If you’ve ever wondered about what makes debt collectors tick, you have to read CNN Money’s “Confessions of Former Debt Collectors.” Featuring fascinating mini-profiles on 10 former debt collectors, the piece is an eye-opener. Some former collectors admit to violating the Fair Debt Collection Practices Act, using any tactic that would get people to pay. Others paint a rosier picture about their behaviors and activities. Most say that they the job wore them down. One says, “I’m sick of all the agony I put people through,” while another says, “If you didn’t break the law, you were asked what was wrong with you.”
Enforcement Actions: FTC’s 2010 Fair Debt Practices Report
We recently discussed the types of complaints that the Federal Trade Commission received during 2009, as outlined in the FTC’s Fair Debt Practices Report. The report, mandated by the Fair Debt Collection Practices Act, also requires the FTC to let Congress know how the FTC has been enforcing the FDCPA.
Typically, the FTC enforces fair debt practices through lawsuits. The FTC either files suit against unscrupulous debt collectors itself, or it asks the Justice Department to do so on its behalf. According to the FTC report, the agency settled an action against Oxford Collection Agency for illegal and abusive debt collection practices. Although the FTC settled two separate suits, each over a million dollars, the fine was suspended based on – ironically enough – their inability to pay.
The report also outlined a settlement with Academy Collection Service for violations ranging from harassment to depositing postdated checks early to communicating with third parties to threatening to garnish consumers’ wages. Again, fines totaling 675,000 were partially suspended due to inability to pay.
The FTC also settled against a number of international Internet payday lenders, as well as an action against Credit Bureau Collection Services. The latter alleged that Credit Bureau Collection Services tried to collect debts that weren’t owed, and informed credit bureaus that consumers owed money when that wasn’t the case.
There are several takeaways from the FTC’s latest report to Congress. First, of course, is that debt collection agencies routinely break the law. If you’re subjected to debt collector harassment, know that you’re not alone and get help from a fair debt attorney. Equally important, though, is to file a complaint with the Federal Trade Commission. They do track consumer complaints, and report them to Congress. Moreover, they use this tracking mechanism to investigate slimy debt collectors and even to take them to court. So, if you’re the victim of a shady debt collector, complete the FTC’s online form or give them a call and make your voice heard.
FTC’s 2010 Fair Debt Practices Report: Complaints
According to the Fair Debt Collection Practices Act, the Federal Trade Commission must submit an annual report to Congress that provides an overview of consumer complaints related to debt collection, as well as what the FTC did to make sure debt collectors followed the law, its educational efforts, and its research. The FTC just released its 2010 report, which covers 2009.
The report has a number of interesting findings. For example, the number of consumer complaints about third-party debt collectors increased substantially over the previous year. The FTC received 88,190 complaints in 2009, whereas it received 78,925 complaints in 2008. The same was true for complaints about in-house collectors, in that there were 32,076 complaints in 2009 and 26,6652 complaints in 2008. The agency acknowledges that the number of complaints don’t reflect the number of violations of the Fair Debt Collection Practices Act, since many consumers never file a complaint with the FTC. However, the FTC still receives more complaints about debt collection than it does for any other industry.
When it comes to the types of violations about which consumers complained, it seems that multiple violations of the FDCPA often occur. The FTC reports that 46.5% of complaints involved harassment by repeated or continuous calls. Other types of harassment included using obscene or abusive language (16.2%), calling before 8:00 a.m. or after 9:00 p.m. (11%), and threats of violence (2.9%).
Another category of complaints involved debt collectors demanding a larger payment than the FDCPA permits. The FTC reported that 31.1% of complaints revolved around a debt collector trying to collect a debt that was not owed, and 10.9% said that collectors tried to get consumers to pay interest or fees that were not owed.
Other complaints involved threatening legal action (20.9%), threatening arrest (13%), calling consumers at work (13.6%), telling a consumer’s friends or colleagues about a debt (12.2%), failing to send required legal notifications (25.7%), failing to verify disputed debts (11.5%), and continuing to contact the consumer after receiving a “cease and desist” letter (8.4%).
