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Our Corona fair debt collection attorneys work every day with people who are being harassed, insulted or lied to by collection agencies. So we were pleased by a March 3 release from the Federal Trade Commission about a settlement that agency reached with an Ohio agency guilty of serious abuses. Credit Bureau Collection Services, a private company not affiliated with the major credit reporting services, agreed to pay $1.1 million to the FTC to settle the agency's claims against it. The company also agreed to sign a consent decree barring it from further violations of the law, including making untrue or unsupported statements to collect a debt, and trying to collect a debt without investigating a consumer's dispute of the debt.

CBCS and two of its officers, Larry Ebert and Brian Striker, were accused of violating both the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. Specifically, the FTC alleged that they failed to investigate disputes from debtors showing that they had already paid off the debts, or were not the people who owed the debts. Furthermore, the defendants allegedly continued to try to collect on those disputed debts without any reasonable basis to do so. They were also accused of reporting information to credit agencies despite disputes or proof that it was not accurate; failing to investigate notices of disputes from credit agencies; and failing to report disputes to the credit agencies. The content decree requires CBCS, Ebert and Striker to refrain from all of these practices and other violations of the two federal laws.

All of this information may sound very dry if you're not familiar with the legal side of credit and collections. But as Fountain Valley debt collection harassment lawyers, we know these practices can ruin the credit of an otherwise responsible person. The credit reporting system relies to some extent on the honesty of those who report credit. If companies like CBCS lie to credit bureaus about a particular individual's credit, that individual will have to do a lot of work to clear his or her name. That's why the FCRA allows the FTC and individuals to sue companies for willful or negligent violations of the law. Similarly, blatant violations of the FDCPA, such as failure to investigate a dispute of a debt, allow victims to sue the violating collection agency.

Continue reading "FTC Sues Debt Collector for Trying to Collect Old Debts and Reporting False Credit Information" »

A federal appeals court recently made a ruling that pleased us greatly as Riverside County fair debt collection attorneys. InsideARM reported Feb. 3 that the Second U.S. Circuit Court of Appeals, the federal appeals court for New York, Connecticut and Vermont, has ruled in favor of more notice to consumers when debt collectors start lawsuits very quickly. In the case, Ellis v. Solomon & Solomon PC (PDF), a collections law firm started its collection efforts against Janet Ellis with the legally required notice that the debtor may dispute the debt within 30 days. About halfway through that 30-day period, the law firm sued the Ellis. She eventually sued it back for violating the Fair Debt Collection Practices Act.

In her lawsuit, Ellis claimed that Solomon and Solomon and two of its attorneys had violated the FDCPA in several ways. However, the appeal focused on whether the law firm misled her when it sued during the 30-day validation period, without providing notice that the validation period was not over. A trial court in Connecticut agreed and ruled for Ellis on that part of the case. The law firm appealed to the Second Circuit, but it too sided with Ellis. Under the law, the court said, new notices must not overshadow or be inconsistent with the original validation notice. Applying a test that takes into account what the "least sophisticated consumer" would think, the appeals court decided that such a consumer might be misled into thinking a lawsuit supersedes the original notice. Thus, the court agreed that the law firm had violated the FDCPA.

As InsideARM noted, this ruling will probably mean that debt collectors who sue during the 30-day validation period have to make it clear that it's still possible to dispute the debt. Our Ontario debt collection harassment attorneys believe this will be valuable for people hit by debt notices. In our experience, most people who receive a debt collection notice don't understand it well, or understand their rights generally. It's not hard to believe that someone without any special legal experience might be confused by a lawsuit that hits halfway into a thirty-day notice. The second notice the court required is a simple solution to this problem that won't cost collection businesses much extra money. And of course, those wishing to avoid a second notice can always wait out the 30 days before suing.

