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Entries in Debt Collection Practices (3)

Wednesday
Apr252012

W. Va. Woman Fights to Collect $10 Million from Debt Collectors

Jupiterimages/Thinkstock(WHEELING, W.Va.) -- In a twist of irony, a West Virginia woman is trying to collect money from a collection agency. Diana Mey, of Wheeling, W. Va., won the largest judgment ever against an abusive debt collection company -- more than $10 million.

"I'm a mom, and I'm a housewife, and I'm an accidental activist," Mey said.

From her small-town home base in Wheeling, Mey went after a debt collection empire that hounds people nationwide and won. But she still hasn't received any money: "I don't know that I'll ever collect a dime, but if I can get their operation shut down, that would make me very happy."

Two years ago, a debt collector with a company called Reliant Financial Associates, or RFA, left a message implying that her house was in jeopardy if she didn't pay a debt. The message stated:

"I'm calling in regards to a preliminary asset liability investigation. They are in the process of serving some court documents in regards to case 29369... They have some information now pending questions at the property, ... Springdale Avenue, in Wheeling, West Virginia. It is in your best interests to contact the department. You are required to contact 866-764-9779."

It is illegal for debt collectors to make empty threats about serving people with a lawsuit or seizing their home. And it was especially galling to Mey, who says she is debt-free.

"They threatened to take legal action against our property and it wasn't even our debt," Mey said.

Millions of Americans are victims of this kind of mistaken debtor identity, partly because of a new breed of collectors called "debt buyers." They purchase old debts for pennies that the original creditors have given up on and then try to collect them for a big profit. Critics say debt buyers sometimes use outrageous tactics to get the money where others have failed. RFA is a debt buyer.

But Diana Mey has battled big companies over intrusive phone calls before. In 1999, she won a class-action lawsuit against a major telemarketer whose salesmen kept calling people, even when asked to stop. People magazine named her one of the "Most Intriguing People of the Year." That's why Mey has recorded her phone calls ever since.

Mey says it took her a year to find attorneys who would sue on her behalf. Wheeling lawyers Martin Sheehan and Patrick Cassidy took the case knowing they would probably never get paid.

"Yes, I like to make money, " Sheehan said, "but at some level there's something so atrocious you have to let people come into your office and say -- that's wrong and I'm going to do something about it."

Last May, Mey sued RFA for harassment and illegal collection practices. In August, RFA's lawyer failed to show up in court, so Mey testified unopposed. The judge called RFA's actions "malicious" and ruled that all of the allegations were true. And then he awarded that record judgment of $10,860,000.

When Nightline went to RFA's Orange County, Calif., office to ask about the case, it was abandoned. RFA is actually a fictitious business name for a company called Global AG, LLC. Records show it is just one of several collection companies run by the same people that often change names and move. Nightline also visited other offices registered to people named in Mey's suit, but employees refused to talk and asked the production crew to leave.

RFA's lawyer later told Nightline that RFA made the first collection call to Mey, but denies making a second, obscene call. He said he was speaking on behalf of company principals Thai Han, Jim Phelps and Stewart Phillips.

"My clients say it is not their policy to engage in conduct that violates the law," he said. He characterized the $10 million judgment as "unfair."

As for Diana Mey, she says she knows she may never be able to collect the money, but that her lawsuit still serves a purpose.

"I hope that it sends a message to other debt collectors out there that you have to follow the law," she said. "Because if you don't, there are going to be people out there that are going to stand up against you."

Copyright 2012 ABC News Radio

Tuesday
Mar222011

FTC: Debt Collectors Provoke More Complaints than Any Other Industry

Jupiterimages/Thinkstock (WASHINGTON) -- For many Americans, debt is a daily part of life -- and according to a new report from the Federal Trade Commission, the debt collection industry causes them more pain than almost any other business.

The FTC received 140,036 complaints about debt collection in 2010, an increase of 17 percent from the 119,609 it received in 2009. Those numbers are higher than for any other industry.

"It tells me we need more law enforcement in debt collection and more guidelines," said Gail Hillebrand, director of Consumers Union's Defend Your Dollars campaign.  "These things have been illegal for years and they are still taking place."

The Fair Debt Collection Practices Act of 1978 was intended to protect consumers from harassment, abuse, and deceptive collection practices -- precisely the complaints consumers made in record numbers last year.

Some numbers:

* 54,147 consumers filed complaints claiming collectors harassed them with repeated calls;  27,554 reported they were falsely threatened with a lawsuit or other legal action;  4,182 said they were threatened with violence if they did not pay.

Joel Winston, associate director at the FTC, says many consumers do not know that collectors are required to provide a lot of information upfront when they first start collecting on a debt. Within the first five days, collectors must send consumers a written notice detailing the amount of debt, the name of the creditor and to whom the debt is owed.

The FTC said 29.8 percent of people claimed collectors never sent the mandatory notice.

"What's interesting is the number of complaints about third-party creditors went up, while complaints against creditors collecting on their own did not," said Winston.

Third-party creditors work for the original creditor and receive a fee or percentage of the money they are able to collect. In some cases they also buy old debt and try to collect where others have failed.

This is the last year the FTC will publish the annual report. In July, the Consumer Financial Protection Bureau is scheduled to open, and it will take over the responsibility. Although the CFPB will handle the report, the agencies will share many responsibilities and work together to enforce regulations.

Copyright 2011 ABC News Radio

Thursday
Nov182010

Woman Sues Debt Collector over Facebook Messages

Photo Courtesy - Getty Images(ST. PETERSBURG, Fla.) -- Should Facebook be off-limits for debt collectors on the prowl? One Florida woman thinks so.

In what her lawyer said is a first-of-its-kind case, Melanie Beacham of St. Petersburg, Fla. filed a complaint against MarkOne Financial, LLC, alleging that employees of the Jacksonville, Fla.-based company harassed her and her family members over Facebook to intimidate her into paying an alleged debt.

In papers filed with a Florida court, citing violations of state consumer protection law, Beacham is asking for damages as well as court intervention to stop MarkOne Financial from using the social network to contact her and her relatives.

"This is a huge invasion of privacy," said Billy Howard, Beacham's attorney. "It's important to send a message to other debt collectors that this type of invasion of privacy will not be tolerated by America....Other people need to know that their rights are being violated by debt collectors when they are contacting friends and family members on Facebook."

In a statement, MarkOne Financial said it does not comment on pending litigation, but added, "We firmly believe that the facts will demonstrate that the harassment allegations made against us are false, and that we have and do operate within the spirit and scope of the law."

The company said that its policy is to use Facebook to locate customers when the customer has a fully public profile and when he or she has not responded to requests through "conventional means."

According to Beacham's complaint, MarkOne "intentionally harassed and abused the Plaintiff in outrageous format" in July, when a representative contacted two of Beacham's acquaintances on Facebook, asking them to call him.

Copyright 2010 ABC News Radio







ABC News Radio