NY Attorney General Shuts Down Collection Agencies; Subpoenas 20 Others
New York Attorney General Andrew Cuomo said that his office is forcing the closure of two related collection firms. The action is part of a large investigation into the ARM industry with nearly 20 other collection firms already under subpoena.
New York Attorney General Andrew Cuomo Wednesday announced that his office had closed a collection agency in the state and said that nearly 20 other accounts receivable management firms had been subpoenaed to provide additional information about their collection practices.
The announcements were part of what Cuomo called a “statewide inquiry into debt collection companies.”
Cuomo’s office said in a press release that it had obtained a court order against Lamont Cooper and two debt collection firms he owns that operated in the state: Emanee Development, Inc. and Dial Tech LLC. The order stipulates that the companies will shut down and Cooper will be forced to pay restitution to consumers statewide. Cooper and his companies are permanently barred from engaging in the debt collection business and acting as brokers that buy and resell portfolios of consumer debt.
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The attorney general alleged that Cooper’s companies told debtors that they were criminals, threatened lawsuits and arrest, engaged in third party disclosure, and other violations of the Fair Debt Collection Practices Act (FDCPA).
“At a time when New York families are already struggling with unprecedented levels of debt, unscrupulous collection agencies add salt to an open wound,” said Attorney General Cuomo in a press release. “Using fear and intimidation to take advantage of individuals facing debt is a shameful and illegal scare tactic. This judgment is the first step in this Office’s expanding investigation into debt collectors that violate the rights of consumers and operate outside of the law.”
Cuomo also said that he has subpoenaed nearly 20 companies and law firms operating as debt collectors throughout the state. The subpoenas included requests designed to discover the policies and procedures the debt collectors have implemented to comply with federal and state laws, how the companies respond to complaints about their collection practices, as well as how individual collectors are compensated.
An executive from one collection agency that was named by Cuomo’s office as having received a subpoena told insideARM that due to the size of the company, it receives requests from regulators fairly often. “From time to time, we get regulatory requests concerning investigations, and we comply with them,” he said. He declined to comment specifically on Cuomo’s subpoena.
Cuomo said that the probe of debt collection practices will include activities that are illegal under state and federal law, including fraudulent threats of criminal prosecution, harassing phone calls to consumers and their families, friends and employers, bringing lawsuits against and/or reporting consumers to credit reporting agencies without verifying that the consumer being targeted actually owes the debt, and failing to disclose that a caller is working for a debt collector.
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Comments
Comment from Anonymous on May 28, 2009 at 10:32AM EST
What would be specific compliance for "bringing lawsuits against and/or reporting consumers to credit reporting agencies without verifying that the consumer being targeted actually owes the debt" The debt buying industry typically works off of spreadsheets with debtors information. What can be done to verify that the consumer is the actual debtor?
Comment from DONALD DALY on May 28, 2009 at 10:32AM EST
WOW! I didn't think my comments from yesterday would be acted on so swiftly, Cuomo get's the "atta boy" award for today.
Comment from Illlinois on May 28, 2009 at 10:48AM EST
Well, the fact that someone in the industry would ask: "what can be done to verify that the consumer is the actual debtor" and then make an admission that the debt buying industry works off a spread sheet is just the fodder any attorney general would need to bring legal action.
That is, the admission that you don't know if the debt is real or not, means until you do know the debt is real, you should not be making any collection efforts. NONE.