Continue reading "Court Says Second Notice Required When Debt Collectors Sue During Validation Period" »

Our Fontana debt collection attorneys are not big fans of the practice of buying and selling debt. This is a standard practice in the debt collection industry, in which an original creditor like a cell phone company writes off a debt as bad, then sells it for pennies on the dollar to a dedicated debt collector. That sale can be repeated many times. According to a Feb. 3 article in The Kiplinger Letter, a Government Accountability Office report (PDF) says this practice causes serious problems for consumers. Because information goes missing when debt information is passed from hand to hand, debt collectors can end up collecting debt that's already paid, discharged in bankruptcy or belongs to someone else. The article suggested that this contributed to 2009's sharp upswing in debt collection complaints.

Thanks in part to the GAO report, the article said, the FTC is scrutinizing the debt collection industry more closely than before. Not only is the agency requesting information on how debt buyers do business, but it's enforcing the law more aggressively. That includes requesting bigger legal settlements as well as holding debt collection leaders personally responsible for violating the law. Action by lawmakers may be next, the article said. In fact, the GAO report called on Congress to make several changes to the Fair Debt Collection Practices Act. The law should be updated to require debt collectors to keep information accurate enough to verify debts, the report said. Congress should also update the FDCPA to reflect new technologies and give the FTC rule-making authority.

As Chino Hills unfair debt collection lawyers, we like these recommendations very much. The lack of documentation caused by debt resales can lead to serious problems, because debt collectors generally don't trust debtors. When a debtor says he or she is not the original creditor, or that the debt was paid off, collection agents may assume it's a lie and just keep on calling. In fact, because the information is missing, debt collectors can use lack of proof as a shield against accountability for knowingly calling people who don't truly owe debts. Requiring collection agencies to keep proof of the debt on hand will allow people to exercise their rights under the FDCPA. And giving the FTC rule-making authority will allow it to update the law to deal with innovations like text messaging, more quickly than the political process in Congress generally allows.

Continue reading "Government Report Says Buying and Selling Debt Causes Anti-Consumer Mistakes " »

Our Redlands debt collection abuse attorneys saw an increase in calls about aggressive debt collection in the second half of 2009. So we were not surprised by a Jan. 21 report in Collections & Credit Risk saying that Fair Debt Collection Practices Act lawsuits increased substantially between 2008 and 2009. The article called it a record high number, saying it more than doubled over 2007's total of 3,813. The statistics come from research firm WebRecon LLC, which provides data about consumer lawsuits to the collections industry.

The trend continued into the first half of January, with 319 FDCPA lawsuits filed between Jan. 1 and Jan. 15. The article offered explanations for the rise from ACA International, a trade group from the collections industry. According to its spokesperson, ACA did not believe the increase in lawsuits corresponds to an increase in actual abuses by the collections industry. It noted that the numbers don't show how many claims were dismissed. The spokesperson attributed the spike in part a rise in consumer debt and increased online advertising by consumer attorneys. However, the article said, other types of consumer lawsuits, such as those under the Fair Credit Reporting Act, have seen little to no growth.

We suspect this flat growth shows that increased advertising is not a factor in the rise in FDCPA claims. Our Placentia unfair debt collection attorneys handle both FDCPA and FCRA lawsuits. Purely from speaking to clients and potential clients, we believe that there are more FDCPA lawsuits because consumers are seeing, and reporting, more violations of that law. As more consumers are having trouble paying their debts in a bad economy, debt collectors are losing money. We suspect that this makes some of them so desperate to collect that they cross the line. The collections industry claims that the majority of its employees are law-abiding, but it's fighting an increasingly large number of media reports of outrageous behavior by debt collectors. If it wishes to eliminate this negative PR, it may have to take a harder stance against law-breaking than it has.

Continue reading "Report Says Individuals Filed Record Numbers of FDCPA Lawsuits in 2009" »

One of the most frustrating realities for our Moreno Valley fair debt collection attorneys is that many people don't understand their rights when dealing with collection agencies. That's why we were impressed by a lengthy article published in the Dallas Observer Jan. 20, about a man who understands his so well that he's actually made money from debt collector harassment. The article features Craig Cunningham, who has sued so many collection agencies that he's on an industry list of troublesome consumers. Cunningham, 29, considers himself a "private attorney general" whose lawsuits help correct illegal behavior by debt collectors.

