Payday loan company Quik Cash has agreed to pay $170,000 to settle a collections fraud lawsuit filed by the Attorney General of Arizona. The lawsuit was originally filed in 2009 by former Arizona Attorney General Terry Goddard. Goddard lost a bid for the Governor’s office last year and is well known for his battles with payday lenders in Arizona. Payday Loans are now illegal in Arizona, largely due to Goddard’s efforts to eradicate the industry.

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:

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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.

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.

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Today, we are grateful to have a guest post from Jason Holmes, a regular writer for Debt Consolidation Care. Jason will provide us with some helpful tips for Credit Card Debt Settlement. After the New Year, I will be posting some tips for Payday Loan Debt Consolidation, so be sure to look out for that.

Are you getting calls from debt collectors to collect an unpaid amount from you? Are you thinking of making the payments to get rid of harassing collection calls? If yes, then before you make any payments, check whether or not the Statute of Limitations (SOL) on that debt has expired. If it’s not, then you can think of paying back the debt.

If your financial condition doesn’t permit you to repay the outstanding balances in full, then you’ll have to negotiate for debt settlement with the collector. Read this article to know how to negotiate in order to get the best debt settlement deal.

How to Negotiate with Debt Collectors

Here are some tips you should follow while dealing with debt collectors.

DO NOT negotiate for settlement over phone – It is better to avoid negotiating over phone. However, if they call you, then at first ask who has called you on behalf of the collection agency. You should also note the time when you got the call. Keep the record as if required, you can refer to the time and the person you’ve talked to. Always follow up telephonic conversation by sending mails with return receipt request.

However, if a debt collector calls you at odd hours that is, before 9 am or 9 pm, then you should inform him that you’re aware of the Federal Debt Collection Practices Act (FDCPA). Tell them that you can take necessary actions if they violate FDCPA.

DO NOT show your eagerness to settle debt – You may be eager to settle the debt by reducing the payoff amount as much as possible so that you can pay it back and get rid of it quickly. However, don’t show your eagerness to settle the debt fast as otherwise, you’ll never be able to get the best deal. The debt collector may reduce your debt to about 40-60% of the outstanding balance if you keep patience.

DO NOT start paying without a written agreement – The collector may later deny about the verbal agreement if you start paying without a written agreement. In this regard, you should also know that even if the SOL on the debt has expired, it may start all over again if your start making payments on that debt.

DO negotiate for removal of negative listings – Before you start paying, make sure you negotiate for removal of negative listings from your report. Negotiate with the collector to update the account status as “Paid in full” or “Paid as agreed”. If you can negotiate for a “Paid in full’ status on your report, then it’ll have positive effect on your report and help you in improving your score by a few points.

Often the debt collectors threaten the debtors to sue them in court. Though they can take this action, yet they rarely do so as the process is time consuming and expensive. Instead, they usually agree on a reduced payoff amount if they understand that you cannot repay the unpaid balance in full.

Jason Holmes is a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.

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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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 »

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.

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.

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:

Press Release
March 13, 2009

West Virginia Attorney General Darrell McGraw today announced that his office has entered into a settlement agreement with Brady and Caruso which will provide $9287.87 in refunds and $282,953.84 in debt cancellation for approximately 174 West Virginia consumers. Brady and Caruso, LLC, doing business as Brady, Caruso, and Associates, LLC, is a Nevada limited liability corporation that collects debts from its headquarters in Amherst, New York.

The Attorney General’s investigation was prompted by a complaint that a consumer received a collection call from Brady and Caruso but was not able to dispute the debt or determine whether she owed it because the collector could not verify the debt that she allegedly owed. Under federal law, debt collectors are required to send consumers a written notice within five days of their initial contact. The notice is required to provide the amount of the debt and the name of the creditor to whom the debt is owed. The consumer has 30 days from the date of this notice to dispute the debt in writing. If the consumer disputes the debt, the debt collector is required to provide verification of the debt, including the name of the original creditor, or a copy of the judgment. If the collector cannot provide such verification, it must stop all collection efforts. The Attorney General’s investigation of Brady and Caruso also revealed that it was not registered or bonded to collect debts in West Virginia.

The consumer also complained that the debt collector threatened to place a lien against her property if she did not pay the debt. Under West Virginia law, liens may not be placed against property unless the creditor first sues the debtor and obtains a judgment in court. West Virginia law prohibits the use of threats and coercion in debt collection and explicitly prohibits threatening that nonpayment will result in the taking of any action that requires a court order if the collector does not tell the consumer that it must obtain a court order before such action can be taken.

Under the terms of the settlement, Brady and Caruso will close all the West Virginia accounts, write those accounts down to a zero balance, take the necessary steps to delete any negative credit reporting in connection with those accounts, and refund any amounts paid on the accounts. The settlement also requires the collector not to resell the accounts. Consumers who are covered by this settlement will receive letters confirming the amount of debt cancellation and refunding any payments they made.