Lemberg is Proud to be “Most Active Consumer Attorney”

A debt collection industry trade publication, Inside ARM, reported that lawsuits against debt collectors are averaging 800 per month. It also noted that, year-to-date, our own Sergei Lemberg was the “most active consumer attorney.”

Lemberg embraces that label, saying “I’m passionate about empowering my clients to stand up against debt collection agencies that use illegal tactics and break the law. If that makes me a target of the debt collection industry, so be it.”

Although the debt collection industry points the finger at consumer attorneys and websites for the uptick in lawsuits, Lemberg says that the spike is the result of increasingly aggressive tactics by debt collectors who often violate the Fair Debt Collection Practices Act. “When debt collectors harass consumers, engage in deceptive practices, and prey on consumer ignorance, they must be held accountable,” said Lemberg. “Under the law, the only way a consumer can fight back is to sue the debt collection agency that breaks the law.”

Here’s to fighting the good fight, and doing whatever it takes to make sure that debt collectors follow the law.

Facebook Friends and Frenemies

Debt collectors at the Australia and New Zealand Banking Group (ANZ) are the subject of an internal investigation and may face charges under the Australian Federal Privacy Act for posting a fake Facebook profile in order to “friend” customers who owed money. The profile, listed under the name “Max Bourke,” was used to try and find bank customers who had moved without leaving a forwarding address. The profile has been taken down. The lesson: Make sure you know who your Facebook “friends” are.

Uncle Sam Settles Debt Collection Class Action for $7.4 Million

Uncle Sam

You know times are tough when even the US government is being sued for abusive debt collection practices, reports InsideARM. The U.S. government has agreed to settle a class action lawsuit brought by military vets for $7.4 million.

The issue was the government’s practice of “administrative offset,” or intercepting federal payments, such as income tax refunds and social security, to pay debts owed to the US. The vets alleged that the government miscalculated fees and interest, failed to send proper notice, and used the “offset” to collect debts that were beyond the statute of limitations. Over 6,700 vets will receive $10,000 each as part of the settlement.

Collapse of Mann Bracken Throws Courts, Consumers, Into Disarray

The Baltimore Sun reported last week that Mann Bracken, a Rockville, Maryland-based debt collection law firm, had closed its 24 offices and will file for bankruptcy protection or disband. Mann Bracken was under investigation by various states for violations of the Fair Debt Collection Practices Act.

As a result of Mann Bracken’s collapse, a Maryland judge announced that tens of thousands of debt-collections cases be dismissed, and state officials revoked its license.

Mann Bracken’s principals, through a statement issued by their attorney, attributed the firm’s collapse to the bankruptcy of Axiant, a company that handled its support services. According to the statement, Axiant’s liquidation left Mann Bracken without funds to pay creditors.

Many consumers are confused regarding what effect Mann Bracken’s collapse will have on them. A spokesperson for the Maryland court system advised consumers with pending lawsuits to contact the clerk of the jurisdiction in which the suit was filed. Consumers who have entered payment arrangements with Mann Bracken are uncertain where to send their payments, as the firm’s phones are disconnected. Cory L. Zajdel, a Maryland consumer law attorney, has advised that consumers with settlements protect themselves by filing a notice with the court that they couldn’t make a payment because the company no longer exists.

FTC Orders Debt Collectors to Disclose Detailed Portfolio Information

In response to consumer complaints that debt collection firms have attempted to collect from the wrong individuals or collect incorrect amounts, the Federal Trade Commission has ordered that certain debt buyers make disclosures to the agency.

Thomas Kane, an FTC attorney, said the firms were selected because they are large. In fact, they represent approximately 75% of the debt purchased in the U.S.

As reported in a recent article, the FTC has given the firms until February 25 to comply with the order. Each firm must provide the following data for 2006 through 2008:

- Total annual sales and earnings from collecting on purchased debt, selling debt portfolios, and other debt collection-related activities.
- The number of debt portfolios purchased each year and their identification number.
- The portfolio seller’s name, and number of customer accounts in each portfolio.
- The age and types of accounts included (i.e., credit card, medical, auto, etc.).
- The face value of each portfolio and how much the company paid for it.
- The number and face value of accounts sold without collection attempts.
- The number and average accounts purchased from the original creditor or owned previously by one or more debt buyers prior to the company’s purchase.
- To whom the debt buyer resold accounts, and how many accounts the company sold to each purchaser.

Some in the debt collection business are concerned about the FTC scrutiny. However, those of us in the consumer protection industry are quite pleased by it.

FTC Wraps Up Largest Case Against Abusive Debt Collector

Last week, the Federal Trade Commission settled with the remaining defendants in a case that drew the largest civil penalty ever imposed on a debt collector. 

The settlement was negotiated by the Department of Justice and the FTC with individual defendants Albert Bastian and Keith Hurt III, formerly of Academy Collection Service, Inc.  Academy, and its owner, previously settled with the FTC for $2.25 million.

According to the FTC complaint, Bastian and Hurt allegedly misled, threatened and harassed consumers, disclosed consumers’ debts to third parties and deposited post-dated checks early, in violation of the Fair Debt Collection Practices Act.

In what some may consider to be karmic justice, the recent settlement imposed stiff penalties of $375,000 and $300,000 on defendants Bastian and Hurt, respectively, and barred both from using abusive collection practices. However, based on their lack of ability to pay, the judgments were suspended on payment of $7,500 each.  If Bastian and Hurt are determined to have misrepresented their poor financial condition, the full amount of the judgments will become due.

Good work, FTC!

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.

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.

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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