Cunningham, an Army veteran and reservist, got into debt through ambitious investments that came crashing down when the real estate market crashed. Like many Americans, he began receiving harassing phone calls from debt collectors. But instead of hanging up or getting scared, Cunningham went online and began reading up on ways to handle the debt collectors. He learned about the numerous legal protections offered by the Fair Debt Collection Practices Act, which mandates certain behaviors by collection employees and forbids others. A similar Texas state law was even more friendly to consumers. The next time a debt collector called, he used a voice recorder to capture the employee illegally telling him things that weren't true. He sued that collector and won $1,000, then learned enough to file 15 more lawsuits, collecting a total of more than $20,000.

Another person who's made a career out of suing debt collectors told the newspaper that despite the collection industry's claims, "you can find violation in almost every collection attempt in America." As Westminster debt collection abuse lawyers, we think this is pretty close to the truth. The collection industry claims that debt collectors who use illegal tactics are a "rogue" minority, but clearly, there are enough to allow Cunningham and people like him to win multiple lawsuits. If the industry wants to avoid lawsuits from people who know their rights and use the law to their fullest advantage, all it has to do is avoid breaking the law in the first place.

Continue reading "Newspaper Profiles Consumer Who Repeatedly Sues Debt Collection Companies" »

As Riverside unfair debt collection attorneys, we were interested to read about the fallout from the bankruptcy of one of the largest debt collection law firms in the United States. As the Baltimore Sun reported Jan. 16, Maryland-based Mann Bracken was ordered by state regulators to cease operations earlier that week. The order was not entirely necessary; the law firm was already in financial trouble because an affiliated company that handles debt collection, Axiant, had filed for bankruptcy in November. The arrangement tied Mann Bracken's fortunes to an arbitration company called the National Arbitration Forum. That company was sued for consumer fraud by Minnesota's attorney general in 2009.

In fact, the Sun reported that the law firm's financial trouble may have started with the Minnesota lawsuit. The National Arbitration Forum was accused of conflicts of interest that biased its judgments in favor of the credit card companies that paid it. As part of the settlement, it agreed to stop handling consumer arbitrations. Axiant filed for bankruptcy four months later, and Mann Bracken blamed its financial troubles on that move. The firm was facing separate lawsuits and regulatory action accusing it of violating the Fair Debt Collection Practices Act and similar state laws. The firm's closure may dismiss those lawsuits, but it will also end tends of thousands of lawsuits filed by Mann Bracken against consumers. Experts told the newspaper that this was a victory for consumers, who may otherwise have ended up with legal judgments against them before they realized they had been sued.

Our Costa Mesa unfair debt collection lawyers don't exactly enjoy seeing another law firm fail -- but in this case, it may benefit consumers. As the Sun noted, Mann Bracken was under investigation, the target of multiple lawsuits and had a Better Business Bureau rating of F because of numerous accusations of unfair business practices. Closing the business will give valuable time to people who were being sued by the company. In any lawsuit, the person suing must notify the defendant. But shady debt collectors frequently fail to give notice, or find ways to ensure that notice isn't served quickly, because they will win automatically if the consumer doesn't appear and fight the case. This creates a default judgment that the unscrupulous debt collector may use to garnish wages or take property. Many victims don't realize this happened until it's too late to fight back.

Continue reading "Thousands of Debt Collection Lawsuits Dismissed by Collection Agency Bankruptcy" »

As San Bernardino County debt collection abuse lawyers, we were interested to read about the conclusion of a major enforcement action against an abusive collection agency. The Federal Trade Commission announced on Jan. 7 that it had settled with two individual employees of Academy Collection Service, Inc. The company itself and its owner, Keith Dickstein, had already paid $2.25 million to settle their part of an FTC lawsuit accusing them of using lies, threats and harassment to compel payments. The new settlement order is against employees Albert Bastian and Keith Hurt III, who oversaw the company's Las Vegas office.

