Alabama Consumer Law Blog

CNN just put up a fascinating story on debt collectors and collection agencies that are abusive towards consumers. This is something that we are seeing more and more of as Alabama consumers are becoming targeted by abusive collectors as the economy continues to seem to slow down.

Here are some excerpts from this excellent story:

In one case a collector threatened to call a woman's place of work "until she lost her job," according to the National Consumer Law Center.

In another case, a collector threatened to send the police to the person's workplace to arrest them, said Joe Ridout of Consumer Action.

The Better Business Bureau received a complaint about a debt collector contacting someone's grandmother four-to-five times a day, using threats like, "if she dies, then her life insurance can pay this debt off."

John Fugate, a Texas consumer attorney relates a story about a rogue debt collector. The debt collector told the "9-year-old child of my college friend, who is the victim of identity theft, that they were going to take her mommy away forever."

The CNN story goes on to summarize some important rights:

But here are some basic rights:

# A debt collector cannot call you before 8 a.m. or after 9 p.m., unless you agree.

# You cannot be contacted at work if the collector knows your employer disapproves.

# If you don't want to hear from a debt collector, write a letter telling them to stop. By law, they have to. Remember, the debt won't go away and you can still be sued.

# The debt collector can contact your attorney -- if you have one. If not, your friends and family can be asked about how to get in touch with you.

# A debt collector can't misrepresent the amount of your debt.

# A debt collector also cannot use profane or threatening language

# Debt collectors can't say that they will put a lien on your property or file a lawsuit unless the agency really means to do that and it's legal.

# Collectors can't legally claim federal benefits, such as Social Security or your retirement accounts, like your IRA or 401(k).

If you have been attacked by abusive debt collectors, contact a consumer attorney who has experience in fighting back and suing abusive collection agencies. The only way to discourage abusive collectors is to sue them which will encourage collectors to go about collecting in an honorable and legal manner.

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Just about any car Alabama consumers buy that is not new will be sold “as is.” Does this mean that the seller can sell you a junker or a lemon and you’re just out of luck because you agreed to purchase the car “as is.”

Under Alabama law, you may be able to revoke the purchase. Even though you buy a car “as is,” you still expect the car to work. The technical term under Alabama law, is that the car must be a “conforming good.” In other words, if the dealer sold you a car that he or she represented would be reliable, or said it would be good for getting you to and from work, or some other such representation and the car breaks down within a reasonable time period after your bought it, then the “good” or car is non-conforming. That is, it doesn’t conform to your expectations.

If you buy a used car that turns out has a lot of problems, you have the right to revoke the car. This does not mean you can automatically revoke any “as is” purchase. To revoke the car, you must meet certain criteria set out in the Alabama Code § 7-2-608. These are basically:

- the revocation or return of the car to the dealer must be within a reasonable period of time after the discovery that the car is non-conforming.

- the revocation or return must occur before any substantial change is made to the car, other than the defect you are complaining of, such as attempted repairs, etc

- revocation is not effective until buyer notifies the seller of the car

Upon revocation, you should be put in the same position as if you had never accepted the car. In other words, if you have made payments, you can ask for them back; if you traded in an older car, you should ask for it back (this will often be difficult as the seller usually sells your trade-in shortly after you drive off the lot)

Revocation does not work in all instances and you should probably consult an attorney before doing so. However, as a consumer you need to be aware that you have a right to expect that you are receiving the benefit of your bargain. Though a dealer cannot guarantee there is nothing wrong with a used car, it should meet your basic expectations and not fall apart shortly after you drive it off the lot.

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The Consumerist has a post that contains a "stick figure" slide show that explains, remarkably well, the way the sub-prime mess has occurred. Be warned there is some strong language in the slide show but on the whole it is very well done and, with humor, explains how we got in this terrible position we are in now.

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We recently came across this excellent post from our friend Ron Burdge, a consumer lawyer in Ohio. You can visit his website here. Mr. Burdge also has an excellent blog called the Consumer Rights Law Blog.

In a recent post, Mr. Burdge discusses the unfortunate trend of emboldened collection practices by debt buyers and debt collectors. One such collector purchased large volumes of debt for pennies on the dollar and recently sent out letters trying to collect on it.

This particular letter was an attempt to collect on $16.96. As Mr. Burdge noted, the letter was addressed Dear S_____ and the envelope was addressed to S_____ Face. They claim it was a mistake as the letters were automatically generated. However, this highlights a trend we've been seeing against Alabama Consumers by emboldened debt collectors. Since George Bush pushed through a change in the bankruptcy laws making it more difficult to file Chapter 7 bankruptcy, we've seen worse and worse conduct from debt collectors.

