Oregon appeals court rules AGAINST consumers and for debt buyers

Unfortunately the Oregon rulings extend the 3-year statute of limitations in Delaware where Chase is incorporated to the 6-year Oregon statute of limitations.  Here is the article at OregonLive.com:

Oregon Court of Appeals says consumers with unpaid credit-card debt aren’t off the hook unless six years have passed and no lawsuits are filed.

Arizona changed the SOL for credit cards from 3 to 6 years in 2011 and also applies 6 years to debts that would be time barred according to the creditors’ terms.

The trend is clear — more power and $$$ for scummy bankers and debt buyers.

Why do they have so much time to sue?

From the article:

… But Daniel N. Gordon, the Eugene attorney who represents CACV and Unifund, said his clients were simply trying to get the defendants to make good on debt they owed. Gordon noted that two other high courts — the Washington Court of Appeals’ Division 2 and the U.S. Ninth Circuit Court of Appeals — have sided with debt collectors on the issue.

When asked why it can take more than three years to file a lawsuit, Gordon said the years can easily fly by.

Months can pass before a bank bars a cardholder from racking up new charges, and more months can pass as the bank tries to collect on overdue bills. At some point, the bank may give up and sell the debt to a collector.

Then many more months can pass as the collector presses the delinquent former cardholders to pay up, and the collector hires an attorney in the consumer’s state to sue.

Let’s put this argument in perspective.

  • Bankers and debt buyers have collection employees and legal departments with attorneys who do nothing but collect debts.
  • Consumers with delinquent debt have  NO employees, NO money, NO legal skills and NO time.

Yet, bankers and debt buyers get 6 years to sue while consumers get ONE year to sue for violations of the Fair Debt Collection Practices Act (FDCPA) and TWO years for violations of the Fair Credit Reporting Act (FCRA).

I know like nobody else how hard it is for consumers to find attorneys.  Most consumers do NOT want to sue unless they have to because they are being sued for the debts.  Of course the SOL for violations of the FDCPA and the FCRA often expired by the time they are served with the summons and complaint for the debt.

The FDCPA could be AMENDED to extend the SOL for violations to the SOL for the debt that’s collected.  THAT would be FAIR.

To keep it simple, a 3 year SOL for ALL credit card debts and FDCPA and FCRA violations would be FAIR.

FTC stops operations of FAKE debt collectors American Credit Crunchers and Ebeeze

Scam after scam and the California attorney general does NOTHING.  It’s incredible that the FTC has to take action while California continues to welcome scammers of the worst kind.
The FTC press release:

Maryland suspends licenses for debt buyer LVNV Funding and servicer Resurgent Capital Services

It’s about time!

LVNV usually reports INCORRECTLY on the credit reports and they refuse to document accounts after disputes. Every time my clients submit disputes, Resurgent passes the accounts on to another collector, they have to dispute again and the accounts are returned to Resurgent. Resurgent then writes that they just received the account and we have to start all over.  It’s like playing musical chair.

Resurgent sends letters that make NO sense at all and we might just start a blog for them.

State suspends licenses of affiliated debt-collection firms

By Jamie Smith Hopkins, The Baltimore Sun5:27 p.m. EDT, October 28, 2011

Maryland financial regulators said Friday that they have suspended the debt-collection licenses of two affiliated companies and ordered them to stop attempting to collect on consumer debts.

The state Department of Labor, Licensing and Regulation said it has “found grounds to allege” that LVNV Funding and Resurgent Capital Services violated several debt-collection laws. The companies have collectively filed more than 27,000 cases in Maryland courts over the past six years to seek judgments on old debts, including defaulted credit-card accounts.

A variety of companies buy consumer debts and then sue, often — the state contends — with little evidence to prove they have the right to collect. Maryland’s highest court voted in September to make clear that more documentation is required from debt buyers, rules that will go into effect Jan. 1.

The state labor department said Friday that LVNV and Resurgent Capital’s violations include filing “false, deceptive or deficient affidavits” in their court cases, misrepresenting the amount owed and collecting unauthorized attorney fees.

Luke Umstetter, senior corporate counsel for Resurgent Capital, said the company its affiliates — including LVNV — work hard “to comply with both the letter and spirit of all applicable laws and regulations.”

“Given our efforts to operate in a fair, ethical and sensitive manner, we are very disappointed with any allegations to the contrary and look forward to resolving this matter with the state of Maryland as expeditiously as possible,” he said.

The companies have a right to a hearing before the state decides whether to make the license suspension final.

