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News and Industry Alerts

August 30, 2006

Minnesota Department of Commerce Revokes License Of Buffalo Collection Agency

The Minnesota Department of Commerce has revoked the collection agency license of Go More Financial, Inc., charging the owner of the company with allegedly commingling funds, financial mismanagement, violating an earlier consent order and lying to government agencies. This action comes after unprecedented cooperation with other state regulators in Wisconsin, Colorado, Maine and Connecticut. Those states are also taking action against Go More this week.

To read the full press release click here.

July 7, 2005

MAINE ISSUES CEASE AND DESIST ORDER AGAINST THE LAW CENTER AND ATTORNEY HARRY COHN!

The Maine Office of Consumer Credit Regulation has ordered The Law Center and Attorney Harry Cohn  to cease and desist collection activity from any location with regard to residents of the State of Maine. 

For the full text of the administrative order, click here.

October 27, 2004

IDAHO ISSUES CEASE AND DESIST ORDER AGAINST COLLECTION LAW FIRM!

In an October 15, 2004, order, the Idaho Department of Finance ordered Giove Law Office, P.C., a New York law firm, to cease and desist from further collection activity in the State of Idaho. The Department found that the law firm was collecting in Idaho without the requisite permit, and that it had repeatedly threatened consumers with criminal prosecution in connection with the collection of debts. For a copy of the order click here.

Giove Law Office, P.C. has requested a hearing to challenge the order.

July 29, 2004

MINNESOTA REVOKES COLLECTION AGENCY LICENSE

The Minnesota Department of Commerce has revoked the collection agency license of Valley Collections. The state alleges that agency owner Joann Stewart collected money from debtors, yet never transferred the funds to her clients.

The state also claims that Valley Collections allegedly commingled money from its trust account with the agency's operating account and that Stewart allegedly withdrew more money from the trust account than she earned in commissions.

The revocation is not a judicial determination. Ms. Stewart has the right to contest the state's allegations and demand a hearing.

In an unrelated action the Minnesota Department of Commerce also recently fined Credit Bureau of Napa County, Inc. d/b/a Chase Receivables $15,000.00. The Department alleged that the agency allowed debt collectors to provide inaccurate legal information to debtors in their collection attempts and allowed unlicensed debt collectors to contact Minnesota debtors. 

June 9, 2004

WEST VIRGINIA ATTORNEY GENERAL ANNOUNCES SETTLEMENT WITH COLLECTION ATTORNEY

Attorney General Darrell McGraw's investigation of Riddle & Associates, P.C. has netted $828,000 in refunds and canceled debts for 5,000 West Virginia consumers. The case involved Riddle’s collection of a $98.00 “Attorney/Collection Cost” in connection with accounts that it was handling.

On June 8, 2004, Attorney General McGraw announced that his office had entered into a settlement agreement with Jesse L. Riddle d/b/a Riddle & Associates, P.C., of Draper, Utah, which resulted in more than $828,000 in canceled debts and cash refunds for approximately 5,000 West Virginia consumers. Specifically, Riddle has agreed to refund the $67,251.65 it collected from 388 West Virginia consumers. In addition, DIRECTV decided to close, with a zero balance, all of its West Virginia accounts that were referred to Riddle for collection. DIRECTV reported to the Attorney General that its action resulted in the cancellation of $760,944.31 in delinquent DIRECTV programming accounts allegedly owed by 4,651 West Virginia consumers.

As part of the settlement, Riddle agreed to obtain a business license from the State Tax Department before collecting debts in West Virginia in the future. He also agreed to refrain from adding attorney fees or collection costs onto any amounts he collects in West Virginia in the future and to fully refund all such fees he has previously collected.

May 14, 2004

FORMER GENERAL COUNSEL OF CAPITAL CITY MORTGAGE CORP. BARRED FROM DEBT COLLECTION

The former general counsel of Capital City Mortgage Corporation, a Washington, DC-area mortgage lender and servicer, has settled FTC charges that his actions allegedly violated federal law. The consent decree against Eric J. Sanne permanently bars him from participating in any debt-collection business and orders him to pay $20,000.

In January 1998, the FTC filed a complaint against Capital City and its president, Thomas K. Nash. The FTC later amended the complaint to add Sanne, and more recently amended the complaint a second time, after Nash died, to substitute Nash’s probate estate as a defendant and to add relief defendants.

