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THE DEBT BUYING INDUSTRY

  • Jared Hartman, Esq.
  • Posted on August 20, 2016

 

Dealing with a debt buyer can often be a frustrating and stressful experience. In general, debt buyers purchase old debts for a small percentage of how much is owed, and then aggressively pursue collection efforts upon the balance (or large percentage thereof) in order to maximize their ability to profit upon the debt as much as possible. Many debt buyers give their collection agents bonuses and commission based upon the amount they collect, which gives the collection agent incentive to put significant pressure upon the consumer to pay. While this industry is a legitimate and legal industry, the manner in which they operate can easily violate consumer protection laws through misrepresentations about how much is owed, whether interest and collection costs can rightfully be added onto the principle, misrepresentations about potential lawsuits, and in the most extreme cases verbal abuse and personal attacks upon the consumer.

On June 5, 2016, John Oliver highlighted this industry and its flaws in his HBO show “Last Week Tonight with John Oliver”, which can be viewed here:

his episode of Oliver’s show explains how easy it is for mistakes to be made, because the typical manner in which the debts are sold and bought is simply through Excel spreadsheets with just basic information about the consumer and how much is owed, which might not provide the debt buyer with sufficient information as to whether the debt is legally enforceable, is actually collectible, if prior payments had been made, and whether any legal stipulations had been included in the original loan agreement. Obviously, the debt buyer who purchases the debt for pennies on the dollar would want to engage in as little review of the account as possible, because the more effort that is put into review before collection means there is less profit to be made when compared to the effort being conducted. In short, quickly collecting as much as possible with as little effort as possible yields the most profitable return in favor of the debt buyer.

Oliver also highlights some of the more extreme and disturbing examples of how the debt buyers in this industry can harm consumers through harassment and oppressive conduct. At 7:02 of his episode, Oliver plays recordings of voicemails left by debt collection agents uttering threats of violence, threats of harassment, and even suggesting that one consumer should commit suicide because she/he is a loser. At 7:46, an undercover video is shown where a debt collection agent laughs and jokes about how he likes to call consumers’ employers at the employers’ home in order to put pressure upon the consumer to pay the debt by harassing the consumers’ employer.

Our law firm routinely pursues lawsuits for legal violations committed by debt buyers and debt collection agencies. If a debt collector is contacting you or a loved one, there is a very realistic possibility that they have already violated your rights. Do not hesitate to contact us for a free and confidential consultation to discuss your rights!

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DEFAULT JUDGMENT AGAINST ASSISTED CREDIT SERVICES, INC. FOR $30,784.65 FOR MALICIOUS CREDIT REPORTING VIOLATION AND ATTEMPTING TO COLLECT A PAID DEBT

  • Jared Hartman, Esq.
  • Posted on July 20, 2016

 

Default Judgment against Assisted Credit Services, Inc. for $30,784.65 for Malicious Credit Reporting Violation and Attempting to Collect a Paid Debt amount, even though the client’s insurance company had already paid more than half of the full debt and the client owed much less than what Assisted Credit was attempting to collect. Luckily, the client was smart enough to raise some red flags instead of just being tricked into blindly paying the full amount. Because the client did not trust Assisted Credit to be honest and ethical, she then paid the balance that she did owe directly to the medical provider. Assisted Credit then got upset and argued with her for depriving them of the ability to keep a portion for their collection “services” for not paying the debt through them.

Thereafter, Assisted Credit furnished an update to the client’s credit report with the false information that she still owed a balance on the alleged debt, even despite their irrefutable knowledge that the client had already paid the balance on the debt directly to the medical provider. Therefore, it was believed that Assisted Credit submitted the derogatory credit reporting information maliciously with the intention of causing damage to the client’s credit score because she paid the balance to the medical provider directly.