In September LVNV settled a class-action lawsuit by agreeing to forgive about $10 million in debt it had tried to collect from 3,500 Maryland consumers. A key part of the suit was that the company got its collections license after filing thousands of cases here. LVNV did not admit any wrongdoing.

Obama should prohibit the collection of sold consumer accounts.

Midland Funding affidavits questioned in Maryland

It’s about time that other states pick up on the fraudulent affidavits submitted by debt buyers all over the country and VOID the judgments.

Consumer advocates want affidavits pulled in Md. debt-collection cases

Ohio class-action settlement has implications for Maryland consumers, attorneys say

October 03, 2011|By Jamie Smith Hopkins, The Baltimore Sun

The University of Maryland School of Law’s consumer-protection clinic is trying to get key documents stricken from potentially hundreds of debt-collection cases over an issue more commonly thought of as a foreclosure problem — robo-signing.

Midland Funding, which buys old consumer debts and sues to collect, filed affidavits signed by representatives who swore they had personal knowledge of the debts even though they did not, a federal court in Ohio found as part of an August class-action settlement.

Midland employees daily signed 200 to 400 of such “false and misleading” affidavits for years, according to an order by U.S. District Judge David A. Katz.

Though it insisted the facts in the affidavits were accurate, Midland agreed as part of the settlement to change its practices. But the University of Maryland consumer-protection clinic says the company and affiliate Midland Credit Management have more than 400 active cases in Maryland that rely on affidavits filed during the period covered by the class-action settlement — January 2005 through mid-March of this year.

Some of the cases have not been ruled on by a judge, while others are still active because Midland was awarded a judgment that hasn’t been fully paid off.

Midland’s parent, the publicly traded Encore Capital Group, said it would stand by its affidavits in Maryland. The company said it made its affidavit process “more robust” in late 2009 while the Ohio class-action suit was under way and — in response to a separate class-action settlement — agreed to drop 10,000 Maryland cases filed by Midland before midJanuary 2010 because the firm did not have a state collections license until that point.

“We are confident that the affidavits submitted by our employees are prepared appropriately and properly identify consumer and account information,” Encore spokesman George Durham said.

Robo-signing came to national attention as a result of the long-running foreclosure crisis. But consumer attorneys say the lack of personal knowledge underlying the practice is also common in collection lawsuits brought by debt buyers, no matter how much time they take to prepare the paperwork.

Industry critics say the companies typically purchase scant information about the debts and are sometimes several purchasers removed from the credit-card company or other creditor that originally sold it.

“A fifth-generation purchaser of debt cannot possibly have personal knowledge of what happened when the account was created and what happened with each prior generation of debt buyer,” said Peter A. Holland, an attorney who runs the University of Maryland clinic.

Last week the clinic began filing motions in several Midland cases to get the affidavits stricken from the record in those lawsuits. The clinic also asked the District Court to take note of “fraudulent, robo-signed” affidavits in all of Midland’s 2005 through mid-March cases in Maryland.

Affidavits, the written equivalent of court testimony, are critical in debt-collection cases because many suits are decided without ever going to trial. If the consumer doesn’t defend himself, a judge decides the case based on filings — including the affidavit — by the company suing to collect.

WV AG sues debt buyer Cavalry over state licensing

This is of interest to me because Acarta LLC is currently suing me in Arizona and they are NOT licensed and have obtained numerous judgments against others in Arizona.

Debt Buyer Cavalry Responds to State Action; Vows to Defend

Accounts receivable management firm Cavalry said late Friday that it is defending an action brought by the West Virginia attorney general over proper licensing in the state.

In a statement provided to insideARM.com, the company detailed the circumstances that led to the action and noted that it had filed a motion Friday to dissolve an injunction issued by a state court.

The statement in its entirety is below:

In June 2010, the West Virginia Attorney General brought an action seeking a temporary injunction against various Cavalry entities alleging that Cavalry violated the West Virginia Consumer Credit and Protection Act by failing to maintain proper licenses. Specifically, the action alleges that the Cavalry passive debt buyers, which have no employees or operations and simply own the purchased portfolios, should have been licensed at the time the portfolios were acquired.

Prior to the commencement of this action, Cavalry’s attorneys and others in the industry had interpreted the relevant statute as not requiring passive debt buyers to obtain licenses. This opinion was substantiated by the West Virginia State Tax Department’s own interpretation of the statute.

Cavalry’s servicing entity, Cavalry Portfolio Services, LLC, was found by the court to have been properly licensed and bonded at all relevant times.