Comment from Anonymous on May 28, 2009 at 11:00AM EST
Not that I'm painting the industry with a broad brush, but we ALL better step-up compliance efforts (and keep it that way) or we will see more and more of this stuff and worse, more and more burdensome regulation by states and municipalities. State legislators that rely on voters in their state for reelection are going to continue to support (or introduce) bills that provide more consumer protections and make our jobs harder if this conduct continues. We have a lot of "bad apples" in this industry that are making it more difficult and expensive to do business. I applaud ACA's efforts and think its a great organization overall but as an industry don't you think its time for a solution other than simply opposing adverse legislation through lobbying efforts? Politicians faced with reelection back home in their respective districts are going to do what they have to do to get reelected. Period. The ACA should bring a large cross-section of the industry's players together to discuss REAL solutions. Bring collectors, compliance personnel, managers, client relations personnel, etc. to the table - NOT just owners and lobbyists. This concept will of course only work if we as an industry are SERIOUS about self-policing our offices and making bold and neccessary decisions to stop this cycle. The term 'debt collector' is rapidly becoming as taboo as 'telemarketer' did back in the 90's! Performance, profits - money - is certainly why every business opens their doors. Is that it? I don't have the answer. But as I see it, our choice is rather simple: Either continue to do what we're doing OR ALL ACA members need to lead by example or get booted from the ACA and, hopefully, the industry! The recent NBC Dateline agency in Buffalo (LHR) was an ACA member! Come on folks it's time to get serious or our industry is in BIG trouble in terms of regulation.
Comment from Lethal on May 28, 2009 at 11:02AM EST
Unprofessional and dirty tactics for collections is unacceptable and should be shut down. This allows those who do it right to get their job done. Thank you for getting rid of the "fly by night" agencies that give the rest of us a black eye.
Comment from Demosthenes on May 28, 2009 at 11:02AM EST
Many mortgage servicing companies are unable to locate source documents for the mortgages they are servicing ... thus from Illinois' logic all mortgage servicing companies should waive demand for mortgages until they have the source documents in hand AND they have personally inspected all documents AND they can confirm the person they are noticing is the person that originated the mortgage? In a perfect world this would be a perfect solution. Sorry to inform a different reality. There are processes by way of the FDCPA and FCRA for a consumer to dispute a debt or a credit bureau item. Most consumers and credit reporters work within the existing legislative construct effectively and efficiently.
Comment from Anon on May 28, 2009 at 11:04AM EST
The agencies being questioned and investigated should not be worried if they have nothing to hide. Corrupt agencies are what give the rest a bad name. There are good bill collectors and bad bill collectors.
Comment from Anonymous on May 28, 2009 at 11:07AM EST
Sooner or later collection agencies will realize that we are no longer operating without scrutiny. The FDCPA is being enforced and abused by debtors as well. It is surprising that when calls are made on commercial debts that the debtor is quick to site the violation of the FDCPA when it does not apply to the corporate debt. Consumers are protected from unfair collection practices with the FDCPA and seem to be well versed in what is legal and what is illegal when it comes to collection calls. It takes an experienced debtor to stave off debt even when the collection practices are in line with state and federal laws and we see it every single day.
The reality is that some agencies operate using scare tactics and illegal collection practices and many debtors are just waiting for a collection call hoping that the collector steps out of line so that they can hit their pay day by suing the agency. Debtors will bait, taunt and antagonize bill collectors and attempt to push them over the line in an effort to avoid paying their responsibilities. Who is looking out for the client who extended the credit and is suffering financially because debtors are refusing to pay their bills? Legitimate collection agencies are the affordable recourse they are left with. Lets not forget that if it were not for good collection agencies who can collect bad debt there would be a heck of a lot more companies closing, jobs lost and the economy in worse condition than it is today!
Comment from Lois on May 28, 2009 at 11:20AM EST
am amazed and disappointed in some of the responses. The reason the industry has a "Bad" name is because of agencies that threaten consumers with action they will not or can not pursue. Most of the collectors I know have been on both sides of the collection industry. I believe the agencies need to have back up for the accounts that are placed. If there is no information the paper is tainted and the agency sets itself up for law suits, FDCPA violations and mistaken identity of debtors. I believe the majority of agencies in ACA comply with the federal law and state laws. Many,if not most, of the complaints are from the originating creditors own collection staffs. I, for one, feel if the allegations against these agencies in New York are guilty of the charges they should be shut down. I have worked in this industry for over 30 years. I want to hold my head up high when I get on the phone or am asked what my preofession is. My profession is essential in collecting bad debt but I do not have to be the "bad" in bad debt collections.