In our next post, we’ll take a look at some of the enforcement actions the FTC took in 2009.
Uncle Sam Settles Debt Collection Class Action for $7.4 Million
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.
United Recovery Systems Harassment
About United Recovery Systems
United Recovery Systems boasts over 1,000 collectors. Headquartered in Houston, they also have offices in Tulsa, OK, Phoenix, AZ, Bryan, TX, Harker Heights, TX, and Monterrey, Mexico. Earlier this month, they opened a new call center in Tempe, AZ, that has 360 call stations. They new call center currently employs about 150 debt collection agents, but United Recovery Systems expects to hire another 100 in the coming year. United Recovery Systems deals in retail, commercial, credit card, and deficiency auto loans. They’ve recently had some high-level staff turnover, hiring a new recruiting director and new chief financial officer. United Recovery Systems is regularly sued for violations of the Fair Debt Collection Practices Act.
Stop United Recovery Systems Calls
If you want to stop United Recover Systems calls, you’re not alone. One way to stop United Recovery Systems calls is to send them a cease and desist letter. According to the Fair Debt Collection Practices Act (FDCPA), United Recovery Systems must stop calling and writing to you if you send them a written notification. After United Recovery Systems receives your letter, they may only contact you to notify you that they are no longer attempting to collect the debt or if they decide to see a specified remedy.
In your letter, tell them that you’re making the request in accordance with the Fair Debt Collection Practices Act, and that you insist that United Recovery Systems stop calling you at home, at work, on your cell phone or any other location. Also tell them that you do not wish to receive any further written or electronic communication. In addition, tell United Recovery Systems not to call or communicate with any third party acquaintances.
Once you write your letter, make sure to keep a copy for your records, and to send the letter to United Recovery Systems via certified mail with a return receipt requested. Keep your mailing receipt, as well as the return receipt that indicates they received your letter.
How to Stop United Recovery Systems Harassment Calls
If you truly want to stop United Recovery Systems harassment calls, your best bet is to contact stopcollector.com. The attorneys who work with stopcollector.com are experts on the Fair Debt Collection Practices act, and can stop United Recovery Systems harassment calls in their tracks. Best of all, stopcollector.com can pursue United Recovery Systems for violations of the Fair Debt Collection Practices Act. This means that you can be awarded up to $1,000 or more when United Recovery Systems engages in unethical and illegal practices. Representation won’t cost you a penny, since the FDCPA says that debt collectors who cross the line have to pay consumers’ attorney fees.
United Recovery Systems Contact Information
United Recovery Systems
5800 North Course Drive
Houston, TX 77072
800-568-0399
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.
Buffalo Collections Industry Profiled in AP Story
About 10% of all complaints received by the Better Business Bureau last year involved a company in western New York. One of the largest industries in the area is debt collection. A recent AP story, published in the New York Times, briefly profiled the Buffalo-based collections industry.
Debt collection companies were drawn to Buffalo by its inexpensive office space, affordable work force and government grants.
Almost everyone knows someone whose son or daughter has worked for a collection agency,” said David Polino, president of the Better Business Bureau of Upstate New York. ”This is one of the industries that used to be Bethlehem Steel, the Chevy plant — all the places where you used to get out of high school and find employment 35 or 40 years ago, it’s now call centers.
The debt collection industry has brought many jobs to Buffalo. The article reports that between 5,000 and 6,000 people work at 110 collection agencies in and around Buffalo, the nation’s third-poorest city of its size. However, state and federal authorities have increased scrutiny of abusive debt collection practices in Buffalo.
Debt collectors, some of them convicted felons, have illegally posed as lawyers or unlawfully browbeat people — threatening to have them arrested or stripped of custody of their children — to scare them into making payments.
There are law-abiding collections firms in Buffalo, however, we have heard from many consumers who have been harassed by collectors based in the area. Glad the issue is getting some press attention!
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!