On April 26, 2010, the Tax Department reversed its historical position and issued a letter stating that passive debt buyers need to become licensed. Shortly thereafter, in accordance with the new interpretation, the Cavalry passive debt buyers applied for licensure, and were granted collection agency licenses in October 2010.

The Attorney General’s legal theory is contrary to the historical advice of the Tax Department and seeks to hold Cavalry liable for acts that were widely accepted as lawful within the industry and by the government regulator itself at the time those acts were undertaken. Additionally, the Attorney General’s position is legally flawed, as he is attempting to take what is, at most, a potential violation of a revenue statute, and turn it into a violation of a state consumer protection law.

The court’s order is not a determination as to the merits of the Attorney General’s position. Under West Virginia law, the merits of a case cannot be considered by the court at the temporary injunction phase. Moreover, the burden of proof that the Attorney General had to meet at this stage was extremely low. To prevail on a temporary injunction, he must only make a “minimal evidentiary showing,” according to the West Virginia Supreme Court.

This order affects 743 judgments by limiting collection litigation and judgment enforcement with respect to West Virginia accounts acquired by the Cavalry passive debt buyers during the time they were unlicensed (i.e., prior to October 2010). The validity of the judgments themselves remains unaffected during the pendency of the action. Collection activity and credit reporting by Cavalry Portfolio Services, LLC is unaffected.

Cavalry continues to vigorously defend this action, and filed a motion to dissolve the injunction on October 28, 2011.

There has been similar litigation in Maryland.  Unlike Cavalry, Acarta was actively collecting as  it sent me a collection letter.

IC System, Allied Interstate, Van Ru and 5 other collectors charged in MN with hiring felons and other violations

It’s incredible to see so many collectors hiring FELONS.

Apparently it is more profitable to hire felons than to run criminal background checks for new employees.  Obviously, felons make GREAT collectors!

In fact, criminals are so good at collecting, Allied Interstate decided to hire a felon KNOWING about her crimes!

In one instance, a debt collector applicant disclosed her criminal background to Allied Interstate, LLC during the application process. She had been previously convicted of financial card fraud and of being a lookout in a burglary. Allied Interstate, LLC hired her nonetheless and told the Commerce Department she had no criminal history.

Sadly, many states do NOT regulate collectors at all.  A notable exception is Minnesota. Here is the MN Department of Commerce press release with lots of details about the settlements: Read more…

HSBC extended payment holds

A client got one of those $300 HSBC credit cards I recently recommended to rebuild credit.

After receiving his first statement, he first paid $25 and then the remaining $224 so that he would pay the balance in full and not pay any interest.  Both payments were scheduled at the HSBC Orchard website.

The $224 payment cleared his bank account on 9/27/11.   Today he wanted to use his card and he found out that he had only $77 available and there was a $223 “pending charge.”

WHAT???  He hadn’t used the card since paying it in full.

He finally figured out that the pending charge was a HOLD on his payment.

Apparently they cleared $1.

I suppose there’s nothing he can do but wait.

I wonder what would happen if the account went over the limit due to those extensive holds.  Would they charge an over limit fee?

So be aware and don’t expect to be able to actually USE these cards.

Collector Arrow Financial loses 9th circuit appeal

On 9/23/11 the 9th circuit of appeals affirmed the jury verdict against Arrow Financial based on violations of the FDCPA and the California Rosenthal Act.  From InsideARM:

Collection Agency Loses FDCPA Case Appeal; “The Truth Can be Misleading:” Judges

The United States Court of Appeals for the Ninth Circuit ruled against an ARM firm Friday in their appeal over a class action suit that alleged violations of the Fair Debt Collection Practices Act (FDCPA) in the language of their collection letter.

In the case, Johnny Gonzales, et al., v. Arrow Financial Services, the plaintiff argued that a letter sent by Arrow offering settlement of a health club debt misled the debtor into believing the firm would report the debt to a credit reporting agency.

In 2002, Arrow purchased a portfolio of old debts owed to health clubs. The firm sent collection letters to 40,000 California residents in 2004 attempting to collect. The letters offered settlements of 50 percent of the total debt and a line that became central to the suit: “if we are reporting the account, the appropriate credit bureaus will be notified that this account has been settled.” Gonzales sued under the FDCPA because he learned that the debt was too old to report.

Arrow’s defense hinged on the use of the word “if.”

The company argued that it was not threatening to report the debt, but merely stating what would happen if it did. It also noted that the statement was entirely accurate. But the appeals court did not buy that logic, writing, “We emphasize that a literally true statement can still be misleading.”

