge for transparency. Both consumers and attorneys have utilized the manual to better understand their rights and to ensure that debt collection agencies are playing by the book. The Department’s rationale for yanking the manual? Apparently, they don’t want consumers to know that debt collection agencies are allowed to accept payment of 90% of the debt owed.
If you have student loan in default, it might be helpful to know which agencies might be calling you. The Department of Education still lists its contractors here.
Here’s a rundown:
Progressive Financial Services
Allied Interstate
NCO
CollectCorp
Diversified Collection Services
Account Control Technology
FMS Investment Corp
Financial Asset Management Systems
Van Ru Credit Corporation
Immediate Credit Recovery
National Recoveries
Windham Professionals
Collection Company of America
Pioneer Credit Recovery
The CBE Group
Premiere Credit of North America
GC Services
West Asset Management
ConServe
Collection Technology
Delta Management Associates
Coast Professional
Enterprise Recovery Systems
For a peek into the system use to award contracts to private debt collection agencies, you can read an article in the debt collection industry publication InsideARM.
Apparently, contracts are awarded on a quarterly basis, based on a variety of performance metrics. For that reason, the debt collection industry keeps close tabs on which agencies are coming out on top. InsideARM reports that, for the period of April to May, Pioneer Credit Recovery topped the list, followed by CBE Group and NCO Group. From the numbers listed, it looks as though debt collection agencies managed to collect around $40 million during those two months.
The Rio Grande Sun reports that the names and addresses of 733 residents of New Mexico’s Rio Arriba County who have delinquent trash collection bills are being turned over to a debt collection agency. Working on commission, Sterling United Worldwide Collections will rake in close to a third of every bill they collect, meaning that it stands to make close to a half million dollars on $1.6 million in debt.
North Central Solid Waste Authority Interim Manager Michele Martinez said she chose Sterling United Worldwide Collections because it would relentlessly track down debtors. To her credit, though, she said that she didn’t want to pursue the other option available under the law: taking consumers to court. “I did not want to take anybody’s house away because of a garbage bill, no,” she said.
We’ve seen a recent spike in municipalities, universities, and other entities turning to debt collection agencies to collect on everything from parking tickets to trash collection bills. It’s evident that the recession is resulting in lower revenues for these entities, which in turn are scrambling to find ways to close the gap in budget shortfalls. With federal stimulus money dropping off, we anticipate that an even greater number of local government agencies will turn to debt collection agencies to bring in revenue.
McClatchy Newspapers recently published an article highlighting the work that StopCollector’s Sergei Lemberg conducts on behalf of his clients. After telling the story of Lemberg & Associates’ client Shawn Traylor, the story quotes Lemberg as saying that the increase in lawsuits against debt collection agencies is a result of increasingly aggressive debt collector tactics that cross the line into illegal behavior under the Fair Debt Collection Practices Act:
“I think debt collectors have become more aggressive by necessity because folks just have less money. And how do you collect more from people who have less money? You have to become more aggressive,” Lemberg reasoned.
Late last week, Colorado Attorney General John Suthers filed a lawsuit against the David Faith Corporation, a debt collection agency that allegedly violated Colorado state law by operating as an unlicensed debt collector. According to a press release issued by the Attorney General’s office:
The Office of the Attorney General issued an order in late May denying the David Faith Corporation’s application for a debt collection license and barred the company from collecting debts. According to the order, the Denver-based company engaged in fraudulent and threatening debt collection practices, which is barred under Colorado law, and attempted to collect debts prior to obtaining a license from the state. The company’s owner, Chad Lee, also lied on the company’s application to become a licensed debt collection agency concerning his criminal history.
Despite this, the David Faith Corporation has apparently continued to conduct debt collection in Colorado. A tip of the hat to Attorney General Suthers for protecting Colorado consumers.
Mann-Bracken was once consumers’ worst nightmare, but now it seems as though the former law firm is reaching from the grave. In late 2009, Mann-Bracken’s collection arm, Axiant, filed for bankruptcy, and the firm closed its doors. According to Gazette.net, fair debt attorneys are reporting that consumers who have paid their Mann-Bracken debts have had their wages garnished – even after Mann-Bracken went under. Other consumers may be contacted by creditors who haven’t received the payments collected by Mann-Bracken, and may be told that they have to pay again. Don’t believe it.
Sergei Lemberg
