According to the New York Daily News, New York’s Bravest have $50 million in unpaid ambulance fees that are up for sale. In 2007, the FDNY sold $150 million to debt buyer MedCLR for a paltry $3.6 million. Chances are, FDNY will again get pennies on the dollar. Experts say that ambulance debt is especially hard to collect, since those who are in arrears are likely consumers that are lower income and without health insurance.
Whiplash: New York State to Outsource Debt Collection
According to the New York Times, New York’s State Division of the Budget is seriously considering subcontracting collection activity to private debt collection agencies. This move can be considered either ironic or hypocritical, since the state’s Attorney General and Governor-elect Andrew Cuomo has prioritized cracking down on unscrupulous debt collectors, and has rarely had a kind word to say about the industry. According to the Times, the Budget Division will hand over at least $425 million in uncollectible debt, but will not do engage the services of any debt collection agency that has run afoul of the Attorney General. Still, given the huge amount of business the state represents, it will be tempting for debt collection agencies to underbid the contract (likely a percentage of the money recovered), and then to go to any means to collect as much as they can.
Debt Collection and the Midterm Elections
During this midterm election cycle, some candidates are directly or indirectly going after the debt collection industry. New York Attorney General Andrew Cuomo, who has been dogged in rooting out the bad players in the debt collection industry, is running a debt collection-related campaign ad in the New York gubernatorial race.
Here’s the ad:
Debt collection industry publication, Inside ARM, says that some call Cuomo’s efforts a “jihad,” and that this represents “the first time the industry has appeared in a political ad.” While it acknowledges that Cuomo has gone after the truly bad guys, it also seems to take offense at the Attorney General touting his record. You can’t have it both ways.
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.
Many 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.
Consumer Advocates Pushing for Consumer Credit Fairness Act
Pending legislation in New York would help to prevent unscrupulous debt buyers from filing an endless string of lawsuits and obtaining legal judgments against consumers for invalid debts. A coalition of organizations, including the New York State chapter of AARP, are pressing for passage of the Consumer Credit Fairness Act (S.4398-A, A.7558-A). According to a press release issued by the coalition:
“Every year, debt buyers bring hundreds of thousands of debt collection lawsuits against New Yorkers. Many of these lawsuits should not be brought in the first place. Debt buyers regularly file frivolous cases even when they have no proof that the people they’re suing actually owe the money,” said Susan Shin, Staff Attorney at NEDAP.
“These debt buyer lawsuits are especially abusive because New Yorkers often receive no notice that they were sued until after judgments have already been entered against them,” said Robert Martin, Associate Director of DC 37 Municipal Employees Legal Services. “Debt buyers wreak havoc on people’s lives by using these judgments to freeze people’s bank accounts and garnish their wages.”
If you live in New York, call your state senator and assemblymember and urge passage of the bill.
New York City Provides Debt Collectors with Guidance
According to a report by Inside ARM, the New York City Department of Consumer Affairs has responded to a letter by debt collection trade associations in which it clarified provisions of Local Law No. 15, which regulates debt collection agencies. The Department’s response said, among other things, that:
* When a debt collection agency communicates with a consumer, it must provide a call-back number that will be answered by a person, rather than a machine; the name of the agency, the name of the original creditor; the name of the person the consumer should call back; and the amount of the debt.
* “Communication” includes voice mail messages, email, and text messages.
* A debt collection agency must provide the consumer with the agency’s name, and can only use a DBA if it was included in the agency’s license application.
* The callback number that will be answered by a person (rather than a machine) must be included in every communication, including an initial collection notice.
* A debt collector can use an alias only if his employer has the alias on file and it can be tracked to the true identity of the collector.
* Anytime a debt collector calls or writes, he must state the true amount of the debt (including interest and fees) at that moment in time.
* A debt collection agency must record conversations with either a randomly selected sample of consumers or all consumers located in New York City.
Mayor Bloomberg Issues New Debt Collection Regulations
On Monday, Mayor Michael Bloomberg announced new regulations governing how debt collectors can conduct business when collecting from New York City residents. Together with the Department of Consumer Affairs Commissioner Jonathan Mintz, Bloomberg highlighted the underhanded tactics that debt collection agencies are currently using. Essentially, debt collectors take a name from their collection list and call everyone in the five boroughs with that same name.
According to the Mayor’s office, “Under the new regulations, any debt collection agency attempting to collect a debt from a New Yorker must provide proof the debt is owed at the consumer’s request. The collector must provide a copy of the original debt documentation, a copy of the final account statement of the originating debt, a document itemizing the remaining amount due, including any additional fees or charges claimed to be due and the basis of the consumer’s obligation to pay them. Other provisions of the new regulations include disclosing the consumer’s rights regarding the statute of limitations, and providing written confirmation of the debt payment schedule or settlement within 21 days of the agreement. In addition, debt collection agencies must provide New Yorkers with a phone number that must be answered by a live operator and not an answering service.”
Bloomberg noted that, over the course of the Great Recession, debt collection agencies have resorted to ever-more brazed tactics. Indeed, the Department of Consumer Affairs found that New York City residents were wrongfully pressured to pay more than $1 million in debt that they didn’t really owe. According to Mintz, “Wrongful debt collection is more than just annoying and stressful. Such wrongful collection attempts can cause serious and long-term damage to a family’s finances, including seized bank accounts, damaged credit ratings, and more.”
If you live in New York City and have been the victim of improper debt collection calls, you can call 311 or file an online complaint by clicking here.
New York Attorney General Sues Lawyer for Illegal Debt Collection Practices
New York Attorney General Andrew Cuomo filed a lawsuit against a New York lawyer who allegedly allowed a debt collection agency to use the lawyer’s name in order to intimidate and threaten consumers with bogus legal action. According to the lawsuit, John P. Nicolia was paid $141,000 by Eastern Asset Management debt collection agency, so that Eastern Asset Management could use his and his law firm’s name – without ever doing any actual legal work for the debt collector.
In a statement issued on Thursday, Cuomo said, “The lawsuit alleges that this attorney knowingly allowed a debt collection firm to use his name to threaten, intimidate, and harass consumers, while he sat back and profited without having to do any actual work. Our investigation into illegal debt collection practices has uncovered layer upon layer of abusive acts, and we will continue to root out the bad players in this industry.”
Both the federal Fair Debt Collection Practices Act and New York debt collection and consumer protection laws prohibit debt collection agencies from posing as an attorney or threatening legal action that cannot be taken. Cuomo’s suit alleges that Eastern Asset Management’s debt collectors told consumers they were calling from the Law Offices of John Nicolia and sent “settlement” letters to consumers saying that “…our legal counsel, John Nicolia, Esq. may review the status of your particular case at anytime.”
Kudos to Attorney General Cuomo, who has been vigilant in fighting illegal debt collection practices.
Buffalo Debt Collector Imprisoned for Weapons, Freed on Appeal Bond
New York Attorney General Andrew Cuomo made news last year when he shut down Tobias Boyland’s Buffalo debt collection agency after an investigation revealed that his employees resorted to violence to collect debts and sometimes masqueraded as police officers.
According to the Buffalo News, Boyland was subsequently arrested and convicted of weapons charges after authorities discovered an AK-47 and six handguns in his home. Although he was sentenced on April 1 to a prison term of 15 years, he was recently released on an appeal bond – over the strong objections of prosecutors, who said that Boyland represents a flight risk. Prior to starting his debt collection agency, Boyland had been imprisoned for robbery.
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!
