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STOP Collector Blog From the law firm of Lemberg & Associates

Senator Elizabeth Warren (D-MA) recently introduced the Equal Employment for All Act, which would stop employers from requiring job applicants to share their credit histories. According to a press release from Warren’s office, “It was previously thought that credit history may provide insight into an individual’s character, but research has shown that an individual’s credit rating has little to no correlation with his or her ability to be successful in the workplace.”

The legislation, which is cosponsored by Senators Richard Blumenthal, Sherrod Brown, Patrick Leahy, Edward Markey, Jeanne Shaheen, and Sheldon Whitehouse, has been endorsed by 40+ organizations. According to an article in the Washington Post that cited a survey by the Society of Human Resource Management, “Forty-seven percent of employers use credit checks in their hiring decisions.” A think tank study found that “one in 10 [unemployed Americans] had been told they would not be hired because of their credit.”

The Post notes that 10 states ban credit checks on prospective employees.


The Attorney General of Colorado, John Suthers, recently announced that his office filed suit against United Credit Recovery. The lawsuit alleges that United Credit Recovery (also known as UCR) bought debt portfolios from US Bank and Wells Fargo Bank. A press release issued by Suthers’ office said that the company then allegedly used consumers’ account information to “create hundreds of thousands of fake affidavits purporting to describe and to verify debt owed by consumers.” United Credit Recovery apparently both collected on the debt themselves and resold the debt (and fake affidavits) to other debt collection agencies.

The lawsuit alleges that debt collection agency GTF Services used the law firm Standley & Associates to file more than 300 lawsuits against Colorado consumers, and asks the court to compensate those consumers.


The Consumer Financial Protection Bureau has filed suit against CashCall, WS Funding, Delbert Services Corporation, and J. Paul Reddam for alleged violations of the Consumer Financial Protection Act. The CFPB is charging that online loan servicer CashCall, Inc. continued to collect money from consumers after their obligations for online loans had been nullified.

The seeds of this action took root a few years ago, when a South Dakota lender named Western Sky Financial claimed that, because it was based on a Native American reservation and owned by a Native American, state laws did not apply. It was determined that when Western Sky Financial made Internet-based loans, the company was bound by state laws. CashCalll and WS Funding bought the loans originated by Western Sky Financial, which began to unwind its business this fall after being investigated and sued by several state Attorneys General.

According to a CFPB press release, the online loans either violated licensing requirements or interest rate caps in at least eight states, voiding the consumers’ loan obligations. According to the CFPB complaint, CashCall allegedly continued to debit consumers’ bank accounts or engaged in debt collection activities.

According to CFPB Director Richard Cordray, “All of this conduct violates federal law, specifically the Consumer Financial Protection Act’s prohibition on unfair, deceptive, and abusive acts and practices. It is unfair to collect money that consumers do not owe on loans that do not legally exist. It is deceptive to trick consumers into repaying illegal loans that state law has nullified in part or in whole. And it is abusive to take unreasonable advantage of a lay person’s lack of understanding when it comes to the application of state and tribal laws. So in our lawsuit today, we are seeking monetary relief and civil penalties from CashCall and its affiliates to require them to refund the money they unlawfully took from consumers. We also seek injunctive relief to require the defendants to adhere to all federal consumer financial protection laws that prohibit such unfair, deceptive, and abusive acts and practices.”


If you’ve ever received a call from a debt collector, a company named TLO may have had a hand in providing the debt collector with your contact information. TLO brands itself as providing “online investigative systems,” and provides debt collection agencies with information about where you live and where you work.

TLO went into bankruptcy, and the bankruptcy court auctioned off the company. A Florida judge accepted TransUnion’s offer of $154 million to purchase TLO. TransUnion (along with Equifax and Experian) is one of the big three credit bureaus.

The implications for consumers are considerable. TransUnion is in the business of collecting location and work information from creditors, while TLO is in the business of selling that information to debt collectors. So, for example, when you apply for a mortgage all of your information could be transmitted to TransUnion. If you later default on a student loan, the debt collection agency that subscribes to TLO may have access to the information TransUnion has – gratis.


The Consumer Financial Protection Bureau will likely be developing new debt collection laws and regulations for the debt collection industry. They published an Advance Notice of Proposed Rulemaking in the Federal Register in November. The publication is essentially an invitation for stakeholders to provide input for new debt collection laws and regulations. The problem is that, for most people, the process of submitting comments and opinions can be cumbersome and daunting.

This is why the CFPB has partnered with Cornell Law School’s RegulationRoom.org. Instead of submitting a formal response to regulations.gov, you can share your debt collection experiences and your opinions about changes to debt collection laws and regulations at RegulationRoom.org. They’ll compile the feedback and put it in a format that conforms to the regulations.gov rules. While you can still participate in the formal commenting process via regulations.gov, it’s nice to know there’s a more accessible alternative.


The Consumer Financial Protection Bureau announced that it has started accepting complaints from consumers who are having problems with payday loans. Payday loans, which are typically short-term loans, often have significant strings attached, such as giving the lender access to your checking account and authorizing automatic withdrawals. Unfortunately, high interest rates often lead to a cycle of indebtedness for borrowers.

