I received this email from a former employee of the Indian Payday Loan Scammers. He describes how they operate a bit and explains that he was recruited to work for them thinking that they were a legitimate company collection on past due payday loans. Here is the full email below.

Dear Brent,

I know most of them as i have worked for/with them. 90 percent of them call from India (the cities of Ahmedabad, Mumbai, Rajkot
or Pune). When i went their office for an interview, they told me that they collect money from those people who have owed money on Payday Loans, but didn’t pay back yet. I said ‘ok.’ However, when i started calling those people, most of them told me that they never got a loan.

Then I informed to my TL (team leader) about this problem, he replied ”don’t worry, they are lying, harras them” by hearing this i thought this didn’t sound legal. After that I Googled and found out that we were doing criminal activities.

Next day I went to HR department and told them I wouldn’t do this f-ing job. I tell you the whole path of how these scammers work:

1. First of all,they get the whole information about people including SSN, phone numbers (work place and home), email
   address, residence address, ip address, birthday and many more.
2. Then, they named each record ‘leads’.
3. For each lead they pay 1 U.S. dollar which are provided by another person.
4. Most of them call from a computer application named Eyebeam orXlite. They can display any number like
   0 or 911 or anyone which they want.

Do following things to stop them:

1. First of all speak english as a first language.
2. Tell them that they are calling from India (Mumbai, Ahmedabad, Pune or Rajkot) and I
   know that.
3. Ask them who provided you this lead or where is your closer or team leader.
4. Ask them if they are an American, then have them tell you a few lines of your national anthem.
5. Finally, tell them to stop calling or you will contact your city police via FBI.

Believe me they won’t call you again. But there are many centers in India doing this scam so may be, you can get called
from other. But each time tell them which I have mentioned above.

Forgive me because i have done this job for 7 days, but that time i didn’t know the truth.

Bye and take care.

Not sure what to make of this “confession” email, but I can tell you that what he says about how they operate and what you should do to try and get them to stop is spot-on with the advice I have given.

Please continue to post your comments about your experiences with these payday loan scammers to help others avoid being ripped off.

FTC Settlement is Largest Ever for a Debt Collection Agency

West Asset Management has agreed to pay $2.8 million, the largest civil penalty ever won by the FTC in a debt collection case, to settle charges that it violated the FDCPA when collecting debt from consumers.

West Asset Management employs over 1,500 collectors and manages collections on over 20 million delinquent accounts. The FTC alleged that West Asset Management, Inc. violated the FTC Act and Fair Debt Collection Practices Act when collecting debts from consumers. It would be easy to simply dismiss this as an example of a bad collection agency, but this is a major collection agency that is part of all the major trade organizations and the Federal Trade Commission continues to report more complaints about debt collectors than any other single industry.

Here are some of the FTC’s complaints against West Asset Management, all of which violated federal law:

• Calling consumers multiple times per day, sometimes regarding debts they did not owe
• Using abusive or rude language over the phone
• Telling friends and relatives about consumers’ debts
• Contacting consumers after receiving written notification to cease and desist contact
• Withdrawing funds from consumers’ bank accounts or charging their credit cards without proper permission
• Falsely telling consumers that they could be sued, arrested or even have their property seized if they didn’t pay the alleged debt

The $2.8 million civil penalty is the largest civil penalty the FTC has ever gotten in a debt collection industry case. Perhaps the fine will send a significant message to the industry about the importance of abiding by federal laws when collecting on debts, but it most certainly will not be much solace for individual debtors harmed by West Asset Managements unfair debt collection tactics.

This is a disgraceful list of accusations against a supposedly reputable agency. West reports on it’s website that it:

ranks as one of the nation’s top accounts receivable management companies and is the vendor of choice for the largest healthcare system in the United States, seven of the top 10 credit card issuers, and other Fortune 500 companies

West is also a member of the ACA International, which supposedly holds its members to high standards. It will be interesting to see if ACA continues to accept West’s dues. It certainly makes you question the legitimacy of the entire debt collection industry when you hear about these types of actions and a company paying record fines to make the problem go away.

Consumers who believe West Asset Management broke the law in attempting to collect debts from them should consider consulting a consumer law attorney. Under the FDCPA they may be entitled to damages as well as attorney fees.

