Federal officials with the Justice Department and FBI announced Tuesday the arrest of seven people for their roles in a fraudulent debt collection operation that over the course of five years targeted more than 6,000 consumers in all 50 states and brought in more than $4.1 million. The FTC had previously launched a civil action against the company.
A U.S. Circuit Court decision this summer took an extraordinary step when it held that filing a proof of claim on time barred debt is conduct that violates the FDCPA. At the time, attorneys close to both bankruptcy and FDCPA proceedings warned that it would touch off a very real firestorm in that sector of the ARM industry. That has proven to be quite true.
A federal district judge in New York last week dismissed an FDCPA case in which a consumer claimed a collection agency unlawfully disclosed his debt to a third party. The judge not only disagreed with the allegations in the case, but noted that the law itself might be an issue, writing, “The FDCPA is clearly out of touch with modern communication technology.”
The U.S. Treasury Department is readying a pilot program to take over the collection of some defaulted student loan accounts from the Department of Education, essentially removing the work from contracted private debt collection agencies. But it might not be so simple.
The United States Trustee Program, a division of the Justice Department, is investigating several of the largest consumer lenders in the country over their debt collection and portfolio sales tactics relating to accounts owed by consumers under bankruptcy protection, according to The New York Times.
The American Bar Association Wednesday issued a formal opinion finding that a growing practice by district attorneys of allowing debt collection agencies to issue demand letters that suggest they originated from the prosecutor’s office violates ABA Model Rules of Professional Conduct.
Section 1692g of the FDCPA says collectors must provide a notice to consumers within five days of initial communication stating the amount of the debt, the name of the current creditor, and explaining the consumer’s right to dispute the debt and to obtain verification. You might assume that a collector can comply with that section by simply copying the language from the statute into their initial notice to consumers. Not exactly.
Florida Attorney General Pam Bondi announced late last week that her office has filed a law against a debt collection agency for allegedly targeting consumers who were victims of previous frauds or scams. The Federal Trade Commission filed a parallel lawsuit against the firm in the U.S. Southern District Court of Florida.
Minnesota Attorney General Lori Swanson announced Thursday that her office has filed a lawsuit against TJ Process Service, a Minnesota process serving company, and one of its process servers for falsely claiming that some individuals were served with debt collection lawsuits.
We’ve arrived at the most intolerable phase of any election cycle: the immediate aftermath, in which members of the media and pundits try to guess what will happen next. Most of it is filler and grandstanding. But with the result on Tuesday, we are guaranteed to see some real change in governance.