First of all, what can you do if you've been harassed by a debt collector. Well, simply put you do not have to put up with it. You can sue them. The Congress passed the Fair Debt Collections Practices Act to govern how debt collectors and debt buyers collect debt. They are not allow use profanity in doing so. However, many of them believe this is an effective means to intimidate consumers in to paying debts they allegedly owe. You do not have to put up with this.

As Mr. Burdge points out to his Ohio Consumers, Alabama Consumers should be aware, that if you have been illegally sued or harassed by a debt collector you do have rights. They can be forced to pay you as much as $1,000 in statutory damages and to pay your attorney's fees in addition to mental anguish damages.

If you have been harassed by a debt collector, please contact us. We sue debt collectors who have violated the law.

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Alabama consumers should be aware of this jury duty scam we recently read about on the Houston Consumer Blog. This is a blog that the local ABC News Station has on their website. The blog is maintained by Mike Mcguff, who has done an excellent job of informing Houston consumers of issues they need to be aware of.

Apparently, an identity theft was attempting to obtain individual's personal information by calling them and telling them that they had missed jury duty and were being fined. One person he called reported it this way:

“I received a phone call yesterday from someone claiming to be with the Harris County Jury Assembly Room Staff. They said that I had failed to report to Jury Duty and I would be fined $300 dollars if I did not. Then they told me that I could pay with a credit card and get it taken care of right away. I do not have a credit card, so I told them I had never received a letter/summons and if I was going to be fined, I would rather send in a money order or check. Then I started asking more questions about what I could do to avoid the fine, since I had never received the letter, and they just hung up on me.

First, of all, never give your personal information out over the phone to someone who calls and asks for it. Second, if you receive such a call. Hang up and call the court to report this immediately. If you ever receive a suspicious call from anyone, hand up and call the company back on a number from the phone book or their official website.

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In our first part in this series we gave you an overview of why as an Alabama consumer you need to pull your credit reports when you have been sued by a junk debt buyer such as Palisades, Unifund, Asset Acceptance, and the like. We pointed out three reasons:

1. You need to know what the junk debt buyer is saying about you and the date of last activity;
2. Is the junk debt buyer reporting the account as being "in dispute"; and
3. If you win your case will the zombie debt buyer remove the account from your credit reports?

This post will address the first of the these areas - what is the debt buyer saying about you and the age of the account.

Sometimes we see when people have been sued in small claims or district court in Jefferson County or Shelby County or wherever the suit may be filed - we see the amount claimed is significantly higher than the amount listed on the credit report. Most debt scavengers who sue Alabama consumers do NOT claim attorney's fees as they know they cannot obtain attorney's fees when they don't have a valid contract. As we have pointed out, debt buyers normally either do NOT own the account or are unwilling to prove they own the account. So the amount they claim in a lawsuit should be similar to what is on the credit report but often it is not. This can cast doubt on the credibility of the claim - particularly when the amount claimed is (as it almost always is) significantly higher than what they are telling the credit reporting agencies.

The other reason knowing what's on the credit report is so important that we will address in this post is the age of the account. The basic rule is that negative accounts can stay on your credit reports for seven years (sometimes it is seven and a half years). This is measured from the date you first become delinquent - that is normally when you stop making payments. What some junk debt buyers have a nasty habit of doing is to list the starting date as the date they bought the account. This is not an accident. This is to hurt Alabama consumers by forcing the account to stay on your credit reports longer than it is supposed to - here is an example. You default in May 2001. It will come off in May 2008. But Palisades buys the debt in February 2006 and reports the trigger date as February 2006. Now it will stay on until February 2013. When you find this, contact a lawyer immediately so you can file suit if that is appropriate. We have previously posted about this dirty trick of debt buyers. We suggest you respond to this type of malicious conduct with a vigorous and punishing suit.

Part Three of this series will focus on whether the debt buyer is listing your account on your credit report as being in "dispute" as required by law assuming that you have disputed the account.

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Credit Slips is a wonderful blog written by professors about consumer issues. The most recent post is by Elizabeth Warren, a Harvard professor. The title is The New Politics of Bankruptcy.

We recommend you read this article as it discusses the beginnings of a backlash against those in Congress who voted for the change in the bankruptcy law that has harmed so many consumers across the country. Here is a brief excerpt:

Recently Albert Winn, a long-time Congressman from Maryland, was challenged in the primary for his seat. His opponent, Donna Edwards, campaigned on several issues, but among the most prominent was her opponent's vote for the 2005 bankruptcy legislation. He had ignored the needs of his constituents, she argued, and favored the financial interests whose executives (not coincidentally) gave his campaign financial support. Ms. Edwards defeated that incumbent in a landslide (60%-32%).

Read the rest of this article and be sure and let your elected officials what you think about them not taking into account the needs of consumers. The big banks may have the money, but we still can be felt by voting and expressing our opinions....