Debt Collection Complaints Top 2010 FTC Complaint List

The FTC has released its 2011 Fair Debt Collection Report and in 2011 the FTC received more complaints against debt collectors than any other industry. Further, the number of complaints received by the FTC concerning third-party debt collectors and creditors increased from the previous year. The FTC is required to report annually on their enforcement efforts related to the FDCPA.

The report states the number of complaints related to third-party debt collectors and in-house creditors totaled 140,036 complaints and accounted for 27 percent of all complaints the FTC received. This represents an increase in total number of complaints compared to 2009, when the FTC received 119,609 debt collection complaints, accounting for 22.8 percent of all complaints to the FTC.

The FTC received 108,997 complaints about third-party debt collectors in 2011, which represents 21 percent of all complaints received from consumers by the FTC. In 2009, the FTC received 88,326 complaints referencing third-party collectors which was 16.8 percent of the complaints levied by consumers in that year.

In addition to evaluating the total number of complaints, the FTC also evaluates complaints filed regarding specific types of debt collection practices. The types of collection practices which were most frequently complained about by consumers in 2010 were:

• Debt collectors harassing consumers or others – 49.7%
• Demanding a larger payment than permitted by law – 30.4%
• Failing to send required notices – 29.8%
• Collectors threatening the consumer – 25.3%
• Agencies failing to identify themselves as a debt collector – 22.8%
• Communicating with third parties about the consumers’ debt – 21.8%
• Calling the consumer’s place of employment despite warnings – 15.6%
• Failing to verify debts that were in dispute – 10.5%
• Continuing to contact the consumer after receiving a cease and desist letter – 6.7%

It is no surprise to me that debt collector complaints top the FTC’s list again this year. The increase in bad debt, problems with the economy and general aggressive nature of collection agencies made this inevitable. Hopefully, the FTC continue to reign in the bad actors in the debt collection industry.

If you would like to make a complaint against a debt collector, to the FTC, you can do so at the FTC Complaint Page HERE.

A Florida Judge has rule that collection agencies cannot use Facebook to contact debtors.

Debt Collectors looking to use Facebook, MySpace LinkedIn and other social media sites will have try another tactic. Last week, a Florida judge ordered Mark One Financial LLC, a debt collection agency, to stop using Facebook and other social media websites to locate debtors.

Mark One Financial had been sued for, among other things, using Facebook to locate a Tampa woman over her $362 late payment on her car loan. The presiding judge, W. Douglas Baird, ordered the Jacksonville, Fla. company to refrain from contacting the woman’s family or friends on Facebook.

Melanie Beacham filed a lawsuit last August against the collection agency. According to her complaint, Mark One sent several messages to Ms. Beacham herself and her family members on the Facebook networking site. Messages asked her family to have her call the agency asap about the alleged debt.

Billy Howard of the Morgan and Morgan law firm in Tampa, said the debt collectors violated his client’s privacy and the agencies actions constituted harassment under Florida law. He said that in the past few months, over a dozen potential clients have reached out to him because debt collectors have used social media sites to track them down or harass their friends and relatives.

“It’s the beginning of an epidemic,” Howard said, calling it “another weapon” unethical debt collectors can use, if allowed.

Allegedly, Mark One contacted Ms. Beacham up to 10 times a day by phone, sent text messages to her cell phone, called her neighbors and dispatched a paid courier to deliver a letter to her place of work. Last November, Mark One said it would not discuss Beacham’s case and denied breaking any Federal or Florida laws. However, the company did acknowledged that instructs its collectors to use Facebook to find people when they don’t respond to efforts at contact, like sending letters and making phone calls.

This is not an isolated case, as many consumers are filing suits relative to being contacted via social media. In one Chicago case, a man accepted a new friend request from a young woman in a bikini. But, much to his surprise, the account was a debt collector’s. The man figured this out when the new Facebook “friend” posted a message on his wall for all his friends to see. The message read: “Pay your debts, you deadbeat.”

