U.S. Sens. Al Franken (D-Minn.) and George LeMieux (R-Fl.) recently introduced legislation to end abusive debt collection practices. The End Debt Collector Abuse Act includes several provisions designed to eliminate predatory practices, including prohibiting debt collectors from seeking arrest warrants to collect on debts and ensuring consumers are better protected against abusive debt collectors.

“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:

Read the rest of this entry »

Washington State Governor Gregoire signed a new law today that restricts check cashers’ and payday lenders’ ability to collect on consumer debts. Payday Loans have gotten a lot of attention in the Washington Legislature this month, but this bill is very interesting in its definition of “harassment.”

This bill has some relatively benign elements, such as making it illegal for payday loan companies to impersonate a police officer and make false threats to consumers. I’m pretty sure these are already illegal activities in all 50 states, right?

Yet, this bill also bans the so-called “field calls” frequently used by payday loan collectors. Employees of payday loan companies often take off into “the field,” showing up at consumers homes or places of work, usually delivering a letter that notifies them of their payday loan debt. This is the definition of harassment, since the same payday companies have already called 2-3 times per day to remind the customer that they have fallen behind on their payday loan. It is good to see this horrible collection tactic put out of commission in Washington, at least for payday loan collectors.

Read the rest of this entry »

Debt Collectors will get the Dateline NBC treatment on Friday night, March 27th at 10pm Eastern and Pacific. Reporter Chris Hanson, most famous for his work exposing child predators on “To Catch a Predator,” will “expose dirty tactics used by some collection agencies.” According to NBC, hidden cameras will be involved, so this should be a really interesting show to watch on Friday night.

The episode of Dateline is titled “Debt in America and Its Collectors” and is part of a series called “Inside the Financial Fiasco.” Collection agencies abusing consumers is a serious issue in our country and it is great to see Dateline NBC and Chris Hanson tackling this issue with their trademark style.

However, everyone is not so excited. Without even having seen anything but the preview (below), Patrick Lunsford of InsideARM is lamenting the fact that it will be unfair and biased, with this from his article on the show:

To pre-suppose that the show will be an unfair view of the ARM industry is a bit beyond us at this point. I seriously can’t imagine what manner of awfulness will be foisted upon the public in this segment. I guess that we should withhold judgment until the piece airs, but I can’t see a piece that touts itself as a hidden camera expose of the ARM industry being even-sided.

While it’s always great to see “foisted” used in an article, I’m not sure how Patrick already knows the show will be so unfair? Maybe, it’s because Patrick, as an InsideARM expert, is well aware that there are a lot of debt collectors out there breaking the law every day, and if Chris Hanson is on the case, he’s bound to expose a number of them on national TV Friday night. Even better than Patrick’s “warning” to fellow debt collectors are the comments below the post. Apparently it’s not required to take an economics class to be a debt collector.

Tune in on Friday night or check back here on Saturday for an update on the episode.

West Virginia Attorney General Darrell McGraw is at it again… in a good way. McGraw has been on a mission to shut down payday lenders and their collection agencies that operate in his state. McGraw’s office began their crackdown on the internet payday lending industry in 2005.

Since then, McGraw’s office has successfully concluded 75 investigations of Internet payday lenders and their collection agencies, which have netted a total of $1,784,772.82 in cash refunds and cancelled debts for 6,612 West Virginia consumers.

Now, McGraw has sued not only 7 online payday lenders, but also 5 of their accomplice collection agencies. The really great thing about this is that McGraw is not just going after the lenders, but also their collection agencies.

The problem with online payday loans is that they are illegal in many states (and some are illegal in all states, as they operate offshore), yet they are using legitimate, licensed U.S. collection agencies to do their dirty work.

Read the rest of this entry »

Earlier this month, we posted on the New York Times article regarding agencies that collect on dead people’s debt.

Well, it appears that US Senator Charles Schumer from New York has read the article as well (or maybe he heard about it here?) and has called for a Federal Investigation into collecting on dead people.

It is probably unlikely that there will be an actual investigation or that anything will come of this, but we can always hope. Either way, it is certainly positive to see the respected US Senator shine some light on this despicable practice but bottom-feeding collection agencies.

