Texas Attorney General Greg Abbott has charged an Oklahoma based payday loan company with impersonating a state official. Patrick D. “Dylan” White, whose businesses operate in Texas as CASHMAX, Fed Cash, TOPCASH and Cash Service Center, is owner of Federal Cash Advance of Oklahoma, LLC, and maintains offices in Dallas County.

According to State investigators, the defendant sent deceptive collection letters to Texans with outstanding payday loan debts. The letters were delivered in envelopes that contained the Dallas County Clerk’s forged signature and improperly bore the official seals of both the State of Texas and Dallas County. Inside the envelopes, the defendant inserted notices of debt collection that instructed recipients to call a telephone number, which belonged to Federal Cash Advance’s CASHMAX offices.

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Pamela Davis found herself in an all to common situation: a collection agency was harassing her even thought she did not owe any money for the debt they were collecting on. However, with a common name like Pamela Davis, they had decided the debt belonged to her and allegedly would not listen to her complaints. So, she has filed a lawsuit alleging debt collectors harassed her even though they had the wrong person.

G.E. Money Bank, G.E. Capital, Northland Group Inc., LVNV Funding and Law Offices of Brachfeld and Associates were named in the lawsuit that was filed on Nov. 12 in the Eastern District of Texas, Marshall Division.

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I wanted to provide an update on the payday loan scam that appears to be getting worse, unfortunately. There have been numerous media reports and warnings about this issue from state Attorney Generals. However, it seems that the publicity has done nothing to stop these scammers from trying to rip off innocent payday loan customers. In fact, they have even gotten more sophisticated and aggressive from what I’m seeing.

Here are some of the recent developments with this scam:

• They have begun to use a variety of vague lender names, designed to mislead customers. They usually use some combination of “Cash” “Net” “USA” and/or “Advance.” Some outlets are reporting that they must have stolen data from CashNet USA since they use these names. I believe this to be completely false and giant leap being made due to the fact that they use Cash and Net in their scam. It would make sense to do this because CashNet USA is the largest online payday loan company in the U.S.

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The Payday Loan Collection Scam continues and they are now sending e-mails amazingly. These e-mails come from legal@lawofficeusa.us.

Below is an actual e-mail that they sent a consumer.

Please note that the misspellings and formatting issues are directly from the e-mail.

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American Credit Services, a payday loan collection scam, has come to my attention and I’d like to alert readers to the outline of how these fraudsters work.

Basically, the “company” is calling people and telling them they owe money on one or more payday loans. Some of the common characteristics of these fake collection calls are:

• Invariably the so-called collectors have moderate to heavy Indian accents. Presumably they are operating out of one of the thousands of offshore call centers in India.
• They start the call in most cases by telling the victim that they need to call their lawyer and appear in court the next day.
• These “collection agents” usually claim to be from some government agency, even claiming to be prosecutors in many cases. For some reason, they usually claim to be associated with the state of California.
• These fraudsters have a good bit of personal information on the people they are calling. They usually have some combination of Social Security Number, bank account and date of birth for the victim.
• They usually ask for a relatively large sum of money, about $1500 in most cases I’ve heard of.
• In some cases, through coincidence or otherwise, they actually claim to be representing a payday loan company that the victim actually owes money to.

The disturbing thing about this collection scam is Read the rest of this entry »

New York Attorney General Andrew Cuomo is continuing his crusade against rogue debt collectors. His office announced on Wednesday that they have launched a statewide inquiry into debt collection agencies.

In addition, they have obtained a court order against Lamont Cooper and his two debt collection companies, Emanee Development, Inc. and Dial Tech LLC, under which the companies will shut down and Cooper will be forced to pay restitution to consumers statewide.

According to Cuomo’s Office, Cooper’s collections companies unlawfully lied to consumers, threatened to arrest them, and intimidated them into paying debts that they sometimes did not even owe. They would often call third parties like neighbors or employers to further embarrass and harass consumers. Emanee and Dial Tech allegedly did business under the names of various shell companies and fictitious law firms across the state, including: Claims Process Services, Claims America, CMC Recovery Services, Lomax & Barnes and Murray, Bradshaw & Associates.