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While we don't practice bankruptcy law, we do get calls from time to time to help bankruptcy attorneys who are dealing with various types of improper conduct from creditors and particularly from junk debt buyers. In this fascinating post by Michael Doan, he talks about a proof of claim filed by a debt scavenger who, amazingly, did not even own the debt but was planning on buying the debt. Here is an excerpt:

So while you may have listed Sears, Citibank, and a Shell mastercard in your case, instead you now have claims from Asset Acceptance Corp, B-Line, eCast, Resurgent, and the like. The biggest problems with these claims is that most these debts are VERY OLD and past the statute of limitations to collect upon. Of even greater significance, is the fact that these debt scavengers may have the WRONG DEBTOR or may not have even bought the proper account in the first place!

Stay involved in your bankruptcy case and ask your bankruptcy lawyer what your options are if you have a false proof of claim filed. Often we can go after the junk debt buyers who do this and sometimes that can mean money to you or at least money paid into your plan which helps you get through the bankruptcy quicker.

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According to myentrust's article, a staggering five percent of all identity theft victims are children. You should definitely read the entire article but here is a critical part of the article:

Here are some common sense Tips to Protect Children from identity theft and online fraud:

1) Keep info private - Educate children about the importance of keeping personal information private.

2) Protect their SSN - Your kids need to ask your permission from a parent before they give out their Social Security number and address or other personal contact information to anyone.

3) Protect personal info - Warn children about the perils of submitting their email address, name, home address, and birth date to online sites.

4) Check for red flags -If you start to receive promotional mail and especially credit card solicitations in your child’s name, this is a red flag for potential identity theft.

5) Stay off mailing lists - Keep the names of children off mailing lists. Use an adult family member's name instead.

6) SSN's only when necessary - Social Security number theft is on the rise. Don’t give your children’s SSN to anyone, if it's not absolutely necessary. When it is, ask why it's needed and how it will be used.

7) Parental monitoring - Pay attention to sites your children visit and ensure they are not unnecessarily exposing themselves to identity theft.

8) Protect SSN cards - Don't allow your children to carry their Social Security cards. Keep them locked in a secure place.

We need to practice these steps to help protect our children. We just today posted an article about a seven year old boy that had his identity stolen when he was about one year old.

Myentrust is an interesting website with lots of identity theft related articles. Thanks to Julie Tilsner of Walletpop for alerting us to this article.

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Lita Epstein of Walletpop has an excellent post on Protecting Your Identity - Understand The Types of Identity Theft. We highly recommend this particular article and this site in general. Identity theft is a terrible problem that we all face and every bit of information we can gain (and that we use - knowledge by itself is worthless) can be the difference between almost being a victim and being an identity theft victim.

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This would be funny if it wasn't so serious - a 7 year old boy has been told by the IRS he owes back taxes on $60,000. It turns out a despicable person has been using the boy's identity since 2001. Let's see - using advanced math skills - the boy was, what, one year old when his identity was stolen? Or was he not even one yet? Amazing!

The story is pretty short but it gives the details - we recommend you read it in the San Diego Union Tribune.

Protect yourself and your children from identity theft. If you have been the victim of identity theft contact a consumer attorney. This will help make sure you get it cleared up - or if it doesn't get cleared up you can sue the companies that refuse to honor their obligations under federal and state law.

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We ran across this video that discusses the dangers of eating out. Though this happened in April of 2007, you could still potentially be a victim of this scam. The scam involves credit card skimming, which is where someone who uses your credit card runs it through a device, which records your personal information from the card. They can then make a duplicate card, which appears to be and works just like your card. When used, the charges show up on your account.

The only real way to prevent this is to regularly check your credit and bank card statements and balances. If anything looks out of line, contact your bank immediately to report it.

If you have been the victim of identity theft and have difficulty correcting it revew these articles, Identity Theft Credit Issues and Steps for Reporting Credit Errors on some steps you can take to begin repairing your credit.

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Most of us have probably heard or seen the commercials from LifeLock - the owner gives out his social security number without fear because he is protected against identity theft. For the curious, his social security number can be found on the website. Rush Limbaugh advertises the service. Apparently LifeLock now has about 700,000 customers who pay about $10 per month. So what's the problem? For one, Experian has now sued LifeLock.

According to Andrew Johnson of The Arizona Republic, Experian is claiming that "LifeLock is violating the Fair Credit Reporting Act by signing up its customers for fraud alerts and removing their names from direct mailing lists."

Here are several more interesting quotes from this good story:

Experian claims that under the Fair Credit Reporting Act, the 90-day alerts are intended for consumers who believe they have become the victim of fraud or will likely become a victim.

The act also stipulates that only consumers or representatives - such as a parent - can sign up for fraud alerts.

Experian argues that by continuously enrolling its customers in fraud alerts, LifeLock is costing credit-reporting agencies money.

Furthermore, Experian also contends that LifeLock does not do enough to let consumers know that they could obtain many of the services it offers on their own for free.