The FTC lawsuit alleged that Bastian and Hurt participated in, or directed and allowed, debt collection practices that violated the Fair Debt Collection Practices Act and the Federal Trade Commission Act. According to a Jan. 14 column in the Washington Post, they and the other defendants in the case are accused of improperly calling debtors' neighbors, children and co-workers; calling at work after being told the employer wouldn't allow it; and making illegal and unauthorized withdrawals from victims' bank accounts. They also allegedly threatened victims with violence, arrest, legal action and wage garnishment, even though they couldn't legally do those things, or didn't intend to. The judgment fines Bastian $375,000 and Hurt $300,000. They were also barred by the court from engaging in the same illegal practices alleged in the lawsuit.

Our Garden Grove FDCPA attorneys are pleased to see the FTC taking major enforcement action against an abusive debt collector. That's especially important right now, because when the economy is bad, debt collectors get more desperate -- and some are happy to break the law. Unfortunately, far too many consumers don't realize that many of the practices the FTC mentioned are even illegal, so they never complain. In fact, the FDCPA restricts debt collectors from using a variety of unfair and deceptive practices, including calling someone other than the debtor, his or her spouse or attorney; calling constantly; threatening actions they can't legally take or don't intend to take; and using profanity. Collection agencies accused of these and other unfair practices can be sued and fined by the FTC, state regulators or individuals.

Continue reading "FTC Settles End of Largest-Ever Case Against Unfair Debt Collection Business" »

Our Fullerton debt collection abuse attorneys were pleased to see a recent article from debt collection industry publication InsideARM about federal action against debt buyers. The Jan. 11 article says the Federal Trade Commission, the agency responsible for enforcing the Fair Debt Collection Practices Act, has requested purchase and sales records from the nine biggest debt buyers in the U.S. The companies are not accused of wrongdoing. Rather, the FTC says it wants to better understand the debt buying industry, which has grown in recent years and is the subject of many consumer complaints. The debt buyers chosen by the FTC are the biggest in their industry, collectively representing about 75% of all debt purchased in the country.

Debt buyers are companies that purchase written-off debt from the original creditors and try to collect it. They are the focus of numerous complaints about harassment from consumers who say they are victims of mistaken identity; unproven debts; debts too old to collect; and violations of the FDCPA. A Scripps Howard newspaper investigation from 2009 showed that debt buyers frequently get incomplete or bad information, leading to incorrect collection attempts, lawsuits and damage to the consumer's credit score. The FTC said it was seeking to understand the industry better by requesting detailed information on the companies' sales and earnings; number of debt portfolios purchased; ages and types of accounts; and other information. Complying with this request is not optional, and debt buyers have until Feb. 25 to comply. A study may follow.

As Riverside unfair debt collection lawyers, we are extremely pleased to see the FTC shine a spotlight on the practices of debt buyers. As the Scripps investigation said, debt buyers don't always get the full information when they buy a debt. This can lead to mistaken identity, confusion about whether the debt was paid off and other mistakes. To make matters worse, some debt collectors are actively hostile when consumers point these mistakes out, believing they're lying to get out of paying what they owe. And particularly in this bad economy, some debt buyers are so eager to collect the debts that they're willing to break the law by harassing consumers, calling their workplaces, neighbors and family or even resorting to threats.

Continue reading "FTC Requests Information From Debt Buyers to Understand Consumer Complaints" »

The U.S. Supreme Court heard oral arguments Jan. 13 in a case with important implications for our practice as Ontario fair debt collection lawyers. In Jerman v. Carlisle, the high court is examining whether the bona fide error defense under the Fair Debt Collection Practices Act extends to a mistake of law, rather than a clerical mistake. The FDCPA says debt collectors may not be liable for violations that arise unintentionally, from a bona fide error and despite procedures intended to prevent such mistakes. The federal appeals courts are split on whether a mistake of law is eligible for this defense, with the Second, Eighth and Ninth saying no and the Sixth, Seventh and Tenth saying yes. The Sixth Circuit's decision led to this appeal.