Comment from Anonymous on May 28, 2009 at 11:27AM EST
To: Illlinois on May 28, 2009 at 10:48AM EST
I am not someone in the industry, just someone researching the industry for possible entry to it. If this is a blog with seasoned veterans from the industry, an answer to the question should come simply if everyone is versed in compliance. The fact that there wasn't an answer posted is the thing that will wake up the attorney general. Illinois, can you answer the question? If not, can someone else?
Comment from Anonymous on May 28, 2009 at 11:30AM EST
Lets call it what it is. "Cowboy Debt Buyers Destroying Our Industry" Want to fix this Mr Coumo, go after the sellers of the debt for failing to do proper due dilligence on the buyers. Otherwise you will just be punishing the compliant for the sins of the fly by night operators.
Comment from Anonymous on May 28, 2009 at 11:42AM EST
I think statistically speaking there are more law abiding collection agenices percentage wise than Attorney generals.
Comment from Let's Do The Right Thing on May 28, 2009 at 11:45AM EST
To Quote Johann Wolfgang Von Goethe
"Things which matter most must never be at the mercy of things which matter least."
We should realized longevity of the industry is far more important than the millions made at the hands of cheaters.
Comment from Anonymous on May 28, 2009 at 11:55AM EST
FYI: Anonymous at 11:53 is not the same Anonymous at 10:32 and 11:27.
Comment from Patrick Lunsford on May 28, 2009 at 12:14PM EST
To Anonymous at 11:55 -
Yeah, it would be great if people actually identified themselves in some of the longer comment threads. Or at the very least used a nickname or something.
Comment from Steve on May 28, 2009 at 12:19PM EST
I have been in collections since 1977. I want to make it clear that you do not need to be a member of ACA to be a good agency. I operate in every State and the fews times I have received a letter from the AG office I have been treated with respect. Maybe its time we as an industry stop taking bad clients. I know it's hard to say no but we just cheapen the view of agencies. I think Mr. Coumo is doing the right thing.
Comment from sif2pif on May 28, 2009 at 12:50PM EST
If a debtor makes a complaint to the AG how can they tell its actually valid. You cant! Lets face it, pretty soon their will not be any collections coming from with an organization. Soon it will be 100% customer service. You go delinquent on a bill and now you wanna buy something, then the debtor calls in to pay. Customer service. In buffalo we have a local aty that flat out says on his commercial that debt collectors can not leave any message on your answering machine. Now, we may be able to read between the lines and understand what he means but the avg person will not. Where is the protection from that type of deception?
Comment from NPS on May 28, 2009 at 12:51PM EST
This extreme case aside, in his broad brush strok on the industry notice there is no confirmation or factual basis for the assumption that the debts ARE NOT OWED. The vast majority of sold debt is in fact valid. Cuomo is just another leftest with a twisted view on who the victim is. Debtors, criminals, and terrorists are the victims. Big bad free market companies are the perps. Up is down, down is up....it's Cuomo in wonderland....
Comment from FR. on May 28, 2009 at 1:57PM EST
I believe that from a perception standpoint the debt collection industry is similar to law enforcement. When police do something wrong it is all over the news and most people would say that they do not like the police. On other hand if people are being honest most would also say that the majority of law enforcement people are good people with good intentions.
There are agencies that take on debt with no way of verifying the debt and pressure their employees to collect at any cost. They hire anyone off the street and do not bother to check the employee’s back round or even do a drug screen.
On the other hand there are plenty of agencies out there that hire good people, do back round checks and drug screens and do their best to foster an environment of performance with professionalism.
There are also debtors who have good intentions, fell on hard times and need help getting the account paid. Then there are the debtors who know they owe the debt and have the ability to pay but send overly burdensome dispute letters that do not actually mention the nature of the dispute (i.e.: already paid or not me) and ask for everything short of a DNA sample from the collection agency.
Bottom line is that consumers and debt collectors need to stop assuming that every person has bad intentions and understand that the majority of people have good intentions and want to do the right thing. Those who do not are not worth your time and those who are criminal (both debtors and collectors) in their actions should be pursued to the full extent of the law.
