Basically, the “company” is calling people and telling them they owe money on a payday loan. 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 that they actually appear to have a great deal of information and are targeting payday loan customers. I believe that they must have posed as a lender trying to buy information from payday loan lead generators in order to have so much information on people. Alternatively, they may be gathering information illicitly from insecure payday loan websites.

It is likely that they may change their name or some of their tactics since the word is getting out about this scam. However, it would seem unlikely that they will be able to change the accented workforce that they are using to perpetuate this fraud on innocent payday loan customers.

Even the real “American Credit Service” here in the US, has placed this scam alert on their home page.

For more detailed information on this scam, see the links below:

• Complaints Board
• ABC News Report
• RipOff Report

They also appear to be using the following phone numbers often:

• 941-961-8518
• 714-845-0766
• 714-409-0250
• 310-208-3170
• 714-400-0563
• 213-221-1002
• 213-995-3046
• 310-362-4319
• 714-333-2951

If you have any questions about this scam, please us the Ask Brent section to send me a question.

New York AG Cuomo Closes Collection Agencies

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.

Cuomo also announced that his Office has subpoenaed nearly 20 other debt collectors across the state of New York in his ongoing investigation into various practices of the debt collection industry.

Attorney General Cuomo has subpoenaed nearly twenty companies and law firms operating as debt collectors throughout the state. The subpoenas included requests designed to discover the policies and procedures the debt collectors have implemented to comply with federal and state laws, how the companies respond to complaints about their collection practices, as well as how individual collectors are compensated.

The companies subpoenaed by Cuomo’s Office include:

• Cavalry Portfolio Services, LLC
• Cohen & Slamowitz, LLP
• Debt Recovery Solutions LLC
• Eltman, Eltman & Cooper
• Forster and Garbus
• LHR, Inc
• Mel S. Harris & Associates, LLC
• Med-Rev Recoveries, Inc.
• Mitchell N. Kay, P.C.
• NCO Portfolio Management, Inc. and NCO Financial Systems, Inc.
• North Shore Agency, Inc
• RJM Acquisitions LLC
• Rubin & Rothman LLC
• Sharinn & Lipshie P.C

You may remember LHR from the Dateline NBC special about a month ago. Perhaps Cuomo will thank Chris Hansen and Dateline for helping him out on this investigation.

Also, several of the agencies above were involved in a previous action by Cuomo.

Read the full press release HERE.

Read the Business Week Report on this HERE.

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.

New York Attorney General Andrew Cuomo

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.

“The laws of this state are supposed to ensure that each and every New Yorker has their day in court,” said Attorney General Cuomo. “If proven to be true, the schemes detailed in the cases filed today undermined the legal rights of thousands of citizens by corrupting our legal system and abusing individuals who happened to have consumer debts.”

The catalyst for this investigation by Cuomo was a report from non-profit MFY Legal Services. The report, titled Justice Disserved, detailed abuses by 7 top law firms in New York and their process servers. The report by MFY Legal Services showed that these 7 law firms filed over 180,000 cases in New York City Civil Court in 2007. The law firms mentioned in the report are:

1. Mel S. Harris & Associates, LLC – 43,506 cases filed
2. Cohen and Slamowitz, LLP – 41,480 cases filed
3. Rubin and Rothman, LLC – 31,661 cases filed
4. Forster and Garbus – 30,032 cases filed
5. Wolpoff and Abramson, LLP – 19,028 cases filed
6. Pressler and Pressler – 8,647 cases filed
7. Eltman, Eltman and Cooper – 5,823 cases filed

Carolyn Coffey, an attorney with MFY Legal Services, a nonprofit provider of free legal services, said: “The consequences of sewer service are profound, especially on vulnerable New Yorkers. In MFY’s 2008 report, Justice Disserved, we documented many victims of improper service who had judgments unknowingly entered against them, often to devastating effect. In one case, a disabled senior citizen who was a victim of sewer service attempted to withdraw money from his ATM to purchase medicine when he discovered his bank account was frozen. In another case, a single, working mother of two children who had no idea she had ever been sued, was buying food at a supermarket checkout counter when she learned her debit card would not work.”

ALP and Singler are both charged with Criminal Possession of a Forged Instrument in the Second Degree (a class D felony), three counts of Offering a False Instrument for Filing in the First Degree (a class E felony), and Scheme to Defraud in the Second Degree (a class E felony). Singler is also charged with being a Notary Public committing Fraud in Office (a class A misdemeanor).

It is really great to see AG Cuomo going after these collection law firms and their potentially criminal tactics. However, it is important that we note that most of the credit should be given to MFY Legal Services for their efforts in exposing this sham and providing assistance to New York Authorities. Without their efforts to work for the benefit of consumers, it is likely that ALP and Forster & Garbus would still be using their “sewer service” methods to collect debts in New York.

Oregon Attorney General John Kroger

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.

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.

Horsham, Pennsylvania’s NCO Group, Inc. reported a net loss for the full year 2008 of $337.1 million. In the fourth quarter of 2008 alone, the company reported a net loss of $286.6 million.

Mike Barrist, NCO Group Chairman and CEO, said that the company had achieved its objectives for the 2008 calendar year. The company’s EBITDA (earnings before interest, taxes and depreciation) for 2008 was $95.5 million. “As we continue to navigate through 2009, we believe NCO is well positioned among its peers within each of its core markets to capitalize on all available opportunities,” said NCO CEO Mike Barrist.

NCO Group acquired OSI in early 2008 and that acquisition contributed to the record revenue of $1.51 billion in 2008. $1.22 billion of that revenue was generated by NCO’s Collection Agency business. The company noted in an SEC filing that 60 percent of the ARM unit’s revenues were generated “from the recovery of delinquent accounts receivable on a contingency fee basis.” NCO also stated in an SEC filing that they spent $126.5 million purchasing debt portfolios in 2008.