After being served with the lawsuit, Assisted Credit hired an attorney, but then for whatever reason fired that attorney and failed to participate in the lawsuit. Because a company or other organization cannot represent itself in court and must appear through an attorney (Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201–02 (1993), the Court graciously gave a deadline to Assisted Credit to retain a new attorney or face default judgment. When Assisted Credit failed to comply, the Court entered default of Assisted Credit. Recently, on July 19, 2016, the Court entered judgment in favor of Plaintiff in the amount of $30,784.65 for the violations alleged.

The Court acknowledge that “Actual damages for credit reporting violations under either statute can include emotional distress and humiliation. See Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1332–33 (9th Cir. 1995) (holding that “emotional distress, manifested by sleeplessness, nervousness, frustration, and mental anguish resulting from the incorrect information in her credit report” can be properly compensated). The Court agreed that the requested damages were appropriate for this client, because she “suffered frustration, anxiety, lack of focus on her livelihood, and feelings of hopelessness” and because her “consumer credit score took a hit after Assisted Credit reported the already-paid debt—a hit that Plaintiff acutely felt, as she had worked hard to rebuild her credit after a prior bankruptcy.” Further, the Court agreed that the credit reporting violations were willful: “evidence of Assisted Credit’s willful conduct in reporting a $120 debt when Assisted Credit affirmatively knew that the debt had been paid warrants punitive damages.” The Court’s well-reasoned and articulate ruling can be read by simply clicking HERE.

This represents a nice opinion confirming that the law and the Courts will protect consumers being harassed by malicious debt collectors who flagrantly violate the law. If you or a loved one are being harassed, lied to, treated unfairly, or notice inaccurate information on your credit report, you should not feel alone and helpless. The law firm of Semnar & Hartman, LLP are experienced in protecting consumers and individuals in these situations. Consultations are always free and confidential, and can be done over the phone to reduce the burden on the client who may just need some questions answered. Do not hesitate to call and discuss your rights!

Related Tags: default judgment, federal rule of civil procedure 55, frcp 55, credit reporting violations, california credit reporting, 1785.25, inaccurate credit report, credit report attorney, FDCPA, fair debt collection practices, debt harassment, debt collection harassment, California debt harassment attorney, San Diego debt harassment attorney, Riverside debt harassment attorney, Orange county debt harassment attorney, consumer rights, consumer protection, consumer attorney
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DOES A DEBT COLLECTOR OR BANK REFUSE TO ACCEPT YOUR CLAIM OF IDENTITY THEFT?

  • Jared Hartman, Esq.
  • Posted on January 15, 2016

 

Imagine a bank—such as Wells Fargo—contacts you and claims you owe them money on a credit card that you’ve never heard of. You ask some questions about the time and location of the application, and you discover that, indeed, this account was opened in your name fraudulently. You tell Wells Fargo’s agents that you never opened this account and you have been the victim of identity theft. However, they ignore your complaints and persists in calling you in an attempt to collect. You are now facing the very real future of continued harassing calls, threatening letters, potential debt collection lawsuits against you, potential wage garnishments and bank levies, and potential negative credit reporting against your name and social security number. All over an account that you never opened. What do you do? How do you protect yourself?

In California, consumers who are the victims of identity theft are actually protected by law from debt collection activity upon the account opened under identity theft, but you cannot just sit idly by and hope everything falls into place. You must take action, and we at Semnar & Hartman, LLP are experienced in helping!!

Under California Code 1798.92-1798.93, if you or a loved one have been the victim of identity theft, you can bring a lawsuit against a debt collector or bank that is claiming they are owed money upon the fraudulent account in order to have a judicial finding (called declaratory relief) that you are not liable upon the account. In connection with such a lawsuit, you can request a court order (called an injunction) that the debt collector or bank stop trying to collect from you, and you can also have the court order that any security interest (such as a car title loan or home mortgage loan) is void and unenforceable. Moreover, if the bank or debt collector has filed a lawsuit against you, you can file a counter claim against them seeking dismissal of their lawsuit in addition to declaratory relief and an injunction.