The FTC alleged that in his position as general counsel, Sanne violated the Fair Debt Collection Practices Act (FDCPA) and the FTC Act by engaging in unfair and deceptive debt- collection practices, including sending letters to borrowers that falsely claimed he was from a third party collecting a debt, rather than a Capital City employee, and by seeking to collect money not owed.  The settlement does not include any admission of liability for such claims.

The terms of the order against Sanne bar him from engaging in any “debt collection” business. Additionally, Sanne is required to pay $20,000 and must pay an additional $50,000, if he is found to have materially misrepresented his financial condition. The order also contains recordkeeping provisions to assist the FTC in monitoring the defendant’s compliance. To see the consent decree click here. To see the Second Amended Complaint click here.

April 14, 2004

MAINE TAKES ACTION AGAINST COLLECTION LAW FIRM!

In an April 13 order, the Maine Office of Consumer Credit Regulation penalized Lenahan Law Offices, a law firm in Buffalo, New York, that buys delinquent debt from credit card companies and other creditors. The Maine regulator fined the New York collection law firm $9,000, and ordered the firm to stop contacting Maine debtors.

Director William Lund, who served as hearing officer, found that Lenahan illegally communicated with third parties, harassed Maine consumers, threatened to seize or garnish benefit checks and falsely implied that debtors had committed crimes. The order followed a hearing in which five consumers testified to Lenahan's tactics. Also testifying was a neighbor of one consumer on whose answering machine collection messages were left, and a work supervisor of another debtor who testified as to the effect of wrongful collection calls to the debtor's workplace and to co-workers.

Lenahan, although served with a notice of the administrative hearing, did not appear in its own defense.

For the full text of the administrative order, click here.

"The Maine Legislature enacted the Fair Debt Collection Practices Act specifically to deal with the types of tactics utilized by these collectors," said Lund in a prepared statement. "Lenahan conducted a misleading, harassing and abusive campaign in its efforts to intimidate Maine consumers to pay their alleged debts."

The Maine Fair Debt Collection Practices Act, patterned after a similar federal law, prohibits unfair and deceptive practices by debt collectors. It is administered by the Office of Consumer Credit Regulation, which licenses and examines debt collectors and responds to consumer complaints.

March 25, 2004

FTC ANNOUNCES SETTLEMENT WITH CAMCO, RM FINANCIAL, INC., AND THEIR PRINCIPALS!

The Federal Trade Commission has announced a settlement In a case in which it had alleged that CAMCO, RM Financial, and their principals violated the FDCPA.

The Commission had alleged that most of the debts in question were unenforceable in court and so old that they were beyond the reporting periods allowed under the Fair Credit Reporting Act. Some of the debts CAMCO allegedly attempted to collect were already discharged in bankruptcy or had been paid. The FTC charges included allegations of allegedly:

The settlement with CAMCO, RM Financial, Reese Waugh, Jerome Kuebler, Scott R. Franson, and Mario Bianchi prohibits such practices and further requires the defendants to pay a civil penalty in the amount of $300,000. It requires that all written collection materials sent to consumers contain disclosures about consumers’ rights under the FDCPA, provide an address and phone number consumers can use to contact the companies, disclose that the FTC enforces the FDCPA, and disclose ways to contact the FTC. It also contains certain recordkeeping and bookkeeping requirements to allow the FTC to monitor compliance.

“The Commission is accepting this settlement,” said Chairman Timothy J. Muris, “because there is ample evidence of the defendants’ liability. We are reviewing our civil penalty program to determine whether the overall range is appropriate. As part of this review, we will give additional scrutiny to the level of civil penalties in the future.”

For the text of the consent decree, click here.

NOTE: The consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A consent decree has the force of law when signed by the judge.

March 9, 2004

MINNESOTA ANNOUNCES RECORD COLLECTION AGENCY FINE!

The Minnesota Department of Commerce has announced the imposition of a $70,000 fine against Alliance One Receivables Management Inc. of Pennsylvania. The fine represents the largest civil penalty imposed against a collection agency operating in Minnesota. As part of the consent order, Alliance must also design and implement a compliance plan that is acceptable to the Department of Commerce.

For the full text of the official press release, click here.

December 1, 2003

THIRD-PARTY DEBT COLLECTOR ALERT!

Copyright Barron, Newburger, Sinsley & Wier, PLLC 2003

NEW COLLECTOR NOTICE WILL BE REQUIRED IN CALIFORNIA

California’s S.B. 1022, approved by the Governor on September 1, 2003, imposes new requirements upon third-party debt collectors.

