The Federal Trade Commission filed suit against what it terms “a web of defendants, including AMB Services, Inc., three other Internet-based lending companies, seven related companies, and six individuals” related to payday loans. The FTC is charging that the Colorado defendants didn’t disclose the true costs associated with the payday loans, and alleges that the payday lender made multiple withdrawals from consumers’ bank accounts while adding on a new finance fee each time. Furthermore, the suit charges that the defendants threatened consumers with arrest and imprisonment when trying to collect on loans.
In its press release, the FTC notes that there is a growing trend for payday lenders to try and shield themselves from prosecution by affiliating with Native American tribes. On March 21, we discussed the FTC’s action against Payday Financial, which the FTC said brings lawsuits against consumers in the Cheyenne River Sioux Tribal Court in order to obtain judgments. In that case, the FTC is arguing that the tribal court doesn’t have jurisdiction in debt collection cases against consumers.
Colorado Attorney General John Suthers recently announced that his office filed suit against Regent Asset Management Solutions, a Denver-based debt collection agency for allegedly violating Colorado’s Fair Debt Collection Practices Act. The suit alleges that Regent Asset Management did not conform to the state’s licensing requirements, and that the company’s license expired in July 2010. In addition, the Attorney General suspects that the company did not provide consumers with debt validation, and did not send out required notices with the amount due, the creditor’s name, and a notice of the consumer’s right to dispute the debt. Attorney General Suthers follows other Attorneys General (most notably in New York and West Virginia) who are using state laws to shut down debt collection agencies that violate the law.
According to an article in the Greeley Tribune, the AFNI debt collection agency will open up a new call center in Evans, Colorado. The call center is expected to have 500 employees, with the first 250 hired by December, and the remainder by February 2011. Based in Bloomington, IL, AFNI operates other centers in Alabama, Kentucky, Florida, and Texas.
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.
It seems as though the city council of Chattanooga, Tennessee, believes that desperate times call for desperate measures. The Chattanooga Times Free Press reports that the city will soon turn debts over to the Alliance One, so that the debt collection agency can take citizens to court. Chattanooga offered those owing a total of $11.7 million in fines a 25% discount and an amnesty program through May 28, but those fined have ponied up less than $4,000. The city plans to revamp its ordinances to make it easier to boot the cars of those who owe fines. One way to look at it is that Chattanoogans will not only get sued, but they won’t be able to drive to court in order to defend themselves.
But it appears that Chattanooga isn’t the only city looking to put the squeeze on its citizens. According to the Aurora Sentinel, those who have received tickets in Aurora, Colorado, will also be at the mercy of Alliance One beginning June 1. Aurora officials say that Alliance One will report those with unpaid tickets to the National Credit Bureau, will access contact information and cell phone numbers, and will charge consumers a collection fee of 25 percent.
It appears that Alliance One, which has been repeatedly accused of violating the FDCPA, has a new sales channel, perhaps approaching cities that are strapped for cash and promising to use any means necessary to collect overdue fines.
Sergei Lemberg