"LifeLock is leading consumers to believe that the service it is providing is something consumers couldn't do themselves and they have to pay a fee for what is a legal right under federal law," said Peg Smith, executive vice president in Experian's Costa Mesa, Calif. office. "We believe what's happening here is LifeLock is not providing adequate disclaimers to consumers about the fact that these are free for consumers who are truly victims of fraud."

Just because something can be done for free doesn't mean its wrong to pay for it - I could do my taxes for free but yet I will pay a CPA to prepare them. That sounds like a bogus argument from Experian. Now what does resonate as true is that LifeLock is costing Experian money. That is the only thing that we have found in numerous suits against Experian, Equifax, Trans Union, and Choicepoint (credit reporting agencies) that will get their attention. The more people that opt out of the mailing lists, the fewer names the agencies such as Experian have to sell to companies who want to bombard us with offers and advertisements.

I don't know if LifeLock is violating the Fair Credit Reporting Act like Experian claims but I do know it is noteworthy that Experian claims this. I've never seen Experian agree or even hint that it had ever seen the Fair Credit Reporting Act violated - every time we sue Experian for this it claims there is no violation and it has never seen a violation. So, perhaps progress is being made by the means of LifeLock - annoying commercials and all....

Update - just saw this post by Denise Richardson on this issue - good stuff to read by clicking here.

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Our good friend Matthew Dunaway has an excellent post on his blog - Birmingham Bankruptcy Blog - about zombie debt and those who buy it. We recommend it for your reading as every bit of knowledge you can gain about this industry is helpful when it targets you and normally has no proof of what it claims against you.

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Whenever an Alabama resident is contacted by a collection agency or debt buyer or debt collector, we recommend that the Alabama resident contact a consumer attorney. There are several critical reasons why we recommend this.

First, there are some rather strict deadlines about what can be asked of a debt collector in, for example, the first 30 days after contact.

Second, many Alabama residents have been intimidated into paying debts that they do not owe simply because they thought they had no choice but to pay. You should never feel obligated to pay a debt that you do not owe!

Third, many debt collectors or collection law firms or debt buyers are abusive and violate the Fair Debt Collection Practices Act and state law and you can sue them for doing so. It makes sense to know your rights as early as possible in your dealings with collectors.

While being in a car wreck and being contacted by a debt collector is not the same thing, in both cases it makes sense to get a free evaluation of your rights. Just as some insurance companies try to discourage injured victims from getting legal counsel, the collection industry has tried to do the same for the same reason - it is easier to deal with people who don't know their rights. Don't let this happen to you - have a free consultation with a lawyer and know your rights and options and then you can make the best decision for you.

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We have focused this blog on consumer issues but we have spent many years developing our personal injury and wrongful death litigation skills over many cases. We have gained some insights into depositions and have shared a few of our preparation skills in our new blog - Birmingham Injury Blog - in five separate posts that we believe will be of use to our consumer readers.

The blog posts are as follows:
Four Keys To Being Prepared For A Deposition
First Key - Hear The Question
Second Key - Understand The Question
Third Key - Think About The Truthful Answer
Fourth Key - Only Answer The Question

While these posts are written with a slant towards personal injury cases and depositions, we still believe they will be useful to any consumer who is facing a deposition and wants some general thoughts on one way to approach deposition preparation.

We appreciate any thoughts or comments you have and if we can be of assistance to you, please feel free to fill out the "contact us" form to the left of the page.

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We ran across this recent article titled "Social Insecurity: High-Interest Lenders Tap Elderly, Disabled" in the Wall Street Journal detailing how payday lenders have been targeting the elderly and disabled. This isn't something that is happening just in other parts of the country. The story was out of Dothan, Alabama and shows how Alabama's elderly and disabled have been targeted.
Payday lenders charge rates that would make some loan sharks blush and this article shows how they are targeting our elderly. We all need to be on the guard against this type of activity but particularly those of us who have elderly family and friends who might fall prey to this type of activity.

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We have received a number of calls and emails from Alabama consumers who have been sued recently by debt buyers. Many of these people have been sued by junk debt buyers such as Palisades, Asset Acceptance, Midland Credit, etc. and by local lawfirms such as Zarzaur & Schwartz or Nathan & Nathan. We often tell people who are not late on filing an answer to the suit to pull their credit reports.

This may seem odd but here is why it is critical to do so:
1. You need to know what the junk debt buyer is saying about you and the date of last activity;
2. Is the junk debt buyer reporting the account as being "in dispute"; and
3. If you win your case will the zombie debt buyer remove the account from your credit reports?

We will examine each of these in a separate post to explain why you need this information when you have been sued by junk debt buyers like Palisades, Asset Acceptance, Unifund, LVNV Funding, and similar companies.