Arizona Attorney General Tom Horne announced a settlement with Quik Cash, a unit of publically traded QC Holdings Inc. (QCCO)

The lawsuit alleged that Quik Cash’s collections practices “raised an onerous burden” for the customers that they sued. Quik Cash claims it did not do anything illegal, but the Attorney General disagreed. Basically, Quik Cash sued Arizona customers over payday loan debts of $500 or less. However, they sued all of their Arizona customers and even some Nevada residents in Pima and Maricopa counties.

The catch? Many of these clients received loans at locations hundreds of miles away. This made it extremely difficult for the cash-strapped payday loan or cash advance customers to attend the hearings. Therefore, default judgments and subsequent garnishments were easy for the company to obtain.

According to a press release from the Arizona AG:

[Quik Cash], in order to obtain as many defaults as possible against consumers who lived outside of Pima and Maricopa counties, filed for default judgments and, in many cases obtained garnishment orders, in Pima County against non-county residents. Quik Cash’s actions allegedly deprived consumers of their right to appear in court or to contest judgments and garnishments and in some cases, allowed Quik Cash to collect on debts consumers had already paid.

This is very similar to issues with phantom service that we have seen in the credit card collection industry. However, I’m amazed that lenders would proceed with legal actions against consumers for payday loan debts of less than $500. This seems like it would clog up our court system and would only really be beneficial or economical for the lender if consumers did not have a chance to protest of challenge the proceedings. My guess is that this is why Quik Cash pursued this course of action, which the Attorney General refers to as “consumer fraud.”

Ironically, Quik Cash is no fly-by-night payday loan shop. They are one of the nation’s largest payday loan companies, a member of the CFSA (which supposedly supports best practices by it’s members) and are publicly traded under the ticker symbol QCCO. QC Holdings Inc. is based in Overland Park, Kansas.

The Fair Debt Collection Practices Act was first passed by U.S. Congress in 1966 and was thoroughly revised in 2006.

Most of the questions we get here relate to what collectors can and can’t do. Since all collection agencies in the United States are governed by the FDCPA or Fair Debt Collections Practices Act, I decided it would be good to post on the Top 5 things most consumers DON’T KNOW about the FDCPA.
 

Most consumers understand that collectors can and cannot do certain things, but sometimes they make assumptions based on logic or intuition. However, it is important to understand exactly what FDCPA covers and what it does not… in many cases it may surprise even the most educated consumers.

So, here is our list of the Top 5 Things You Did Not Know About FDCPA.

5. You can have a collector to stop calling you. Just as simple as that. All you have to do is send the collector a letter and let them know you have no intention of paying the debt or that you are requesting that they cease communications. Section 805.c is very clear on this matter:

(c) CEASING COMMUNICATION. If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except—
(1) to advise the consumer that the debt collector’s further efforts are being terminated;
(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.
If such notice from the consumer is made by mail, notification shall be complete upon receipt.

Our Cease and Desist Letter will do the trick!

4. Collectors can show up at your home… in person! There is nothing in FDCPA that prevents a collector from visiting you in person. Now, this is expensive and cumbersome, but it has been known to occur. Several companies were offering these services to mortgage companies during the economic downturn and housing crisis the last few years. We also see payday loan collectors doing this from time to time, since they have employees without much to do manning their stores on slow days.

It should be noted that they can also show up at your place of employment or any other place you might be.

3. Collectors should only call your references or family members once. Making calls to references, family members, neighbors, etc. is a tried and true collection practice. The reason is that this causes embarrassment and increases the chances of the consumer paying. However, according to FDCPA this type of contact should be very limited. Collection agencies should only contact someone other than the debtor in order to get location information on the debtor and should not recontact them unless they have reason to believe the reference or third party may have new information. There are several implications here:

• If you are in contact with the agency, they should not be contacting third parties. They are only to use that tactic to find your location information and if they have that, there is no need to contact others.
• The agency should never identify their company unless the third party asks explicitly.
• There is no reason, in most cases, for an agency to call a third party more than once.

This is one of the most common FDCPA abuses that I hear about. Agencies will hound references and relatives in an attempt to “shame” debtors into paying. However, the protections against this in FDCPA are very strong.