According to a CFPB press release, the regulatory agency is accepting payday loan complaints from consumers who encounter:

  • Unexpected fees or interest
  • Unauthorized or incorrect charges to their bank account
  • Payments not being credited to their loan
  • Problems contacting the lender
  • Receiving a loan they did not apply for
  • Not receiving money after they applied for a loan

To sent a complaint to the CFPB, visit www.consumerfinance.gov/Complaint


Lemberg & Associates issued the following press release today:

OCTOBER 17, 2013 – STAMFORD, CT – Fair debt attorney Sergei Lemberg (www.StopCollector.com) has turned the tables on a debt collector who allegedly embarrassed consumers by using mailing envelopes that depicted a cartoon hand holding a consumer by the ankles and shaking money out of his pockets.

Debt Collection Envelope

Lemberg said, “Many debt collection agencies routinely violate the law, but this case was especially egregious. Such tactics are nothing more than an attempt to humiliate and mock consumers who are having a difficult time making ends meet.”

With an eye toward empowering consumers and making them aware of their right to sue and recover up to $1,000 from debt collectors who violate the Fair Debt Collection Practices Act, Lemberg published his own version of the cartoon. “In our version, we’re holding debt collectors by the ankles and shaking money into the hands of harassed consumers,” he said. “It’s imperative for people to know that they don’t have to put up with abuse. Instead, they can get the harassment to stop and recover money from debt collectors who violate the law.”

Lemberg Cartoon

The offensive debt collection cartoon came to light when the Federal Trade Commission announced a $1 million settlement with National Attorney Collection Services, Inc. and National Attorney Services LLC for alleged violations of the FDCPA and the FTC Act. Lemberg applauded the FTC, saying, “The debt collection industry needs to know that it will be held accountable for bad behavior.”

A number of debt collection tactics are prohibited by the FDCPA, including calling repeatedly, talking to third parties about a debt, making threats, and making misleading or deceptive statements. Lemberg, who was named the “most active” consumer attorney of 2012 by debt collection industry insider WebRecon LLC, said, “I’ve seen too many clients who have suffered at the hands of unscrupulous debt collectors. Folks need to learn about their rights under the FDCPA and fight back when their rights have been violated.”

Saying that the Federal Trade Commission does an outstanding job prosecuting the worst offenders, Lemberg concluded, “Unfortunately, obtaining redress for individual consumers is beyond the scope of the agency’s mission. That’s why it’s important for consumer attorneys to bridge the gap and represent everyday people whose rights are being violated.”


Some of you may have read about the the case one of our clients, John Tallman, brought in Illinois against the law firm of Freedman Anselmo.  Mr. Tallman claimed that Freedman Anselmo falsely threatened to obtain a judgment against him and charge him with its legal fees in addition to the judgement amount.  Freedman Anselmo had all the recordings of its conversations with Mr. Tallman, except this one.

Well, there is a postscript to this case. In June, a Springfield, Illinois, jury found for Freedman Anselmo. Freedman Anselmo then moved to charge John Tallman with the costs of defending the lawsuit, but the judge denied the motion last week, finding that John Tallman’s case was brought in good faith and he could not pay the costs.


On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Eastern District of Wisconsin, against Enhanced Recovery Company. Our elderly client alleges that Enhanced Recovery Company called and terrified her when the collector said, “We know where you live.” Our client’s son sent a cease and desist letter to Enhanced Recovery Company, but Enhanced Recovery Company continued to call her multiple times each day.

The lawsuit charges that Enhanced Recovery Company violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior; by continuing to call after receiving a cease and desist letter; and by using unfair and unconscionable means to collect a debt.


On behalf of our client, Lemberg & Associates recently filed a complaint in U.S. District Court, Central District of California, against Performant Recovery. Our client alleges that Performant Recovery threatened to garnish his wages if he didn’t immediately pay his student loan. Performant Recovery allegedly told our client that its “Administrative Wage Garnishment” had been “approved.” A month later, Performant Recovery told our client that, unless he paid $750, they would begin to garnish his wages. The law says that a consumer has to be served with a Notice of Intent to Garnish, but our client hadn’t received the notice. Our client offered to pay $100 monthly paymentsm but Performant Recovery refused, and demanded a down payment of $750 and monthly payments of $335. Performant Recovery never mentioned that our client was eligible for a Department of Education income-based repayment program. Moreover, they told our client that his account would be marked as “refusal to pay.” Performant Recovery even called our client’s workplace and left a message with a secretary about the debt.

The lawsuit charges that Performant Recovery violated the Fair Debt Collection Practices Act (FDCPA) by engaging in harassing behavior; by communicating with third parties; by using false, deceptive, or misleading representation in connection with the collection of a debt; by threatening garnishment if the debt was not paid; and by using unfair and unconscionable means to collect a debt. The lawsuit also charges that Convergent Outsourcing violated the Rosenthal Fair Debt Collection Practices Act.


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Author
Sergei Lemberg

Sergei Lemberg is the principal at Lemberg & Associates, a consumer law firm that defends consumer rights in the areas of fair debt collection law, fair credit law, and 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.

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100 Summer Street
Stamford, CT 06905
855-229-9506
info@lemberglaw.com

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"The FDCPA is a consumer protection statute and was intended to permit, even encourage, attorneys like Lemberg to act as private attorney generals to pursue FDCPA claims."

U.S. Ninth Circuit Court of Appeals, Evon v. Law Offices of Sidney Mickell
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