Articles On Abusive And Bogus Debt Collection Lawsuits

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The LA Times has a wonderful article on the growing practice of abusive and bogus debt collection practices — this mirrors what we see in Alabama small claims and district courts when debt buyers such as LVNV, Midland, and Portfolio file bogus shakedown type of suits.

Here is a quote — but do make sure you read the entire article:

Aided by outdated laws and lax oversight, debt collection has become a $12-billion-a-year business as people increasingly have fallen behind on their bills for credit cards, student loans, hospital stays and other expenses.

The Great Recession and its aftermath have led to a sharp increase in the number of people facing debt collectors to an estimated 30 million Americans this year – up nearly 50% since 2003.

At the same time, job losses and underwater mortgages have made it more difficult for many of those people, who already are struggling to make ends meet, to pay off their debts.

Federal regulators, along with lawmakers in California and several other states, are starting to take action against debt collection firms over aggressive tactics that authorities said are becoming rampant.

Those tactics include intimidating phone calls, unfounded threats of arrest, harassment of relatives and neighbors and a flood of lawsuits aimed at squeezing money for unpaid bills from paychecks or home equity – recovering $55 billion in debts in 2010.

We wrote recently about how collection agencies, when they get sued, claim no violation occurred or if did, it was only a rogue employee.

Take a look at this quote and see if it fits the pattern:

For many who do owe money, the debt collection process can be intimidating and nightmarish.

Katie Brown got a call in March about her unpaid $3,000 credit card bill from Hhgregg Inc. The person said he was from a free legal aid service she had contacted to try to stop harassing phone calls from debt collectors.

“After I told him everything, he laughed and said, ‘Now let me tell you who I am. I hold your debt from Hhgregg,’ ” said Brown, 26, of Piqua, Ohio. She didn’t know how the debt collector knew she had contacted legal aid.

“I was scared they would get to my husband’s work and start calling them,” she said, “because at this point they would stop at nothing if they were going to misrepresent themselves.”

Brown did what an increasing number of consumers are doing: She filed a lawsuit. Her complaint against International Asset Group Inc. in Amherst, N.Y., alleged the company violated a federal law that prohibits misrepresentation and harassment by debt collectors. The suit is pending.

Brent Nowicki, the company’s general counsel, said he couldn’t comment about the case. International Asset Group is an upstanding company, he said, but sometimes technical violations of the law occur.

“It could be the rogue employee who gets a little overzealous about something,” Nowicki said. “It happens. It’s unfortunate.”

If you are dealing with collectors — understand that many are willing to violate the law and when they are caught (which is very rare) they will say it was just a technical violation (that’s when it happens to someone else — like “minor surgery”) or its really not the collection agency’s fault (rogue collector). These are bogus reasons.

The ultimate way to stop the abuse is to sue the collection agencies that violate the law — by doing this you become an agent for change. We encourage you to look at your options and take the right action.

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