2. Nothing in FDCPA prevents collectors from being rude. While collectors are prevented from doing anything to “harass, oppress, or abuse any person in connection with the collection of a debt,” this does not prevent them from being rude. Short of oppressing or abusing you, using profanity or threatening violence, they can be extremely rude. Examples of this that I have seen are hanging up on customers, being extremely condescending and generally being rude and difficult. Certainly, some lawyers would take up a case on some of these, but it is pretty easy to be rude without meeting the definitions in FDCPA.

1. FDCPA only applies to 3rd Party Collection Agencies. This is probably the MOST prevalent misconception I get about FDCPA. It simply does not cover the original creditor. In fact, there is no Federal Law that covers creditor collection efforts. So, technically speaking, an original creditor, say Citibank, can curse at you, call you at midnight, tell your neighbors you owe a debt to them and generally operate without rules. Now, I should note that most ethical creditors operate under self-imposed guidelines that are close to FDCPA and there are state laws in some states that apply to original creditors (Texas for example). However, there is no Federal Law covering original creditors.

I hope this helps everyone’s FDCPA education and creates more knowledgeable consumers who can work to stop debt collectors in their lives.

Here is a link to the FULL FDCPA.

Portfolio Recovery Associates, or PRA, is one of the nation’s largest debt buying collection agencies. Despite doing most of their business in California, Texas, Florida and New York, the company faced 47 lawsuits in U.S. District Court for Colorado in 2010. However, here is the kicker, nearly all the lawsuits were filed by one attorney, David Larson.

PRA specializes in buying debt. Late last year, the company reported owning over $50 billion in consumer debt. However, it paid less than $2 billion to buy this debt. This is fairly typical in the debt buying and debt selling industries.

Typically, debt collection lawsuits settle very quickly, as the debt collectors want to avoid lengthy litigation and consumer attorneys are looking for a quick, easy settlement to collect their fees on. They would prefer this to protracted litigation.

It is my belief that where there is smoke there is fire. If Portfolio Recovery Associates has this many cases filed against it in Colorado, there must be something systemically wrong with their collection practices. Otherwise, why would they settle the majority of the cases. In fact, the average time to settle each of the cases filed by Larson last year was 35 days.

Sentor Al Franken Introduces the End Collector Abuse Act

“This bill will protect Minnesota consumers from abusive debt collectors who often exploit loopholes in the law to make an extra buck,” said Sen. Franken. “Debt collectors often use deceptive and aggressive tactics, sometimes going after debts that have already been paid or even targeting the wrong person. This bill will protect consumers, keep debt collectors honest, and stop the misuse of law enforcement resources for private profit.”

The End Debt Collector Abuse Act adopts recommendations by the FTC and consumer rights groups that will help to protect consumers, while keeping debt collectors honest. Obviously, stopping the abuse of law enforcement and judicial resources for private profit is one aspect of this act.

A few of highlights from the proposed End Debt Collector Abuse Act are:

• Prohibit debt collectors from seeking arrest warrants to collect on debts.
• Give consumers the information they need to protect themselves from unscrupulous debt collectors.
• Require debt collectors to conduct thorough investigations when consumers dispute the debt.
• Increase penalties on debt collectors who break the law to discourage them from employing bad practices.
• Allow judges to provide injunctive relief to consumers when debt collectors continue to violate their rights as specified under the Fair Debt Collection Practices Act.

The End Debt Collector Abuse Act has been endorsed by many national organizations including the following:

• National Consumer Law Center
• Center for Responsible Lending
• NAACP
• SEIU
• National Association of Consumer Advocates
• Consumer Action
• Consumers Union
• National Consumers League
• Minnesota Attorney General Lori Swanson

While this Act is certainly a fine step in the right direction for protecting consumer’s rights, I have several concerns.

First, it seems to be focused on the rare and insignificant case of debt collectors arresting debtors. This is not a common occurrence and it would seem that there are a host of deceptive practices laws that collectors could be charged with in relation to that. It also seems that several FDCPA provisions could be applied here, including the intent to harass and false claims. I’m certainly not saying this is not worthwhile to address, but there seem to be many more common and concerning abuses in the collection industry

Second, I still do not understand why extending FDCPA to first party collectors is not ever mentioned in Congress. If you truly want to protect consumers, then hold original creditors to the same basic standards of fairness required by the FDCPA. Indeed, certain states already extend their collection regulations to first party or original creditors, notably Texas (a state not known for it’s consumer protections). Why should they be allowed to call you at any hour, harass you at work or make false threats? It simply does not make sense to me, but I can only guess its a symptom of the ultra-powerful banking lobby in Washington DC.