In order to recover attorneys’ fees, costs of litigation, actual damages, however, you have to put them on written notice of the identity theft and provide them a copy of either a police report or DMV report showing that you lodged a formal report as a victim of identity theft. You have to provide this written notice and the police report to the address identified by the creditor as being their address for processing identity theft claims. You have to also wait 30 days after providing such notice before filing suit. If they have failed to diligently investigate the claim and persisted in their efforts to collect despite your compliance with all of the above, then you may also be able to recover a statutory penalty against them for up to $30,000.00 in addition to actual damages, attorneys’ fees, and costs of litigation.

A sample complaint against Wells Fargo for this very type of allegation can be found by clicking here.

There are other laws under the Federal Fair Credit Reporting Act that protect your credit reports from suffering derogatory accounts opened under identity theft and fraud, that prevent new fraudulently accounts from being reported, that require the credit reporting agencies to remove accounts that have been identified by you as identity theft, and place a freeze on your credit and prevents new accounts from being opened entirely. However, these laws require their own steps to be taken by you and will be reported under a different article. We are experienced in handling these claims as well.

We can help you protect yourself!!! Do not hesitate to contact us immediately for a free and confidential consultation to discuss your rights and to see how we can help.

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FEDERAL FAIR TRADE COMMISSION PUBLISHES LIST OF BANNED DEBT COLLECTORS

  • Jared Hartman, Esq.
  • Posted on February 4, 2015

 

The FTC has legal enforcement powers to pursue action against companies that violate the Federal Fair Debt Collection Practices Act (FDCPA) for engaging in conduct that amounts to harassment under the FDCPA. The FTC recently published a list on its website of many debt collectors against whom they have been successful obtaining federal court orders prohibiting them from engaging in further debt collection activities. Read the list here http://www.ftc.gov/enforcement/cases-proceedings/banned-debt-collectors.

Additionally, the FTC website above has a link to view other entities against whom it has pursued enforcement actions, but did not obtain an injunction to prohibit further collection activities.

If you or a loved one have been contacted by any of the people or entities named in that list, then you or the loved one may have been the subject of a scam and should discontinue any further communications with the “debt collector” immediately. You should also contact the FTC to report them, and also contact us to see what your rights may be in seeking recovery by way of private lawsuit.

The FDCPA is designed to protect consumers. There are over 40 ways the FDCPA can be violated. If you or a loved one are being contacted by a debt collector, be sure to keep all letters, regularly check your credit report for inaccuracies, and write a journal about every phone call. See our webpage discussing the FDCPA for more information. Do not hesitate to contact us for a free and confidential consultation to discuss your rights.

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PAYDAY LOANS, TITLE LOANS, SHORT TERM LOANS….LEGAL LOANSHARKING?

  • Jared Hartman, Esq.
  • Posted on August 21, 2014

 

There are laws in California that prohibit loan transactions from having a APR (annual percentage rate) of greater than 12%–or 7% in many instances. These laws are called Usury Laws and can be found at Article XV, Section 1 of the California Constitution and in California Civil Code § 1916.12-1 through 1916.12-5. Pursuant to Calif. Civ. Code §1916.12-3(b), any person who contracts to receive a usurious amount of interest is considered “loan sharking” and is a felony crime. Additionally, someone who has suffered a usurious loan can sue civilly to recover all interest paid on the loan within the previous two years in addition to triple the amount of interest paid within the previous one year—these are not limited to just the usurious interest paid but applies to all interest paid.

Unfortunately, there are many exemptions from usury laws, such as banks, which is why credit cards, private student loans, and mortgage loans are typically between 10%-24%. There has been a disturbing rise in the past few years for “short term loans”, which are also listed as an exemption.