Karen Jerman was a homeowner who received a foreclosure complaint from the defendant law firm, Carlisle, McNellie, Rini, Kramer & Ulrich. Representing Jerman's mortgage company, the Carlisle firm wrote that Jerman's debt would be assumed valid unless she contested it in writing within 30 days, as provided by the FDCPA. This was a misreading of the law, which does not require that disputes be put in writing. In fact, Jerman's mortgage was paid off, and she successfully contested the debt and got the case dismissed. She then sued the Carlisle firm for violating the FDCPA. The firm got the case dismissed by using the bona fide error defense. Jerman appealed to the Sixth Circuit, arguing that the bona fide error defense does not apply to mistakes of law. The Sixth disagreed, finding that Congress never explicitly barred the defense.

The Wisconsin Law Journal reported on the oral arguments in the case Jan. 14. During the arguments, the article said, Justice Stephen Breyer suggested that narrowing the bona fide error defense would create a sticky situation for attorneys. Under this reading, he said, attorneys who have followed the law diligently could still be liable for honest misreadings of the law. This would remove their ability to successfully represent clients. However, Justice Ruth Badger Ginsberg suggested that Congress didn't impliedly include mistakes of law in the bona fide error defense just because it failed to exclude them. Because mistakes of law are rare, she said, Congress would have explicitly included them if that was the intention. A decision is expected later in the current Supreme Court term.

As Brea debt collection abuse attorneys, we look forward to that decision. We believe expanding the bona fide error defense to include mistakes of law would be a serious mistake, because it could allow debt collectors to abuse the law. If collection agencies could avoid liability for breaking the law by claiming that they simply misread it, we do not doubt that some would intentionally do so. Individuals would still be able to challenge gross and obvious law-breaking, but the change could effectively end lawsuits over subtler violations. This would weaken the consumer protections that are the goal of the FDCPA, and discourage the private consumer-rights lawsuits that currently comprise the majority of FDCPA enforcement actions. The Federal Trade Commission, which enforces the FDCPA, has argued that a decision against Jerman would weaken its watchdog role as well.

Continue reading "Supreme Court to Decide Whether Bona Fide Error Defense Applies to Mistakes of Law" »

Our Los Angeles County fair debt collection lawyers wrote back in October about a Buffalo, NY collection agency whose employees were actually arrested for posing as law enforcement officers. A Jan. 5 article from the Associated Press put a spotlight on Buffalo's surprisingly large debt collection industry. The article starts by discussing the owner of the business that sparked the arrests, Tobias Boyland, a former felon who is himself being prosecuted for unlicensed possession of a firearm. But even aside from Boyland's nine companies, the article says, the Buffalo area has become a center for debt collection agencies that break the law with their aggressive collection attempts.

Western New York is a former industrial area whose job-hungry workforce and low cost of living make it attractive for call centers. Grants from the state have helped create 110 collection agencies around the city, employing 5,000 to 6,000 people. But along with the growth of jobs came a growth in complaints from consumers who claim the companies violated state and federal consumer protection laws with aggressive and abusive debt collection tactics. The Better Business Bureau for the region gave 104 of 213 debt collection companies in Western New York an F grade, and a Buffalo company is the subject of one in 10 complaints about debt collectors to the national BBB. And at least 20 individuals in the industry have been arrested or sued for threatening, harassing or otherwise abusing consumers. Among the victims was a woman who was scared into paying a debt she didn't owe by a caller who said she would be arrested and her children put in foster care if she didn't hand over her bank account information.