Let’s hope Franken, LeMieux or others in Congress open up to this idea soon and extend some real protections to American Consumers struggling with debt.

HSBC is accused of violating written agreements with Debt Settlement Companies

Major credit card lender HSBC has been hit with a class action lawsuit over it’s collection practices and dealings with debt settlement companies. The complain was filed in New Jersey by plaintiff Chastity Bradley on behalf of the entire affected class. HSBC offers Visa, American Express and MasterCard credit card products and operates a large subprime unit under the brand name Orchard Bank.

The complaint centers around the HSBC Collection Department’s dealings with customers who have enrolled in debt settlement programs. According the the complaint, HSBC engaged in a systematic process of agreeing to settlements with debt settlement companies and taking installment payments to satisfy those settlement agreements.

Despite agreeing in writing to these agreements, HSBC would refuse to accept the FINAL settlement payment. Then, they would proceed with collecting on the full balance owed, less the payments received in the course of the payment plan.

Debt Settlement has come under a lot of scrutiny lately and the FTC recently issued new guidelines for debt settlement or debt consolidation companies in an effort to protect customers. However, it is clear that in some cases, debt settlement does work for a consumer and is a legitimate win-win-win: clients save on their debts, creditors avoid bankruptcy (which often means they get paid nothing) and debt settlement companies make a nice profit.

If these allegations are true, this is an incredible case of unethical, immoral, fraudulent activity by HSBC. To systematically enter into agreements in writing, then void those agreements after consumers have honored their end of the agreement is hard to believe. Coming on the heels of the latest allegations against JP Morgan Chase, it really makes you wonder if banks in this country have learned anything from the financial fallout.

Another question one could ask is where is the Consumer Financial Protection Bureau touted by President Obama? The answer: over 6 months after signing this bureau into law, President Obama still has not nominated anyone to run it.

Here is the complete complaint against HSBC.

A former JP Morgan and Chase employee is reportedly blowing the whistle on Chase Bank’s credit card collection and debt sale practices, among other things. Linda Almonte is a former Chase mid-level manager, who was fired by Chase. She is currently pursuing a lawsuit against Chase relating to her firing.

However, she has now also filed a whistle blower complaint with the Securities and Exchange Commission. The allegations made in her complaint charge Chase with blatantly unethical and illegal practices involving its credit card debt processes. Chase, of course, denies her claims.

Excerpts from the letter sent to the SEC on Ms. Almonte’s behalf are very interesting. This passage lists the claims being made by Ms. Almonte:

1. Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts. . .when in fact Chase Bank executives knew that many of those accounts had incorrect and overstated balances.

3. Chase Bank executives routinely destroyed information and communications from consumers rather than incorporate that information into the consumer’s credit card file, including bankruptcy notices, powers of attorney, notice of cancellation of auto-pay, proof of payments and letters from debt settlement companies.

4. Chase Bank executives mass-executed thousands of affidavits in support of Chase Banks collection efforts and those Chase Bank executives did not have personal knowledge of the facts set forth in the affidavits.

5. When senior Chase Bank executives were made aware of these systemic problems, senior Chase Bank executives — rather than remedy the problems — immediately fired the whistleblower and attempted to cover up these problems.

The complaint goes on to allege various other misdeeds by Chase management. The most concerning of these relate to Chase improperly characterizing accounts that were sold to 3rd party debt collection agencies. Ms. Almonte claims that Chase improperly reported these as post judgment accounts and often sold accounts with inflated balances.

Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts that were marked as Judgment Accounts when in fact Chase Bank knew that many of those accounts had material defects, were not in fact Judgment Accounts and had incorrect and overstated balances.

This is certainly a disturbing set of allegations. However, at this point it is important to keep in mind that they are just allegations. We will keep you posted on this case as it progresses.