The Bill, which becomes operative on July 1, 2004, adds Title 2.97 to Part 4 of Division 3 of the California Civil Code. The Title requires new disclosures to be sent to debtors as part of a third-party debt collector’s first written notice sent to a California address of the debtor in connection with the collection of a debt. A third-party debt collector who fails to provide the notice will be subject to liability under California’s Rosenthal Fair Debt Collection Practices Act.

The text of the new statutory sections reads as follows:

TITLE 2.97. CONSUMER COLLECTION NOTICE

    1812.700. (a) In addition to the requirements imposed by Article 2 (commencing with Section 1788.10) of Title 1.6C, third-party debt collectors subject to the federal Fair Debt Collection Practices Act (15 U.S.C. Sec. 1692 et seq.) shall provide a notice to debtors that shall include the following description of debtor rights: "The state Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt Collection Practices Act require that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or www.ftc.gov."

    (b) The notice shall be included with the first written notice initially addressed to a California address of a debtor in connection with collecting the debt by the third-party debt collector.

    (c) If a language other than English is principally used by the third-party debt collector in the initial oral contact with the debtor, a notice shall be provided to the debtor in that language within five working days.

    1812.701. (a) The notice required in this title may be changed only as necessary to reflect changes under the federal Fair Debt Collection Practices Act (15 U.S.C. Sec. 1692 et seq.) that would otherwise make the disclosure inaccurate.

    (b) The type-size used in the disclosure shall be in at least the same type-size as that used to inform the debtor of his or her specific debt, but is not required to be larger than 12-point type.

    1812.702. Any violation of this act shall be considered a violation of the Rosenthal Fair Debt Collection Practices Act (Title 1.6C (commencing with Section 1788)).

This alert is provided as a courtesy to the friends and clients of Barron, Newburger, Sinsley & Wier, PLLC Receipt of this alert does not create an attorney-client relationship. This alert is not a substitute for specific legal advice pertaining to particular facts or circumstances, nor for the advice of an attorney licensed to practice law in California.

________________________________________________________

October 14, 2003

CREDITOR ALERT!

Copyright Barron, Newburger, Sinsley & Wier, PLLC 2003

HB7, signed by the Governor of Texas on October 13, 2003, corrects a problem for creditors created by SB533 in the 2003 General Session. HB7 eliminates the “mini-Miranda” requirement that was imposed on creditors by SB533. It does, however, impose a new general prohibition on using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer. That general prohibition is applicable to creditors as well as third-party debt collectors.

The amendment takes effect on the 91st day after the last day of the legislative session (January 14, 2004).

The full text of the bill is set forth below.

This alert is provided as a courtesy to the friends and clients of Barron, Newburger, Sinsley & Wier, PLLC Receipt of this alert does not create an attorney-client relationship. This alert is not a substitute for specific legal advice pertaining to particular facts or circumstances.

AN ACT

relating to the reorganization of, efficiency in, and other reform measures applying to governmental entities and certain regulatory practices; providing a penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

* * * * *

ARTICLE 28. DEBT COLLECTION PRACTICES

SECTION 28.01. Section 392.304(a), Finance Code, as amended by Chapter 851, Acts of the 78th Legislature, Regular Session, 2003, is amended to read as follows:

        (a) Except as otherwise provided by this section, in debt collection or obtaining information concerning a consumer, a debt collector may not use a fraudulent, deceptive, or misleading representation that employs the following practices:

                (1) using a name other than the: (A) true business or professional name or the true personal or legal name of the debt collector while engaged in debt collection; or (B) name appearing on the face of the credit card while engaged in the collection of a credit card debt;

                (2) failing to maintain a list of all business or professional names known to be used or formerly used by persons collecting consumer debts or attempting to collect consumer debts for the debt collector;

                (3) representing falsely that the debt collector has information or something of value for the consumer in order to solicit or discover information about the consumer;

                (4) failing to disclose clearly in any communication with the debtor the name of the person to whom the debt has been assigned or is owed when making a demand for money;

                (5) in the case of a third-party debt collector, failing to disclose, except in a formal pleading made in connection with a legal action:

                        (A) that the communication [debt collector] is an attempt [attempting] to collect a debt and that any information obtained will be used for that purpose, if the communication is the initial written or oral communication between the third-party debt collector and [with] the debtor; or

                        (B) that the communication is from a debt collector, if the communication is a subsequent written or oral communication between the third-party debt collector and [with] the debtor;

                (6) using a written communication that fails to indicate clearly the name of the debt collector and the debt collector's street address or post office box and telephone number if the written notice refers to a delinquent consumer debt;

                (7) using a written communication that demands a response to a place other than the debt collector's or creditor's street address or post office box;