As Redlands debt collection abuse attorneys, we know very well that debt collectors can't have people arrested. In fact, threatening someone with arrest or another legally impossible action is illegal under the federal Fair Debt Collection Practices Act and numerous state laws. Unfortunately, many consumers don't know their rights -- which is why so many collection agencies get away with abuses like these. Arrest and criminal prosecution for abusive debt collection employees is very unusual, but the law gives consumers another option for dealing with abusive debt collectors: a civil lawsuit. Both state and federal laws allow consumers who are victims of debt collection abuse to sue the perpetrators for financial damages.

Continue reading "Western New York Becomes Center for Sometimes Unethical Debt Collection" »

As San Bernardino unfair debt collection lawyers, we have already observed an increase in the number of consumers who come to us with complaints about abusive collection tactics. A Dec. 13 article from the Evansville (Indiana) Courier & Press reports that an investigation showed a similar rise in complaints nationwide. Scripps Howard, the newspaper's owner, conducted an investigation of legal complaints about unfair debt collection, using interviews and Freedom of Information Act document requests. The results showed that as of May, the last month for which it had records, complaints to federal authorities were on track to be up by 6% over 2008. A related poll found that Americans said they were contacted more often as well.

The most common complaints investigators found against debt collectors were complaints about conduct prohibited by the federal Fair Debt Collection Practices Act. This included allegations that callers misrepresented the debt; fail to send a required written notice; and called repeatedly. Thirty percent of those responding in the Scripps Howard poll said they had been called before 8 a.m. or after 9 p.m., which is outside the legally allowed period. Consumer advocates told the newspaper that calls and harassment are going up in part because of the bad economy and the resulting increase in defaults on bills. However, they also said enforcement of the FDCPA is weak, which means collection agencies aren't likely to face consequences when they break the law.

We're sorry to say that this has also been the experience of our San Juan Capistrano abusive debt collection attorneys. The FDCPA is enforced by the Federal Trade Commission, which is responsible for a wide variety of trade regulations. Despite the fact that the majority of its complaints are about debt collection companies, the FTC takes action on only a fraction of those complaints. State agencies sometimes also file enforcement lawsuits, but these are also a small amount of cases compared to the complaints they receive. Consumers may act on their own, usually with help from an attorney, under state and federal laws, but far too many people don't do this because they don't even realize they have rights. As a result, complaints simply fall off the radar and blatantly abusive collection agencies go unpunished.

Howard | Nassiri LLP helps clients strike back against debt collectors that break the law. Under federal and California law, debt collectors may not misrepresent the debt they are trying to collect; call continuously or repeatedly; deny a written request for validation of the debt; threaten arrest or any other legal action they can't carry out; report false information on a credit report; and more. If they do break the law, the FDCPA allows consumers to sue for up to $1,000 in damages, plus the entire cost of bringing the claim, including attorney fees. They can also claim any actual damages caused by the illegal behavior, such as the loss of a job due to repeated illegal calls at work from a debt collector. Our Cypress fair debt collection enforcement lawyers work with both individuals and large groups who were all victimized by the same illegal behavior.

If you've had enough from debt collectors who think they're exempt from the law and common courtesy, Howard | Nassiri can help. To learn more about your rights and your options, contact us online or call 1-800-872-5925 today for a free, confidential consultation.

As Anaheim fair debt collection attorneys, we generally find ourselves supporting any financial legislation that the collections industry opposes. That's why we were pleased, in a way, to see an article about the debt collection industry's vigorous opposition to new consumer protection legislation. Industry publication InsideARM reported Dec. 16 that ACA International, "the Association of Credit and Collection Professionals," strongly opposes a bill passed in the House of Representatives last week. The Wall Street Reform and Consumer Protection Act includes multiple provisions that the association believes will burden its industry, most significantly the creation of a Consumer Financial Protection Agency. Because the House vote is over, however, ACA International said it planned to take the fight to the Senate, which is expected to address the issue next year.