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Yesterday, in U.S. District Court in San Jose, a jury awarded a California couple $500,000 in a fair debt collection case.  Credigy Services Corp. was found to be in violation of the Fair Debt Collection Practices Act and were trying to collect on money that was not owed.

The jurors in the cases cited Credigy Services Corp. used intentional and systematic efforts to cause emotional distress for the consumers, Manuel G. Fausto and his wife Luz.

Credigy Service Corp’s lawyers said it’s too early for them to comment on the jury’s decision. U.S. District Court Judge James Ware has yet to enter judgment on the case. If he does not approve the verdict, that could give Credigy’s attorneys an opportunity to get it overturned.

This is certainly a huge win for consumers, not to mention the Fausto’s. Let’s just hope the judge upholds the jury’s decision and sends a message to debt collectors who violate state and federal laws.

UPDATE: The Faust’s lawyers have sent me a link with more details on this debt collection lawsuit.

Attorney General Andrew Cuomo announced criminal charges today against Long Island-based American Legal Process (“ALP”) and its CEO and President William Singler for a fraudulent business scheme in which the company allegedly failed to provide proper legal notification to thousands of New Yorkers facing debt-related lawsuits, causing them unknowingly to default and have costly judgments entered against them without the chance to respond or defend themselves.

According to the court papers filed today, ALP, as a legal process server, was hired by high-volume debt collection law firms in New York to serve legal papers, usually a summons and complaint, notifying individuals that they are being sued and must answer the complaint.

ALP, however, allegedly engaged in “sewer service,” which is basically where the process server does not make any legitimate attempt to notify the consumer of the lawsuit. As a result, thousands of judgments were allegedly obtained against unsuspecting New Yorkers, many of whom first learned they were being sued when they found their bank accounts frozen or their wages garnished.

In addition, Cuomo announced his intent to sue one of ALP’s largest customers, the collections law firm of Forster & Garbus, for violations of New York State’s consumer protection laws. According to Cuomo, Forster & Garbus used ALP to serve over 28,000 summons and complaints across the state, but failed to supervise the company and relied on legal papers from ALP that it knew or should have known were false.

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In an effort to increase debt collector regulation in the state, Oregon Governor Ted Kulongoski has signed a new law that allows the the Oregon Attorney General to sue debt collectors in the Beaver State. The Attorney General’s ability to regulate debt collectors will grow significantly under this bill and offer Oregon debtors a degree of protection from harassing collectors that many states do not.

The legislation will allow Attorney General John Kroger to sue debt collectors who harass Oregon customers by violating their legal rights under Oregon collection law. “This important legislation will help us crack down on debt collectors who routinely violate state and federal law,” AG John Kroger said in a Thursday.

Oregon Senate Bill 328 will allow the state’s attorney general to go to court to enforce a 1977 law against illegal collection practices, the so-called Unlawful Debt Collection Practices Act. Currently, the Oregon attorney general can sue collection agencies under Oregon’s Unlawful Trade Protection Act, but not under this consumer protection law.

Last year, the Oregon Justice Department received 834 written consumer complaints about debt collection agencies and 254 about first-party debt collectors, the attorney general’s office said.

This is a great step that Oregon is taking to make sure that enforcement of collection law is available to their AG in his efforts to protect Oregon consumers.

The fallout from Dateline NBC’s debt collections episode has generated a real buzz in the collections industry.

Just this week we saw this editorial from InsideARM, which offers some pretty good rebuttals to all the collection agency boneheads that were posting on that site. All of their comments since the airing have been about how unfair Dateline’s treatment was of the “Asset Receivable Industry.”

Then, of course, you have NARCA (National Association of Retail Collections Attorneys) coming out with their press release arguing about how unfair the treatment was by NBC’s Dateline.

The point that these debt collectors continue to miss is that Dateline NBC and reporter Chris Hansen never claimed they were showing typical behavior of the debt collection industry. They simply were showing that in many cases (and they did show a number of them), there were horrible debt collectors, such as LHR, out there that are violating debtors’ rights with little or no regard for the law. “Where’s the Outrage” from Paul Legrady makes that point very well and challenges his colleagues in debt collection to try and work toward fixing the bad actors and not just griping about press coverage.

I could not agree more.