Of course, if you have been sued, you should read some of our earlier posts such as:

What Happens When You Defeat A Collector In A Collections Lawsuit?
Arguments Alabama Consumers Should Avoid Making If Sued
Alabama Consumers Sued By Debt Buyers - Two Essential Things To Remember and
I've Been Sued - What Should I Do?

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We are not fans of arbitration but courts have at least recently made it more tolerable by allowing class actions to proceed within arbitration. This news article is very intriguing, as it shows an arbitrator has certified a class action within arbitration.
Here is an excerpt:

“This ruling is a tremendous victory for Verizon Wireless subscribers,” said Scott Bursor, counsel for the plaintiffs. “After four years of extremely hard-fought litigation in several courts and in arbitration, this ruling ensures that Verizon customers who have been charged illegal early termination fees will have an opportunity to prove their claims on a class-wide basis and to seek a refund of nearly a billion dollars worth of illegal charges."

Bursor said Farber’s 35-page ruling to certify the class action has historical significance. “It is the largest class ever certified in arbitration, with approximately 70 million members of the subscriber class,” he said. “It is also the largest class ever certified on a contested motion in any type of forum, litigation or arbitration."

One somewhat amusing thing we have noticed with arbitration awards and rulings - when they go against companies who demanded arbitration, suddenly the companies cry out for the protection of a federal court judge. We suppose arbitration is only acceptable to companies when the arbitrators rule in favor of the companies. Interesting things are happening in the world of arbitration.....

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In its recent report, “Annual Report 2007: Fair Debt Collection Practices Act,” the FTC noted that it received more than 69,000 complaints from consumers for abusive practices by debt collectors. The FTC acknowledges that this is likely a small percentage of the consumers who are actually being harassed by debt collectors.

Though the FTC is charged with policing agencies such as debt collectors, there is only so much it can do with the limited resources it has. The FTC defines its role as follows:

These actions are part of the Commission’s ongoing effort to curtail deceptive, unfair, and abusive debt collection practices in the market place. Such practices cause substantial consumer injury, including payment of amounts not owed, unintended waivers of rights, invasions of privacy, and emotional distress. In some circumstances, illegal collection practices can place consumers deeper in debt. Although the Commission is vested with primary enforcement responsibility under the FDCPA, it shares overall enforcement responsibility with other federal agencies. In addition, consumers who believe they have been victims of statutory violations may seek relief in state or federal court.

The FTC will only bring suit against a debt collector where it has determined there is a culture of harassment within a particular company, which is affecting numerous consumers. The FTC noted that in 2006 it only brought one suit and settled two others.

The FDCPA gives you rights, which can be enforced in state and federal courts of law. Though not an exhaustive list, the FTC categorizes the areas of abuse as follows:

- Demanding Larger Payment Than Permitted by Law
- Harassing the Alleged Debtor or Others
- Threatening Dire Consequences if the Consumer Fails to Pay
- Impermissible Calls to Consumer’s Place of Employment
- Revealing Alleged Debt to Third Parties
- Failing to Send Required Consumer Notice
- Failing to Verify Disputed Debts
- Continuing to Contact Consumer After Receiving “Cease Communication” Notice
- Complaints About Creditors’ In-House Collectors

Though it is important to report abusive debt collectors, it is unlikely that you will receive any relief from the FTC. Consequently, you have two options as we see it, pay the debt collector or contact a consumer attorney. (One other option is to file bankruptcy, though we only recommend this as a last resort after discussing your rights with a consumer attorney) The FDCPA specifically allows for you to sue under the act for the abusive practice listed above.

A large part of our practice is dedicated to suing debt collectors. If you believe your rights have been violated, please contact us or visit our website to further look into your rights.

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Ron Burdge has two posts on problems with the 2008 Honda Accord and then with Hyundais in general. We recommend both of these posts to you. In the first, Ron discusses the surprisingly growing problem with the 2008 Honda Accord. We normally think of Hondas as being wonderful cars from a reliability standpoint but there are reports of growing problems that you should be aware of if you are considering buying the new Honda Accord or if you have one.

Secondly, and this is truly a serious problem, Hyundai is requiring that all buyers waive their right to litigation in a court and instead agree to arbitration. We like Ron's simple and direct advice - don't buy a Hyundai. Well said.

If you think you may have bought a lemon, contact us or another good consumer lawyer to get advice on what you should do to resolve the situation.

Update on 2-23-08 - we have some crash videos of Hondas and Hyundais on our sister blog - Birmingham Injury Blog that might be of interest to you.

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We enjoy reading Chuck Newton's Stay Violation website as it contains a wealth of information about what is and what is not considered a stay violation in bankruptcy court. A recent post discusses how a court viewed numerous letters and phone calls by GMAC to a homeowner regarding the homeowner's mortgage. This was during the bankruptcy so GMAC should have been very careful not to violate the automatic stay which prohibits creditors from collecting against the debtors.