Short term loans are the types of loans that allow someone to get a quick influx of cash for a very high interest rate. The expectation is that the loan will be repaid in a short period of time and is not usually expected to take an entire year or more to be repaid, and therefore the high annual percentage rate is not expected to be detrimental to the borrower. If the company is labelling the loan a “short term loan” with the intention of evading the Usury laws, then the loan is not protected from Usury laws prohibitions.

If someone is truly in need of emergency funding and has the ability to repay the loan on time, these loans can be beneficial. The problem, though, is that most people don’t know how problematic it can be to pay these loans off on time, and then unexpectedly suffer high penalties, acceleration clauses, and losing both title and possession to their vehicles being used as collateral. Even more disturbing is that almost half of the people who take out these loans have to incur more debt with another company just to pay off the first company, thereby creating a never-ending cycle of debt for the company’s to simply sit back and profit from the unfortunate debtor struggling to survive on a day to day basis.

A very disturbing depiction of these loans was presented by John Oliver on HBO’s Last Week Tonight on Sunday August 10, 2014. Watch the video below for more:

The law offices of Semnar Law Firm, Inc. and Hartman Law Office, Inc. have teamed up to file a lawsuit recently against a company called Trading Financial Credit, LLC. The lawsuit was filed in the Orange County Superior Court under case number 30-2014-00735404. The complaint can be found here complaint. The lawsuit alleges that Trading Financial deceptively labelled their tile loan mandating 92% APR on a $4,000.00 loan as a type of loan exempt from Usury, but only did so with the intention of avoiding usury law prohibitions. The lawsuit further alleges violations of Rosenthal FDCPA (for more on that see our tab called “Debt Collection”) by having someone falsely threaten the plaintiff with criminal investigations for fraud and by calling her references with the same false threats, among other matters.

The bottom line, every person should be very careful when entering into these types of loans. Tough economic times may require quick cash, but there are many other ways to obtain cash that might not cause as many problems. If you or a loved one has entered into such a loan and is being taken advantage of and feel that the loan company is violating your rights, contact us immediately for a free and confidential consultation to discuss your circumstances.

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WHY DO WE SUE DEBT COLLECTORS?

  • Jared Hartman, Esq.
  • Posted on December 8, 2013

 

“Your client allowed himself to go into debt in the first place, so it’s his fault for being harassed by debt collectors.” We sometimes hear people make this statement when talking about suing debt collectors. People who have never had to deal with debt collection harassment and who have never had to go through the frustrating and unforgiving process of credit repair sometimes just don’t understand how it feels. The reality is, though, that the debt collection harassment laws were enacted by Congress to promote four guiding principles: 1) Truth, 2) Fairness, 3) Dignity, and 4) Respect.

No-one wants to go into debt. Virtually every debt is incurred because of some form of economic hardship, such as unplanned-for interest fees, company lay-offs, inability to find a job in a tough economy, or even death or serious illness or injury within the family. Hardly anyone actually incurs a debt with the intention of never paying it back. Although debt collectors try to make it look like debtors are low-life people who had malicious intentions upon incurring the debt, this is almost always far from the truth. Everyone deserves to be treated with fairness, dignity, and respect, and deserves to be free from dishonesty and trickery from debt collectors.

When debt collectors show no mercy or forgiveness, and fail to treat people with truth, fairness, dignity, and respect, they are generally violating the many laws that govern how debt collectors can operate their collection activities. Such violations undermine the integrity of our society and our economy, and allowing them to get away with simply shows them that they can continue their harassing conduct towards others.

Before these laws were in place, debt collectors would often go to the extremes of threatening people with violence, falsely threatening that the debtor has committed a crime by failing to pay a debt, falsely threatening lawsuits, publishing in the media lists of “dead-beats” containing names of people who are in debt, and many other extremely disturbing conduct. These extreme violations are rare today, but they still do happen. Do not let them get away with it; YOU DO HAVE RIGHTS!

Contact us TODAY for a free, confidential consultation to discuss what your rights are and to discuss the proper ways to assert your rights.