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!

Nationwide Asset Services Must Post Bond to Do Business in NY

New York Attorney General Andrew Cuomo recently won a lawsuit against Nationwide Asset Services. The court’s decision mandated that the company pay $200,000 in penalties and post a $500,000 bond if it wants to do business in that state.

Nationwide Asset Services is a national debt settlement company that promises consumers a 25 to 40 percent reduction in their debt. According to Cuomo, only a fraction of one percent saw such savings, while the vast majority continued to be harassed by debt collectors.

A press release issued by the Attorney General’s office quoted Cuomo as saying, “This company made promises to people who were searching for financial help and trying to turn their lives around. But the promises never came true and, in many cases, New Yorkers were left in worse condition than when they started. Thanks to this ruling, the company has to put its money where its mouth is with a performance bond if it wants to do business in New York.”

The decision also applies to the company’s affiliates, ServiceStar and Universal Debt Reduction, as well as its marketer, FGL Clearwater (dba American Debt Arbitration).

The AG’s press release noted:

Debt settlement companies represent that they can substantially reduce consumer debt by negotiating directly with creditors, on behalf of their customers, to pay off outstanding balances at less than the amounts owed. However, Attorney General Cuomo’s Office has found that many of these debt settlement plans are often flawed and, based upon complaints, often mislead consumers about the nature of their services. The debt settlement plans are generally premised on consumers’ aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their already-precarious financial situation.

In addition, the companies often take their substantial fees up-front and keep these fees even when they do not provide the promised services. As a result, many consumers find themselves worse off financially because of these debt settlement plans.

Dirty Dozen: New York AG Files Criminal Charges Against 12 Collectors

New York Attorney General Andrew Cuomo filed criminal charges against a dozen employees of debt collection agencies in the Buffalo area. The charge? Posing as law enforcement officials and threatening to throw consumers in jail unless they immediately paid debts they were told they owed. All of the debt collection agencies were owned by Tobias Boyland, the subject of a Dateline NBC “sting” earlier in the year. Cuomo shut down the agencies in June, and has compiled more than a thousand complaints against the companies.

According to an AG office press release:

“The tactics allegedly used here are some of the worst of the worst in the debt collection business,” said Attorney General Cuomo. “The defendants’ alleged lies, deceit and intimidation caused many innocent people to pay money they didn’t owe just to stop the terrifying calls. My office will continue to seek out and punish companies that prey on consumers and violate clearly written laws regarding debt collection.”

According to the felony complaints, the defendants stole thousands of dollars from consumers from across the country by using the threat of criminal charges and incarceration to collect debts that often did not exist, had passed the statute of limitations or had been previously discharged through bankruptcy. The collectors also regularly inflated the amount owed on an actual debt and would falsely tell consumers that they were being sued in civil court.

The complaints allege that the collectors used false law enforcement identities to coerce and cajole terrified consumers into agreeing to make the payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, wired money, or sent money orders to the collectors. Consumers were intentionally given misleading names, addresses and telephone numbers that led them to believe the businesses were located far from the Buffalo area.

New York Consumer Protection Board Takes a Stand

In an opinion piece in the Times Union New York Consumer Protection Board Chair and Executive Director Mindy Bockstein calls on the New York Senate to take action to enhance consumer protections against unscrupulous debt collectors and creditors. Bockstein says of Program Bill #61:

It increases penalties for violators; affords consumers the right to sue and receive attorney fees, court costs and actual damages for successful actions against debt collectors and creditors; compels collectors to contact debtors between 8 a.m. and 9 p.m. only; requires that notice be provided to consumers if a debt is transferred or sold; and increases the state award limit for statutory damages to $2,500 on behalf of wronged consumers, among other provisions.

She points out - and rightfully so - that “Thirty-year-old laws which do not account for new technologies and business practices or provide an adequate flow of information within the collection system to consumers and others must be changed.”

Chilling Look at Debt Collection

If you didn’t see Dateline NBC’s re-airing of “Debt Trap” last night, it’s worth watching here on the Web.

Although the segment initially takes a broad look at the state of consumer debt in our country, about halfway through it hones in on the egregious tactics of debt collection agencies - particularly those that buy up bad debt.

Because many of these agencies operate out of New York, the original March airing of this segment likely fueled New York Attorney General Andrew Cuomo’s crackdown on the debt collection industry.

If you’re been harassed by debt collection calls, the Dateline NBC episode will help you realize that you’re not alone. It clearly illuminates the lengths that thugs will go in threatening everyday people, who in turn will pay up in order to avoid the dire consequences predicted by the debt collectors. As it was so aptly described, debt collectors are often in an extortion racquet and are rarely brought to justice.

NY Attorney General Creates Web Portal for Debt Collection Abuse

In case you haven’t seen it, New York Attorney General Andrew Cuomo recently launched a website, www.NYDebtHelp.com, that explains consumer rights, allows victims of debt collection and debt settlement companies quick access to the Attorney General’s office to file complaints, and outlines the actions that Cuomo is taking in regard to debt collection and foreclosures.

NY Attorney General Andrew Cuomo Sues to Shut Down Debt Collection Operation

Continuing his crusade against unscrupulous debt collectors, New York Attorney General Andrew Cuomo last week filed suit against the Benning-Smith Group, seeking to shut down the Buffalo-based operation.

According to the Attorney General’s press release, the Benning-Smith Group ran “at least 13 debt collection companies that operated out of multiple locations and under various assumed names in Western New York. The company names include:

Abrams, Burke & Associates

  • Benning and Smith Acquisitions, Inc.
  • Brady and Caruso, LLC
  • DebtPayments.com
  • DebtPayments.com, LLC
  • Fredericks, Goldstein & Zoe
  • Graham, Noble & Associates Bookkeeping
  • Graham, Noble & Associates LLC
  • Graham, Beagle & Associates LLC
  • Kingman, Cole and Associates, LCC
  • Marshall and Ziolkowski Enterprise, LLC
  • Marshall Ziolkowski Acquisitions, LLC
  • Lansky, Goldstein, Zoe
  • OLS Payment Services
  • University Debt Collection

The press release said, in part:

According to the more than 850 consumer complaints filed with the Office of the Attorney General, the Federal Trade Commission and the Better Business Bureau, the Benning-Smith Group’s employees violated state and federal law by routinely posing as law enforcement officials and threatening to arrest or to physically harm consumers unless they made arrangements to pay the company immediately. Additionally, the Benning-Smith Group made abuse and humiliation a trademark of their collection practices by verbally abusing consumers and, in some instances, sexually harassing them. To date, the Attorney General’s investigation has identified more than a thousand instances in which the Benning-Smith Group breached state and federal statutes.

At news conferences last week, CNN reports, Cuomo introduced two victims of the Benning-Smith Group. The debt collectors threatened the victims with immediate arrest and verbally abused them over the phone.

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StopCollector Blog Authors

Sergei Lemberg

Sergei Lemberg is the principal at Lemberg & Associates, a law firm that defends consumer rights in the areas of fair debt collection law, fair credit law, lemon law, among others. He is regularly labeled by the debt collection industry as one of the “most active consumer attorneys” in the U.S.

Sally Smith

Sally Smith is the former editor-in-chief of several consumer magazines, and has written extensively on issues relating to finance, public policy, and other topics of interest to consumers.

Contact Us:
Lemberg & Associates
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855-301-8100
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