The U.S. Court of Appeals for the Ninth Circuit ruled against Arrow Financial Services in the class action suit Gonzales v. Arrow Financial Services. The debt buyer purchased time-barred debts owed to health clubs, and then the debt collection agency sent 40,000 California consumers letters in an attempt to collect those debts. Because the debts were more than seven years old, the Fair Credit Reporting Act says that Arrow Financial Services could not report the debts to credit bureaus like TransUnion, Experian, and Equifax. Yet in the collection letters sent to consumers, Arrow Financial Services included the sentence, “Upon receipt of the settlement amount and clearance of funds, and if we are reporting the account, the appropriate credit bureaus will be notified that this account has been settled.” On the reverse side of the letter, it said, in part, “As required by law, you are hereby notified that a negative credit report reflecting on your credit records may be submitted to a credit reporting agency if you fail to fulfill the terms of your credit obligations.”
Gonzales sued Arrow Financial Services for violating the Fair Debt Collection Practices Act, and in 2007, a district court found in his favor. In a subsequent jury trial, the jury awarded Gonzales and other class members a combined total of $225,500. In its appeal, Arrow Financial Services argued that, because the letter contained the word “if” (“if we are reporting the account”), the consumer could not interpret the letter as saying the debt buyer would or could report the account. The appellate court disagreed, saying, “At the outset, we emphasize that a literally true statement can still be misleading.”
The Minneapolis Star Tribune recently compiled a list of the most litigious debt buyers, who raked in over $223 million in court judgments against Minnesotans from 2005 to 2009. The top ten were: Midland Funding, Dakota Bluff Financial, LVNV Funding, Asset Acceptance, Arrow Financial Services, North Star Capital, Unifund CCR, Palisades Collections, Portfolio Recovery Associates, and Credit Acceptance Corp.
We’ve often noted that taking consumers to court is a favorite tactic of debt buyers. They purchase debt for pennies on the dollar, file lawsuits against unwitting consumers, and then obtain judgments. Consumers often don’t know that they’re being sued, don’t know how to properly defend themselves, or don’t think that it matters since they don’t have any assets. The thing is, once you have a judgment against you, a debt collection agency can pop up at some point in the future and garnish your wages. It’s important to stay alert and to defend yourself if you’re sued by a debt collection agency.
We’ve been counting down the top debt collection agencies, and number 16 on our list, Arrow Financial Services, definitely runs with the big dogs. Back in 2004, Arrow Financial was purchased by Sallie Mae, which is a publicly traded company (NYSE: SLM). Sallie Mae is best known for making student loans. While it was once a government service, Sallie Mae became fully privatized in 2004, and no longer has ties to the U.S. government. Given that Sallie Mae is in the business of making loans, it shouldn’t come as much of a surprise that it purchased a collection agency the same year it went private. Arrow Financial is one of three Sallie Mae collection agencies; General Revenue Corporation and Pioneer Credit Recovery are the other two.
Arrow Financial has offices in four locations: Rockville Centre, NY; Austin, TX; Whitewater, WI; and Niles, IL. In addition to collecting on behalf of original creditors, the company buys up old debts. One of its areas of focus is convincing original creditors to let Arrow Financial buy up the debt of consumers who participate in Consumer Credit Counseling Services. Another comes into play in the arena of auto loans. When a consumer gets behind in payments and a vehicle is repossessed, the vehicle is sometimes worth less than the amount that is owed on the car. Arrow Financial is one of several debt collection companies that will buy up the difference (called a “deficiency balance”), and try to collect money from consumers who have already had their vehicles repossessed.