In a letter to Federal Trade Commission Chairman Jon Leibowitz, Schumer writes:

I am dismayed to learn from recent media reports that some debt collection companies have made it a practice to attempt to collect unpaid credit card balances – and perhaps other types of unsecured debts – from the families of the deceased…

I find it shocking that a debt collection company would determine that it is worth causing profound anguish and embarrassment in order to collect debts that are sometimes as low as $50, or which result in a payment of $15 a month from a widow or widower who is struggling to make ends meet. If a debt is large enough to be worth collecting, there are legal ways to obtain payment.

First, if a surviving family member has also signed for the card, that family member will be obligated to pay the debt. Second, an unsecured creditor such as a credit card issuer can obtain payment from the estate of the deceased through a routine probate proceeding, after the holders of secured debt – such as mortgagors– are paid. This practice of harassing living family members for upfront payments results in putting credit card issuers in the front of the line to get money from an estate, rather than after those who hold secured debt.

Given that the FTC receives more complaints about debt collection companies than any other American business, I hope and expect that you will be thorough in your investigation of this matter.

I could not have said it better myself Senator Schumer.

We’ll keep you updated if there are any developments on this issue.

**Complete press release and letter to FTC Chairman Leibowitz**

New Jersey Debt Collectors Pressler & Pressler, LLP are under attack for their collection practices. A New Jersey consumer, Scott Mills, has exposed some of their tactics and publicizes their practices on his blog. His list of complaints against them is lengthy.

Well, it turns out Pressler & Pressler fought back and filed a claim against Scott Mills for libel. However, on Friday the judge dismissed the preliminary injunction motion in a victory for Mr. Mills.

To add insult to injury for Pressler, Scott’s website and his story were picked up by a Huffington Post blogger who wrote this article on Scott and his case.

Seems like a bad week for Pressler & Pressler. However, at least they’re not collecting on dead people! For more on their practices, see the video below:

Today, the New York Times has an article about collecting debts from deceased people.

The article features DCM Services of Minneapolis and includes an interview with their CEO. DCM Services offers free yoga classes and massages to their collectors. I suppose after selling your soul all day collecting from the relatives of recently deceased, a little yoga or a neck rub can really lighten your spirit? There is also foosball in the break room and catered lunches twice per month. Sounds like pretty good work, so long as you don’t look in the mirror every day.

Other collection agencies that collect on dead people’s debts by contacting grieving relatives who often have no legal obligation to pay are:

• Weltman, Weinberg & Reis, a Cleveland law firm headed up by Scot Weltman
• Phillips & Cohen Associates of Westampton, N.J with Adam Cohen as chief executive. Incidentally, their collectors are trained in all 5 stage of grief, presumably to better take advantage of each stage.
• DCM Services of Minneapolis with chief executive, Steven Farsht arranging yoga and massages for those who pry money from the dead’s relatives.

It’s amazing to me that this is allowed to exist under Federal Law and FDCPA. At the very least there should be some upfront disclosures that notify the deceased’s relatives of the fact that, in almost every state, there is absolutely no obligation of a surviving relative to assume the deceased’s debts. For these debt collectors prey on grief or the idea that the deceased will rest in peace if their credit card debt are taken care of is really about as low as it gets.

What is surprising is how delusional the executives of these collection agencies, law firms or ambulance chasers (you take your pick) are. The fact that three CEO’s would give interviews to the New York Times and have the nerve to discuss their yoga classes or training in the 5 stages of grief is beyond me. Do they really think anyone in their right mind would view this as ethical or even tolerable behavior? I hope they get kicked out of their country clubs for this.

However, what’s even worse to me is the tone the New York Times takes in this article. Not only do they not present an outraged viewpoint, they seem to spin the massages and free lunches in a positive light. They even point out how these agencies refer angry customers to counselors and then call them again in a week when they’ve been “counseled” without so much as pointing out what a racket this is.

Shame on you New York Times and DCM Services.

UPDATE: US Senator Charles Schumer of New York has called for a federal investigation into the collection practices featured in the New York Times article.