In addition to being the world’s largest debt collector, NCO is infamous for a 2004 FTC Lawsuit which it paid the largest civil fine ever for an FCRA case, $1.5 million.

It seem that a Poy Sippi, Wisconsin Collection Attorney was the victim of an attempted scam.

These scams are actually pretty common against collection agencies and collection attorneys. Basically, the collectors are usually contacted by a company regarding a large corporate debt that they are trying to collect. These types of debts can be a windfall for an agency, since the amount owed on one debt can be well into the 6-figure range. So, the attorney or agency takes the case and soon the debtor agrees to pay.

This is where the scam against the collector starts. The payment is usually made via a fake cashier’s check or an ACH. The con artists hope that the collector will remit their portion of the “payment” to them before the collector notices that the cashier’s check is forged or fake. If they ACH’d the money, then they will probably revoke the authorization once funds are remitted.

Just an interesting look inside the woes of debt collectors for a change.

**Read the full article here.**

Harvard Law Professor and Debt Expert Elizabeth Warren

This episode is a must see for anyone interested in debt and debt collection. So, if you had better things to do on Friday night than sit around and watch TV shows about debt collection, the complete episode in 6 segments is below with a summary of content of each section.

The first two sections feature profiles of debt and an interview with Harvard Law Professor Elizabeth Warren. Professor Warren says in this segment that credit card debt is a huge problem in the U.S. today and is destroying the middle class. She sites the “tricks and traps” that credit card companies use to lure consumers into debt: “Credit card companies have put the loan sharks out of business… [they] would make Tony Soprano blush.” Pretty strong words against the credit card industry, but Professor Warren has never been afraid to take credit card debt issues on head on.

SEGMENT 1

SEGMENT 2

The next section begins the focus on debt collection agency abuses. First, Chris Hansen focuses on Academy Collection Service. Academy Collection Service, Inc and its owner Keith Dickstein (appropriate name) were ordered by the Federal Trade Commission to pay a $2.25 million fine late last year. According to the FTC Press Release: “its collectors misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. This is the largest civil penalty the FTC has obtained in a debt collection case.”

Well, it seems that Dickstein and his crew are likely to be back in court as Dateline claims to have obtained a recorded message of someone calling from their offices threatening to rape a female debtor. That’s right, not a typo. The caller clearly threatened to rape the debtor and then laughed.

Additionally, Collection Attorney Pete Barry, who has tried many cases against debt collectors is interviewed and overs some insight as to why these collection agencies break the law so often. He states, as I have here often, that for many of these rogue collection agencies, settling lawsuits is simply a cost of doing business.

SEGMENT 3

The next 3 segments focus on Lewis Hastings Receivables and their wonderful employees. Dateline catches these employees using a hidden camera outside of a bar near LHR’s offices, and they don’t have to work too hard to get every one of them to admit to violating Federal Collection Laws. LHR subsequently issued a comment that those employees had been fired, but it is obvious that this was not an isolated issue, but rather a consistent method of operation for Lewis Hastings.

Chris Hansen also has an interesting piece on Final Claims Asset Locators of New York. They seem less like a renegade collection agency and more like a fraud ring or crime syndicate. Although they are being investigated by the New York AG and the FBI, they are still open for business.

SEGMENT 4

SEGMENT 5

SEGMENT 6

I have to commend Dateline NBC for reporting on this important issue facing Americans. Although others will complain that this is a one-sided view of the collection industry and collection agencies, they are completely missing the point.

First, agencies like LHR are not the victim of a handful of rogue collectors. It is clear that they allowed and rewarded this behavior despite what they may claim once they are aired on national television, and it is a collection agency’s ethical responsibility to insure that its employees do not break the law. When you have these employees flagrantly bragging about breaking the law to deliver results, its obvious that their actions are condoned by their collection agency employer.

Second, it does not make sense to blame Dateline NBC for presenting a one-sided story as collection industry guru Mike Ginsberg does here:

“The comments shown on Dateline are not representative of the ARM industry as a whole,” said Mike Ginsberg, CEO of ARM advisory firm Kaulkin Ginsberg. “Dateline’s approach was to over-exemplify the renegade practices of a few individuals rather than portraying the ethical, law-abiding practices of the masses of collection professionals every day.”

The Dateline NBC story clearly shows that this is not an issue of a “few renegade individuals,” but rather the industry is plagued by many bad actors at the owner level. In fact, the representative of the Collection Agency Trade Association, ACA International, even admits that enough is not being done to stop the bad actors when interviewed for the show. How can the story be one-sided when Dateline NBC interviewed a representative of the industry and she admitted there is a problem?

NOTE: Dateline NBC has a wealth of resources on their website.

Washington Governor Gregoire

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.

However, the real ground-breaking aspect of this law is its definition of collection harassment. The new Washington law defines payday loan collection harassment as making contact with the customer more than three time in a week. Further, it defines a week as the 7 day period between Sunday and Saturday and defines a contact as a letter, e-mail, voice mail or phone conversation with a delinquent customer. This is a great achievement in collection rights, since it goes beyond FDCPA and definitively defines collections harassment.

Also of note is that this bill also applies to any debt collectors or debt collection agencies that work with payday loan companies to collect on debts of Washington consumers.

It just makes sense. If you are contacted 3 out of 7 days to be reminded about your delinquent payday loan, you are probably not forgetting about it.

My only question is why is Washington singling out payday loans and not making this law apply to all consumer debt collection in Washington? Shouldn’t Washington consumers receive the same protections from credit card debt collectors or delinquent mortgage collectors?