The CFPA, a project proposed by President Obama as part of comprehensive financial reform, would collect most federal consumer-protection duties under one agency that has serious power. Among the provisions ACA International didn't like is a proposal to assess fees from regulated companies to pay for enforcement without tapping into the federal treasury. The article said the association prefers funding from the treasury, funded by tax dollars. Similarly, ACA International opposed the proposed agency's power to charge fines against companies found to have violated the law -- up to $5,000 a day in most cases and up to $1 million a day in cases of willful and intentional violation. Non-financial provisions the association didn't like included a proposal for the CFPA to enforce laws on behalf of the FTC; its ability to set restrictions on how employees are compensated; and a three-year deadline for taking action after a violation becomes known.

Not surprisingly, our Riverside County debt collection abuse lawyers are in favor of these provisions. In fact, we believe you don't need to be involved in the consumer credit industry to see the virtues of many proposals. Funding regulation by assessing fees on the regulated, rather than using taxpayer dollars, is an almost surefire winner with voters. Fines assessed for wrongdoing can also add to the agency's budget without cost to taxpayers. ACA International claims these fines are too high, but the low fines assessed for companies violating the Fair Debt Collection Practices Act, and its routine violations, show that higher fines are an important deterrent. A three-year deadline for enforcement lawsuits is actually a standard in many states, where statutes of limitations generally run from one to five years. And giving the CFPA the power to control employee compensation structures -- not dollar amounts -- allows it to stop practices that encourage abuse.

Continue reading "Debt Collection Industry Readies Fight Over Consumer Financial Protection Agency" »

As San Berdardino fair debt collection attorneys, we have watched with interest as the Federal Trade Commission, the federal agency responsible for regulating debt collectors, has considered how to reform the Fair Debt Collection Practices Act. After a February report recommending that the FDCPA be modernized, the FTC held three roundtable discussions to discuss reforming the law, bringing together courts, consumer advocates and players in the debt collection industry. The last of these panels was held Dec. 4 in Washington, D.C., InsideARM reported Dec. 7, and focused on debt collection litigation issues. Among the subjects of discussion the article noted were proposed changes to the statutes of limitations for debt collection, and reforms in how consumers are notified of debt collection lawsuits against them.

The discussion on serving claims started with an agreement by all parties that most consumers don't participate in debt collection lawsuits. This makes default judgments -- in which a court allows one side to win because the other never showed up -- very common. Consumer advocates said some of this is because of debt collectors who intentionally misdirect the summons; other failures to respond may stem from problems understanding the documents and transportation issues. A representative for the collections industry added that some consumers blow off lawsuits because they know they owe the money and don't want to face a court hearing. Another panelist suggested that summonses be sent through traceable means like private carriers, so there's a way to track whether documents got to the right place.

Another area of disagreement was statutes of limitations, which are the deadlines by which debt collectors must sue. If the debt is older than the statute of limitations for the consumer's state, the consumer no longer has to pay it -- but if consumers do pay, the payment automatically restarts the "clock" ticking down the deadline. Consumer advocates and judges said collection agencies frequently tried to collect on out-of-statute debt; the debt collection industry disagreed. Consumer groups suggested that the clock should only restart if the consumer explicitly agrees, but an FTC representative dismissed that suggestion, pointing out that no consumer would agree.

As Santa Ana debt collection abuse attorneys, we agree that no sensible consumer would agree to restart the clock -- if they knew that was what they were doing by paying. Unfortunately, even well-educated people don't always understand their rights. The debt collection industry takes advantage of this every day by requesting payments they have no right to receive, and more than a few consumers pay up. That's why we agree with the consumer advocates quoted in the article who want to ban collections on out-of-statute debt entirely, or at least provide notification that the clock will be restarted an explicit part of the process. We also like the implication that the FTC is considering more aggressive means to stop the practice of intentionally providing inadequate notice of a debt collection lawsuit. In many cases, the first consumers hear about these claims is after the lawsuit is over and their money is being taken away.