From this post:

Despite this Order lifting the automatic stay, GMAC sent the Debtors 11 different letters and called the Debtors approximately 22 times over a 6 month period without foreclosing on the home.

In a close review of the letters the Court found that none of the letters "clearly" constituted a prohibited demand for payment. Although, I think most attorneys would understand that 11 letters is excessive.

But, the Court could not excuse the 22 phone calls because phone calls to the Debtors are NOT required by other federal laws in order to proceed with a foreclosure. The Court found that "It may very well be that the lender was simply trying to contact Debtors were fully aware of all of their options to avoid foreclosure. However, it does not take 22 calls to do so, and many of the phone calls threatened to take legal action. Furthermore, Debtors (through their attorney) made it very clear that the lender should discontinue such contacts and the lender was fully aware that Debtors had vacated and surrendered the Property".

Chuck then provides this closing comment which has been proven repeatedly to be disturbingly accurate:

As shown time and again in these cases, once a large creditor organization has unleashed the hounds of hell, they cannot seem to control the situation. Computers take over and start directing calls and connecting them with the call centers.

If you have been the victim of a stay violation, please seek good legal advice to know what all of your options are in your particular situation.

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We ran across this good article by the lawyers at Krohn & Moss. We recommend reading this entire article (and looking through the rest of this excellent website) but this one scam resonated with us as we have had numerous clients deal with this one:

Scam 3 – Spot Delivery Scams Spot Delivery is when a dealership allows a consumer to drive the vehicle home off the dealer’s lot even though the sale is not consummated and complete. When a consumer seeks to finance the purchase with the aid of the dealership, the dealer most often does not get a banks acceptance while the consumer is there at the dealership, and will let the consumer take the care home while the dealer’s finance department works on financing. While in most states spot delivery is not illegal in and of itself, and can be helpful to both parties, the situation opens up opportunities for the dealer to implement various scams. For instance, once the consumer has grown accustomed to the car, perhaps proud of their new purchase and has shown it to friends and family, they would not hesitate to agree to sign a new, revised contract that has increased the payments. Also, the consumer would agree to bring more money for a down payment. Depending on how or why the dealer got the consumer to consent to come back in, certain consumer rights statutes may be violated. These are also referred to as “yo-yo” scams because the dealer sends you out and pulls you back in like a yo-yo. Most importantly, if a dealer is unable to obtain financing on the terms previously agreed upon, the consumer does not have to agree to new terms, and can elect to cancel the deal altogether. In that case, the consumer is entitled to whatever down payment or trade-in vehicle that they gave to the dealership with no amount to be withheld.

If you are buying a car, educate yourself on not only the car and the right price to pay but also on some of these common scams so you can avoid them or deal with them in the right manner. If you need legal advice, please contact us or another consumer attorney so you can know what your options are in your situation.

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One issue we repeatedly hear from Alabama consumers is what are my rights when I'm contacted by a debt collector trying to collect on a seven or ten year old debt. The FTC has put out a two page pdf on this very subject. We recommend looking at this FTC publication if you have been contacted about an old debt.

It is always good to have solid information as you deal with what often times are abusive collection agencies. We hope this FTC publication helps you to be on more solid ground when dealing with collectors trying to collect ancient or "zombie" debt.

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We just put up a post by Richard J. Dalton, Jr about zombie debt and it had a link to a fine list of things to keep in mind when dealing with collection agencies. We recommend you check out this article if you have been contacted by debt colllectors. Keep in mind that you do have rights and those rights include the right to be treated fairly, not lied to, and not abused. If you have been mistreated by an abusive debt collector, contact us or another experienced consumer attorney to help you.

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It is good when the untold stories are told - when people can see what is really going on with real people. This Newsday.com article tells about ordinary people who are being hounded - haunted as the article puts it - by debt collectors and junk debt buyers. Often the accounts ("zombie debt") that these abusive agencies are trying to collect are well beyond the time limit to ever sue or they were long ago discharged in bankruptcy or they were created by identity theft.

The author of the article, Richard J. Dalton, Jr.,, notes that

Mullen, 46, says she doesn't remember the debt and has challenged it. Others who have received such notices say the purported old debts are a result of identity theft.

Many credit card companies have started selling delinquent accounts to collectors to boost quarterly earnings, according to a report by Kaulkin Ginsberg, a Rockville, Md.-based adviser on debt collection.

The collectors then resell some of that debt to other collection agencies, accounting for $100 billion in credit card debt sold annually, according to the March 2006 report.

Continue reading "Another Story On Zombie Debt Haunting Consumers" »

We are often asked by other lawyers to comment on recent consumer cases and the recent case from Georgia, St. Claire v. Trauner (2008 WL 151542), caught our attention so we thought we would mention it here.

