Fair Debt Attorney Sergei Lemberg Applauds Sen. Al Franken’s S. 3888, “The End Debt Collector Abuse Act”

We distributed the following press release today. Kudos to Senator Franken!

Fair debt attorney Sergei Lemberg today announced his support for S. 3888, “The End Debt Collector Abuse Act,” and applauded Senators Al Franken (D-MN) and George LeMieux (R-FL) for introducing legislation that would amend the federal Fair Debt Collection Practices Act. “Consumers have been subjected to unprecedented levels of abusive debt collection practices,” said Lemberg. “Congress must step in and shore up the FDCPA to further protect consumers against predatory debt collectors.”

The proposed legislation would, among other provisions, require debt collection agencies to include basic information in a debt validation notice, such as the last payment date and the amount of debt; documentation of principal, interest, and fees; information about the consumer’s rights; and contact information for consumers who have complaints about the debt collector. It would also mandate that debt collection agencies investigate disputed debts. According to Lemberg, “These commonsense provisions address an insidious problem with debt buyers, who essentially treat debt collection as a numbers game. They buy ‘junk debt’ for pennies on the dollar, and then put the squeeze on consumers who often don’t even owe the money. Some debt buyers count on strong-arming a percentage of consumers into paying anyway, and thus walk away with a profit.”

Lemberg also commended the bill’s provisions to increase the liability limit for violations of the FDCPA. In the time since the FDCPA was enacted in 1977, consumers could recover just $1,000; The End Debt Collector Abuse Act would tie liability to the Consumer Price Index. “In order to be effective, the FDCPA has to have teeth,” said Lemberg. “Currently, many debt collection agencies view the penalties for FDCPA violations simply as a cost of doing business; the proposed revisions will help to deter bad behavior.”

Lemberg isn’t surprised that the debt collection industry is sounding the alarm and preparing to fight Franken’s bill, yet notes that this week the industry acknowledged the need to rein in bad players. “In the wake of ABC Nightline’s recent expose of the hate speech used by Advanced Call Center Technologies’ debt collectors in conjunction with collecting an $81 debt on behalf of Bank of America, along with the Minneapolis Star-Tribune’s exceptional ongoing series of investigative reports on abusive debt collection practices, the industry is scrambling to avoid what it calls ‘headline risk.’ I’d urge them to be less concerned about headlines and more concerned about the very real damage suffered by consumers who are victimized by illegal debt collection practices.”

Lemberg, who has been targeted by collection industry insider WebRecon LLC, for being the “most active consumer attorney” of the year, said that he intends to offer his full support to Senators Franken and LeMieux. “The End Debt Collector Abuse Act is an important step in protecting consumers, and it should serve as a wake-up call to the debt collection industry,” Lemberg concluded.

ABC Nightline Highlights Abusive Debt Collectors, Makes Bank of America Squirm

Brian Jones’ lawyer says that debt collection agency Advanced Call Center Technologies (ACT) has “a culture of thugs.” When you see the ABC Nightline report on the despicable, revolting language that collectors from ACT used to try and collect Jones’ $81 Bank of America debt, you’ll understand why. And, you’ll see ABC’s Brian Ross make Bank of America’s CEO squirm. After Ross’ gotcha, BofA fired ACT.


The larger issue, as was pointed out in the piece, is that some debt collection agencies use abusive language and violate the Fair Debt Collection Practices Act because they can, and because companies like Bank of America look the other way.

The debt collection industry, which typically takes the approach of “the best defense is a good offense,” and blames consumers and fair debt attorneys for increasing complaints of illegal practices, may be coming around. An editorial in the industry publication “Inside ARM” calls on the debt collection industry’s trade associations to “finally step up and do triage.” Michael Klozotsky writes, “In the service of the greater good of its members, ARM industry associations should begin actively dissociating its compliant members from companies that violate established rules of professional conduct.”

Let’s hope the industry takes Klozotsky’s advice.

New York AG Files Felony Charges Against Debt Collector

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.

Mixed Identity Case Moves Forward in Federal Court

If you’ve been the victim of an identity mix-up and have witnessed your credit score take a nosedive due to someone else’s debts, there’s hope. A federal court has rejected efforts by Experian and CMI to dismiss a fair credit lawsuit brought by Harry Cartwright, Sr. A press release issued by Cartwright’s attorney, Robert F. Brennan, outlines circumstances that will be familiar to many:

In 2005, Harry Cartwright Sr.’s identity began getting mixed with his son’s, who is also named Harry Cartwright. However, Cartwright Sr. and Cartwright Jr. have different social security numbers and, obviously, different birth dates, as well as other differences in identifying information. Cartwright Sr. and Cartwright Jr. worked together to clean up Harry Sr.’s credit report because, as a senior citizen on a fixed income, he relies upon his good credit for necessities and to keep his living expenses down.

However, Cartwright Sr. alleges that, in spite of numerous efforts including letters from attorneys, Experian and CMI continued to report Harry Jr.’s bad credit onto Harry Sr.’s credit report. Harry Sr.’s credit report with Experian was not cleaned up until after the lawsuit was filed.

The release goes on to quote attorney Robert Brennan, saying:

“This is yet another example of how the big players in the credit reporting industry really ignore and neglect the consumers they’re supposed to protect,” says Brennan. “Harry Cartwright Sr. tried for two years to clean up his credit by himself, only to have the door slammed in his face repeatedly. Only when he hired an attorney and filed a lawsuit did things start to improve. But by then a lot of damage had been done.”