Continue reading "FTC Holds Panel Discussion on Reforming Lawsuit Portions of the FDCPA" »

A Nov. 23 report from InsideARM confirmed what our Rancho Cucamonga fair debt collection lawyers have been seeing at work: The number of lawsuits filed over unfair or abusive debt collection has gone up. According to statistics from WebRecon LLC, the number of FDCPA lawsuits filed throughout 2009 has already surpassed the number filed in all of 2008. In fact, the 6,638 lawsuits filed last year was surpassed around Nov. 1, the report said, with two full months left to go in 2009. If the trend holds, the publication suggested, observers can expect to see 8,000 or more debt collection abuse lawsuits for the whole year.

The Fair Debt Collection Practices Act is a federal law setting strict standards for how debt collectors may behave in their dealings with consumers. In addition to prohibiting threats, lies, vulgar language and other abusive behaviors, it also sets forth certain conduct that is required, such as a requirement to verify the debt when the consumer makes that request in writing. These requirements are echoed by state laws in multiple states, including here in California. In addition to the 376 FDCPA lawsuits filed in the first half of November, the report said, those 15 days also saw three lawsuits filed under California's Rosenthal Fair Debt Collection Practices Act, three lawsuits filed under a similar statute in Pennsylvania and one each in New York, Alabama, Texas, Florida, Illinois and Nevada.

The report does not give any reasons for the upswing in FDCPA filings. But as Yorba Linda abusive debt collection attorneys, we can provide plenty of anecdotes suggesting that the increase in lawsuits represents an increase in abuses. Because the economy is bad, consumers have less money to spend -- and for some, that means there's no money for paying off debt. With their profits dwindling, some debt collectors have resorted to abusive and illegal tactics designed to scare or bully consumers into paying. When they do that, many are violating the FDCPA and similar state laws. Collection agencies can often get away with this because many consumers don't realize they have rights, but as debt collectors' conduct becomes more and more outrageous, more consumers are fighting back.

Continue reading "Statistics Show Two-Year High Number of Fair Debt Collection Practices Act Lawsuits" »

As San Diego County fair debt collection attorneys, we are used to seeing horror stories from people who have been the targets of debt collectors. But a Nov. 13 post on The Consumerist blog (owned by the parent company of Consumer Reports) added a new twist: harassing debt collector calls to the adult son of an older couple who made some bad decisions with their retirement income. The son, referred to as Jay in the post, said he was put down as a reference on some of his parents' purchases. When his parents failed to make all of their payments, he said, debt collectors began calling him to demand payments. He wrote to the Consumerist blog asking for advice.

According to the post, the harassment goes beyond repeated phone calls. Jay wrote that the phone calls, which come from blocked numbers, come not only to his home, work and cell phone numbers, but also to his neighbors. He said he tried politely explaining that he can't control his parents' actions, but it didn't work. Instead, the post said, debt collectors started asking him to pay the debts, and threatening him with arrest and lawsuits when he declined. Reasoning that "this has got to be highly illegal," he began a log of all of the calls and planned to file a police report, but wanted some advice. The Consumerist suggested that he get names of companies, record or have a witness for phone calls and report them to his state's attorney general. If they are retailers rather than debt collectors, the blog said, he should ask them to remove him from the account.

As Corona debt collection harassment lawyers, we're glad Jay was smart enough to realize that this is indeed highly illegal behavior -- at least if the phone calls are coming from actual debt collectors rather than the original creditors. If they are, we spotted at least five violations of the Fair Debt Collection Practices Act described in his letter. The FDCPA, a federal law, does not allow debt collectors to call anyone about the debt but the debtors themselves and any attorney or spouse. That includes adult or minor children and other relatives as well as neighbors. Collection agencies may also not demand payment from someone like Jay who is not a party to the debt, and certainly may not sue such a person for failure to pay it. And they may not threaten anyone at all with arrest, because we do not arrest people for debt in the United States, and the FDCPA explicitly forbids threatening impossible legal actions.

Continue reading "Debt Collectors Harass and Threaten Man Over Debts Incurred by Parents" »