On January 11, 2008, Judge Evans from the Northern District of Georgia issued an opinion in a Fair Debt Collection Practices Act case that only involved a dispute over the attorney's fee to be awarded the consumer lawyer Lisa Wright.

The defendant, Trauner, Cohen, & Thomas, LLP, agreed to settle the case for $1,000 plus attorney's fees. This was because the defendant had received a validation request but failed to respond appropriately and instead continued its collection activities.

Lisa Wright asked for $300 per hour and the defendant argued this was too high because Lisa Wright sues lots of debt collectors. The court rightly rejected this argument as the fact that a lawyer sues collection agencies often is no reason to reduce the award (perhaps it should increase the award).

The court did reduce the award, however, to $250 per hour because this was a very simple case. Next the defendant said the hours expended by the plaintiff's lawyer were excessive - the court rejected this by noting the hours were under nine. Therefore, the court awarded attorney's fees in this very simple case that settled shortly after being filed. The fees and costs totaled $2587.

The moral of this case is that defendants who violate the FDCPA by abusing consumers will have to pay reasonable attorney's fees. Defendants love to say their wrongdoing was a "technical" violation and that the defense attorneys don't charge $250 or $300 or $350 per hour but this case reminds us that even for "simple" cases a lawyer who has been practicing for less than seven years is entitled to $250 per hour.

We know Lisa Wright from various consumer conferences and congratulate her on this excellent opinion that, hopefully, will remind debt collectors that there is a price to be paid for abusing consumers.

If you have been the victim of an abusive debt collector or abusive debt collector, please feel free to contact us as we sue abusive debt collectors.

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A growing trend is for abusive debt collectors to start collecting on bad checks - which is fine as long as the law is followed - but the twist is these companies do this as if they were the district attorney.

The Consumer Law & Policy Blog summarizes the decision as follows in its :

Judge Berzon's opinion is the most thorough and scholarly treatment to date on the question of private entities and sovereign immunity. In a sweeping rejection of ACCS's arguments, the Ninth Circuit characterized sovereign immunity as “strong medicine” that should be carefully limited, especially in the case of for-profit corporations that are not democratically accountable to the public. Quoting the philosopher Gilbert Ryle, the court called the argument that a private company could enjoy sovereign immunity a “category error,” like “inquiring into the gender of a rock or into which day of the week is reptilian.”

To summarize the problem, Deepak Gupta states it well:

I've blogged here before about so-called check diversion companies -- private debt collectors that use their contracts with prosecutors to gin out collection demands, on official prosecutor stationary, threatening consumers who have written bad checks with criminal prosecution or jail unless they pay exorbitant collection fees. Passing a bad check is only a crime where there's knowing and intentional fraud, but these companies demand fees regardless of whether a crime has been committed. It's a lucrative and shady business that essentially criminalizes civil debt collection.

If you have been harassed by one of these masquerading collection agencies, which the Eleventh Circuit Court of Appeals (covering Alabama) has already said do not automatically have immunity, you do have rights. Please contact us and we will be happy to explain your options as we are always interested in suing abusive debt collectors.

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Our good friend Matthew Dunaway, bankruptcy and consumer lawyer in Birmingham, Alabama, recently blogged about the growing problem of false entries on a credit report. As Matthew puts it,

Also, if the account continues to show a balance is owed, and the debtor eventually attempts to purchase a home or car, or refinance an existing home loan, the debtor will many time be forced to pay-off the old debt in order to get the loan approved. Thus, the debtor is strong-armed into paying off a debt that was legally discharged in a bankruptcy proceeding. Creditors collect millions of dollars each year with this tactic.

One solution is to

Dispute the errors. Send a letter, via certified mail, to the credit reporting agency (Experian, Equifax or TransUnion) explaining why you are disputing the account. The credit reporting agency must respond to the dispute within 30 days. If the credit reporting agency refuses to correct the error after sending them a dispute, you may need to contact an attorney to discuss your other options.

There are other solutions beside disputing through the credit reporting agencies which we would be glad to discuss with you. We also recently blogged about this growing problem - please go to here or here to read more about this. If you find you are the victim of this type of problem, please contact us so we can advise you of your rights and options which include suing the creditors who are defaming you by putting false information on your credit reports.

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We recently came across the Federal Trade Commission's "Annual Report 2007: Fair Debt Collection Practices Act" report. This report mainly addresses 2006 and provides two basic things: First, it provides statistical data on the number and kinds of complaints it receives from consumers alleging abusive debt collection practices. Second, it provides an update on the FTC's actions and efforts to police this industry.

After reading the report, we are not sure which is more disturbing, the number of complaints and that they are increasing (more than 69,000 in 2006 up from 66,672 in 2005) or that FTC only filed one lawsuit in 2006 after receiving more than 69,000 complaints.