The court upheld a lower court ruling in favor of the class. The original award of $225,500 to the 40,000 class members appears to have been upheld as well.

But one judge on the three-judge panel dissented, writing that the $225,500 award was duplicative in nature and threatened the liability restrictions of the FDCPA.

The court opinion: GonzalesvArrow-9th-circuit-appeal-9-23-11

I have a  similar issue with a attorney James R. Vaughan quoting a true statement about “validation”:

[V]erification of a debt requires nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed.” Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1174 (9th Cir.2006); citing, Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.1999), and, FDCPA §809, Validation of debts, 15 U.S.C. §1692g.

I really don’t believe that this type of language is appropriate in response to a consumer’s dispute.  More important, that’s what attorney Vaughan sent to me after he filed suit for debt buyer Acarta LLC and I requested documentation such as the statements and contract.  He did attach statements, but it seems to me that he is saying that this is all they need to do to prevail in court.

Is this how he will get a judgment against me?

CORRUPT OBAMA: government debt collection calls to cell phones

The collection industry is thrilled by Obama’s latest gift to them. The Inside ARM article:

Obama Proposal Loosens Restrictions on Cell Phone Calls for Debt Collection

Buried in President Obama’s deficit reduction plan unveiled Monday was a provision that would allow cell phone calls for the purpose of debt collection. But the brief proposal seemed to cover only debt owed to, or guaranteed by, the Federal Government.

On Page 28 of “The President’s Plan for Economic Growth and Deficit Reduction,” there is a very brief paragraph that states:

Allow agencies to contact delinquent debtors via their cellular phones. The Administration also proposes to amend the Communications Act of 1934 to facilitate collection of debts owed to or guaranteed by the Federal Government, by facilitating contact of delinquent debtors who are most readily reached on their cell phones. This provision is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cell phones.

There were no additional details given, but a spokesman for the Office of Management and Budget did tell the Huffington Post, “This proposal merely reflects the fact that more and more people rely solely on a mobile phone for their voice communications, and allows debt collectors to call them on these numbers.”

The proposal was included in a section of proposals under the broad heading “Step up collection of debts owed to the Federal Government.” Other proposals in the section include increasing IRS levy authority for Federal contractor payments and offsetting Federal tax refunds to collect State income taxes from debtors who currently reside in other States.

The prohibition on calling cell phones, specifically with auto-dialers, has been a cause of concern for the debt collection industry for years.

“The President’s proposal is consistent with where we’ve been on the use of cell phones to communicate with consumers,” said Mark Schiffman, spokesman for debt collection industry trade group ACA International. “We certainly support this direction as it aligns with what we’ve been advocating for as it relates to the TCPA.”

It costs me 10 cents / minute for every call I receive on my cell phone and I don’t want ANYONE to call my cell unless I asked them to.

Maybe more important than the cost of calls is that many people carry cell phones for emergencies and NOBODY needs to be harassed by collectors while driving a car, at the supermarket or anywhere else outside their home.

I wish I could reach the at least 100 million Americans who should immediately STOP paying all credit cards and student loans.  VOTE with your MONEY!

The US Department of Education,  Sallie Mae and other student loan lenders deliberately inflict damages on student loan borrowers who MAKE EVERY PAYMENT ON TIME.

Incorrect Student Loan Reporting Lowers FICO Scores

The entire credit system is designed to exploit the working people and to redistribute assets from the people to the corporations.

Most people should spend what little extra money they have to stock up on food, fix their house and get the car in shape.  And of course plant a garden!

$1.26 million awarded in NM FDCPA lawsuit against law firm Farrell & Sandlin for wrongful garnishment

Apparently Farrell & Sandlin attempted to garnish the wages of the wrong Lucinda Yazzie twice, even after they were informed that she is not the person they were looking for.  A Farrell & Sandlin collector had changed the SSN on the account to the SSN provided by Target, the judgment creditor.  Yes, that’s how low some collectors will stoop!

So many collection attorneys just don’t know when to quit collecting.

They think they are above the law and correctly assume that MOST consumers don’t have the money to retain a COMPETENT attorney.  Chances of getting a  COMPETENT attorney to take a case on contingency and actually litigate it are very much like winning the lottery.

MOST consumer attorneys strive to settle cases EARLY and primarily for their legal fees (thousands of dollars) while the consumer might get deletion from the credit report and a debt buyer might give up its claim against the consumer.

Most consumer attorneys are cream skimming, looking for slam dunk cases that can be settled quickly for minimal work.

Just last week I received an email about a similar garnishment situation: Read more…