                (8) misrepresenting the character, extent, or amount of a consumer debt, or misrepresenting the consumer debt's status in a judicial or governmental proceeding;

                (9) representing falsely that a debt collector is vouched for, bonded by, or affiliated with, or is an instrumentality, agent, or official of, this state or an agency of federal, state, or local government;

                (10) using, distributing, or selling a written communication that simulates or is represented falsely to be a document authorized, issued, or approved by a court, an official, a governmental agency, or any other governmental authority or that creates a false impression about the communication's source, authorization, or approval;

                (11) using a seal, insignia, or design that simulates that of a governmental agency;

                (12) representing that a consumer debt may be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if a written contract or statute does not authorize the additional fees or charges;

                (13) representing that a consumer debt will definitely be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if the award of the fees or charges is subject to judicial discretion;

                (14) representing falsely the status or nature of the services rendered by the debt collector or the debt collector's business;

                (15) using a written communication that violates the United States postal laws and regulations;

                (16) using a communication that purports to be from an attorney or law firm if it is not;

                (17) representing that a consumer debt is being collected by an attorney if it is not; [or]

                (18) representing that a consumer debt is being collected by an independent, bona fide organization engaged in the business of collecting past due accounts when the debt is being collected by a subterfuge organization under the control and direction of the person who is owed the debt; or

                (19) using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer.

* * * * *

ARTICLE 34. EFFECTIVE DATE

SECTION 34.01. Except as otherwise provided by this Act, this Act takes effect on the 91st day after the last day of the legislative session.

______________________________

President of the Senate

______________________________

 Speaker of the House

I certify that H.B. No. 7 was passed by the House on September 17, 2003, by a non-record vote; that the House refused to concur in Senate amendments to H.B. No. 7 on September 29, 2003, and requested the appointment of a conference committee to consider the differences between the two houses; and that the House adopted the conference committee report on H.B. No. 7 on October 12, 2003, by the following vote: Yeas 79, Nays 35, 1 present, not voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 7 was passed by the Senate, with amendments, on September 25, 2003, by the following vote: Yeas 21, Nays 8; at the request of the House, the Senate appointed a conference committee to consider the differences between the two houses; and that the Senate adopted the conference committee report on H.B. No. 7 on October 10, 2003, by the following vote: Yeas 21, Nays 10. ______________________________

Secretary of the Senate

APPROVED: __________________ Date

__________________

Governor

________________________________________________________

August 30, 2003

CREDITOR ALERT!

Copyright Barron, Newburger, Sinsley & Wier, PLLC 2003

Effective September 1, 2003, creditors who collect consumer debts in Texas will be subject to the same type of “mini-Miranda” requirements as those imposed on debt collectors under the FDCPA.

SB 533, passed in the 2003 General Session of the Texas Legislature, attempted to conform the disclosure requirement of the Texas Debt Collection Act, Tex. Fin. Code Ann. § 392.304(a)(5) to that of the FDCPA, 15 U.S.C. § 1692e(11). Unfortunately, the difference in the definitions between the two statutes is such that the amendment has the effect of forcing even credit grantors to give the “mini-Miranda” warning.

Under the TDCA, the term “debt collector” means “a person who directly or indirectly engages in debt collection . . .” “Debt collection” means an action, conduct, or practice in collecting, or in soliciting for collection, consumer debts that are due or alleged to be due a creditor. Case law recognizes that, unlike the Federal Act, the plain meaning of the TDCA includes as “debt collectors” creditors collecting their own debts in their own names. The Texas Act recognizes a separate category of collectors described as “third-party debt collectors,” who are defined as those persons who are debt collectors under the FDCPA.

In passing SB 533, the Texas Legislature apparently failed to recognize the distinction between the two types of debt collectors. As of September 1, 2003, Section 392.304(a)(5) of the Texas Finance Code includes, as a prohibited a fraudulent, deceptive, or misleading representation in connection with collecting a consumer debt or attempting to obtain information about a consumer:

(5) failing to disclose, except in a formal pleading made in connection with a legal action: (A) that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, if the communication is the initial written or oral communication with the debtor; or (B) that the communication is from a debt collector, if the communication is a subsequent written or oral communication with the debtor;

The full text of the has been incorporated into the text of the TDCA available on this site.

This alert is provided as a courtesy to the friends and clients of Barron, Newburger, Sinsley & Wier, PLLC Receipt of this alert does not create an attorney-client relationship. This alert is not a substitute for specific legal advice pertaining to particular facts or circumstances.

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