We will discuss the report in more detail in later posts, but some interesting, and disturbing statistics are below:

- In 2006 the FTC received more complaints against debt collectors than against any other industry

- 40.3%, 27,929 consumers, complained of debt collectors attempting to collect more than they were owed

- 3.4%, 2,387 consumers, complained that collectors were attempting to collect interest, fees, or expenses that were not owed, such as collection fees, late fees and court costs

- 21.2% or 14,656 consumers complained of harassment from repeated or continuous calls

- 22.1% or 15,314 consumers complained of debt collectors making calls to employers, friends and family repeatedly in an attempt to allegedly gather information to assist them in collecting the debt

- 11.5% of the FDCPA complaints or 7,967 consumers complained of being harassed with collectors using obscene, profane or otherwise abusive language

- 11.4% or 7,913 consumers complained that they were threatened with a lawsuit or some other legal action that the debt collector could not or did not intend to take, such as seizure of property or arrest.

Under the section "Enforcement: The First Prong of the FDCPA Program" the FTC states, surprisingly without apology, that in 2006 it only filed suit against one debt collector and settled with two others. These results may be a little misleading, however, because it appears that the FTC will only sue a debt collector that they can prove has a culture of harassing the debtors from which they collect. The settlements reached were for millions of dollars and did force one large collection agency to shut down.

This does beg the question of what a consumer should do to protect his or her rights given the likelihood that the FTC will not sue on their behalf. Unfortunately, the report is silent on this issue. However, we are not.

Consumers do have options. There are lawyers all around the country, like us, who sue debt collectors on behalf of our clients for abusive debt collection practices.

If you are being called, contacted and harassed by a debt collector you do not have to put up with this. Please contact us. You do have rights against these abusive practices. We will sue the debt collector on your behalf to protect your rights.

Please stay tuned for further updates and commentary on this report.

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We often see Alabama consumers filing bankruptcy for the sole reason of getting abusive collection agencies or debt collectors to leave them alone. The harassment from law breaking debt collectors can become unbearable for many Alabama consumers who then feel their only choice is to file bankruptcy. Filing bankruptcy normally hurts your credit score and in particular when creditors refuse to follow the law on accurately reporting your accounts that have been discharged. Sometimes there is no alternative but to file bankruptcy but other times the best option to deal with abusive collection agencies is simply to sue them. That's what we do - we sue debt collectors who break the law.

The abuse by collection agencies became so bad that Congress passed the federal law of Fair Debt Collection Practices Act to deal with the illegal conduct of abusive debt collectors. While there are numerous ways that debt collectors break the law - in general they do so in the following ways:

1. Lying to consumers
2. Abusing consumers by calling more often than allowed, using abusive language, calling neighbors and co-workers to harass the consumer, etc.
3. Putting false information on credit reports.
4. Suing consumers when the collector has no basis to do so.

We'll quickly examine these areas and then deal with them in more detail in later posts.

Continue reading "Suing Debt Collectors Instead Of Filing Bankruptcy" »

We are seeing more and more Alabama consumers who are being mistreated either during or after a bankruptcy. We have written about discharged creditors (who cannot collect money from the debtor - its been discharged) still trying to collect the money even though it is illegal to do so. You can read about it here and here. Amazingly, abuse even happens by creditors during the bankruptcy process.

The Wall Street Journal has reported that Judge Jim Pappas has sanctioned Countrywide (or its subsidiaries) for wrongful conduct - in this case not answering discovery or showing up to depositions. Please click here to read the rest of this interesting story by WSJ reporter Amir Efrati.

If you are being mistreated by any creditor during or after a bankruptcy, please consult with your bankruptcy lawyer to help determine your rights. Over the years we have been brought into a number of cases by bankruptcy attorneys to help stop abusive creditors (during and after bankruptcy) who are breaking the laws in their obsession to collect money they are not entitled to collect.

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We have been seeing lots of problems with Alabama consumers who have discharged debts but the debts are still on their credit reports showing up with a balance owed. No balance is owed. There was a major article in Business Week that came out that helps explain why this happens. Please read this article in its entirety by Robert Berner and Brian Grow. But here are some excerpts that will give you a good sense of the problem and why it exists.

Here is another excerpt:

This kind of failure by creditors to update credit reports happens with some frequency, consumer lawyers and court-employed bankruptcy trustees say. And it can have consequences: In September, 2003, when Rathavongsa tried to close on a $274,650 mortgage for a new house, his would-be lender, Wachovia (WB ), said he would either have to pay Capital One or show proof from the credit-card company that the debt had been discharged. Despite several calls and a letter from his attorney, he says, Capital One never revised the credit report. To obtain the home loan, Rathavongsa eventually did what many consumers in this situation do. He gave in and paid Capital One $9,523 he no longer legally owed.

Continue reading "Why Discharged Accounts Still Show Up With Balances On Credit Reports" »