Mr. Brennan also criticized Experian and CMI for acting as if the credit information belonged to them and not to Harry Cartwright Sr. “So often in these cases, you see an attitude that big credit bureaus and debt collectors believe that a consumer’s credit information belongs to them It does not. If nothing else, I hope Experian and CMI learn from this ruling that a consumer’s credit information belongs to the consumer, and a credit bureau and a debt collector each a sacred trust to protect it from wrongful damage.”

West Virginia AG Sets Up Claims Process for Victims of NES

westvirginiaWhen West Virginia Attorney General Darrell McGraw settled a case against debt collection agency National Enterprise System (NES), the agreement included a provision that the debt collector would pay $75,000 to the state, a portion of which would be refunded to victims. The suit revolved around telephone harassment, false threats of arrest, and other illegal tactics. In addition, National Enterprise Systems was accused of adding fees to debts for school tuition, which is against state law.

Students who paid fees to NES in conjunction with National Enterprise Systems’ collection efforts can obtain claim forms at www.wvago.gov or by calling 1-800-368-8808.

NCO Doubles Down on Healthcare Collections

Credit Check 1In a recent press release, debt collection agency NCO announced that it was rolling out an “end-to-end Healthcare Revenue Cycle Management Solution,” and had purchased Health BluePrints, the principals of which will take the lead in NCO’s healthcare-related consulting. The company said that its offerings will incorporate five areas, one of which is health information management. Seemingly, the company will be involved in documenting patient information relating to doctor visits, as well as collecting outstanding medical bills. Let’s keep our fingers crossed that confidential patient information doesn’t get into the hands of debt collectors.

Debt Collector Hudson & Keyse Files for Bankruptcy

According to the News-Herald, debt buyer and collection agency Hudson & Keyse have filed for bankruptcy. The Ohio-based company owes creditors an estimated $63 million, but has less than $300,000 in assets. It shuttered its operations on September 1, laying off its final 40 employees.

It’s reported that the company purchased massive amounts of consumer debt in 2007, and typically got consumers to pay through refinancing their mortgages. When the real estate market tanked in 2008, Hudson & Keyse found that it couldn’t collect using that method. One can’t help but wonder if the company found itself on the receiving end of debt collection calls.

West Virginia AG Settles with National Recovery Services

westvirginiaWest Virginia Attorney General Darrell McGraw recently announced that his office had reached a settlement with National Recovery Services and Carpenter Capital Investments for allegedly violating the state’s business licensing laws. The federal Fair Debt Collection Practices Act protects consumers across the country, but many states have licensing statutes related to debt collection. West Virginia’s law says that anyone who directly or indirectly collects a debt in that state must register and post a bond. Carpenter Capital Investments is a debt buyer that purchased bad debt, and then turned it over to National Recovery Services. Neither company was registered in West Virginia.

The settlement includes provisions that Carpenter Capital Investments would “cancel the outstanding balances of West Virginia consumers whose debts it had previously assigned for collection.”

Just When You Thought You’d Heard Everything…

New York Attorney General Andrew Cuomo has been doggedly going after abusive debt collectors, particularly those that operate shady operations in what might be termed the debt collection capital of the U.S., Buffalo, NY. Although we’ve witnessed a range of mind-boggling debt collection abuses, the latest Cuomo target takes the cake. According to a press release from his office, Cuomo has filed criminal charges against Lamont Cooper, who has allegedly been running a debt collection agency while incarcerated in a federal prison.

Cuomo’s complaint alleges that, despite a 2009 prohibition against doing so, Cooper ran CMC Recovery Services and Legal Action Recovery while in prison. Moreover, it alleges that Cooper’s debt collectors “routinely pose as law enforcement officials and threaten to arrest consumers and throw them in jail unless they made arrangements to pay the company immediately.”

Beware of Zombie Debt Collection Tactics

redtelephoneWhile we don’t want to put too fine a point on this trend, it does bear repeating. As reported by NBC Chicago, junk debt buyers are increasingly hounding consumers, trying to convince them that they need to pay debts that they never incurred. Typically, junk debt buyers purchase old debt that’s been written off by the original creditor; often, they purchase debt that’s already been repurchased by another buyer. They might purchase $1 million worth of debt for $50,000 or less. What they receive for their money is usually a database that contains consumer names, amounts allegedly owed, and perhaps an old address or phone number.

Debt buyers then put technology to work for them, using data mining techniques to get a bead on the consumer. All too often, though, the results are anything but reliable. NBC Chicago quotes a credit counselor who says, “They’ll put Susan Smith that lives in Pittsburgh together with Susan R. Smith that lives in Pittsfield. And all of a sudden they’ll push the two together [and] all you’ll get is a notice that you still owe $480.”

In other words, debt collectors call the wrong people, tell them that they owe money, and try and coerce them into a “deal” whereby the amount will be reduced if they pay immediately. It’s easy to see why this method is effective. If a debt buyer cons just a few dozen people into paying up, he’s made a profit.

In the process, a debt collector may try to extract additional information from the consumer, such as his or her Social Security number, place of employment, or other data that will support the debt collection agency’s efforts to track the consumer down. It’s within your rights – and in your best interest – to refuse to supply a debt collector with additional information. He’s basically on a fishing expedition.

It’s also important to demand a validation of the debt. Because debt buyers often have scant information about the original debt, they’re often unable to validate the debt. Until they can, they’re not allowed to contact you. If they do provide validation, carefully go through your records and/or credit reports to see if you might have incurred the debt. If the debt is not yours, dispute the debt. If the debt is yours, see if it’s beyond your state’s statute of limitations. If so, the debt is uncollectible.

If you’re the victim of zombie debt collection tactics, know that you’re protected under the Fair Debt Collection Practices Act. The FDCPA doesn’t only apply to those who owe money; it applies to everyone.

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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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