Signed,
25 year professional debt collector
Comment from Anonymous on May 28, 2009 at 2:17PM EST
Ther e are plenty of law abiding collection agencies that are subject to debtor abusues also. I am in the collection industry and the Agency i work for gets many Atty General complaints fromm debotrs who simply go on the internet and generate internet forms . Many of the AG complaints the agency I work for has not even talked to the debtor. Debtors also have to be held accountable for a percenage of these complaints generated as all they really ahve to do is call the collection agency and try to work something out.
Comment from IntheKnow on May 28, 2009 at 2:27PM EST
Mr. Cooper is still operating 2 agencies. One down the street from the "closed" one, and one in Atlanta. They're operating under a different name. He knew the heat was on because he actually hasn't used those "names" in a while. These agencies are grossing millions of dollars every year. Buying and selling debt is now the new "drug game". These convicts scrape some money together and start these operations in their basements. From what i know, this guy Mr. Cooper actually stole the server of another boiler room agency and that's how he began his lucrative career.
Comment from DAVEBARR1 on May 28, 2009 at 10:40PM EST
What needs to be done most is this. If a Bank sells a debt the back-up or documentation for that account must be placed in a secure on line holding tank so as each agency who purchases that file has access through a unique password for that company to access the back up needed to justify the debt. If the Seller (Bank) does not have the full and complete documentation, than that account cannot be sold. PERIOD. END OF STORY. Also, once an account hits the FCRA 7 year statute, it CANNOT BE SOLD.
Comment from Kevin J. Hough / Corpra Care, Inc. on May 29, 2009 at 3:16PM EST
I agree with many of you...there are more law abiding agencies than not. And IT IS like having a rotten cop amoung good honoable cops. In my 19 plus years...we have never been sued...never. Lots of empty threats...but no real action...because we (as many of you) operate under all laws and statutes. Policies and due dilligence are the order of the day to keep ourselves legal. And that is the real point.....when we WELL within the bounds of the law...we have little to fear. To help myself and associates remember...I remind them that we are consumers as well....if there are bad guys amoung us...get em' out.
Comment from Anonymous on May 31, 2009 at 11:29AM EST
Comment from Anonymous on May 28, 2009 at 11:00AM EST "Politicians faced with reelection back home in their respective districts are going to do what they have to do to get reelected. Period."
Well said. This is why they continue to enact new laws to protect the debtors and overburden the collection agencies - because the debtors are in the majority.
Comment from Illlinois on May 31, 2009 at 9:57PM EST
RE: Mortgae Company
In Illinois, to be a "mortgage", all mortgage notes and mortgages are recorded in the county the property is located in, and such documents have the original signatures on them. Yes, mortgage companies can prove a debt exists. If only all debt buyers and collectors could be held to the same standard of proving a debt exists.
Comment from A professional debt collector on June 4, 2009 at 6:15PM EST
I work for a collection agency, I understand that people are in bad times but is that an excuse to run up high-debt knowing you cant or wont have to pay it back? Also, I might ad that if you buy bad paper you get bad clients. Not all collection agencies have practice illegal collection acts. But lets face collectors have goals to meet and if they dont meet them they cant put food on the table for their families "By no means that is a reason for a collector to be illegal, on that note their are professional debt collectors and lets not forget that their are also professional debtors.
Comment from Anonymous on June 11, 2009 at 12:55AM EST
People need to understand that collectors have a extremely grinding job, we deal with constant deception and a whole aray of dtr nightmares, people rack up these huge credit card bills then when they can not pay they expect everyone to pat them on the back and say its ok, many people abuse credit cards and just roll the dice, in that if they default the worst thing that will happenn is a bad hit to there credit. Yet if one writes a hot check for 20 to 7/11 he can go to jail but its ok to rack up 15k on a credit card and tell your creditors too bad and then moan and cry when collectors making us the big bad wolves. American express is laying off around 10,000 people because of debtors who will not pay..This issuse is far more complex then most people understand. Collection efforts on bad debt is absolutely imparative to the economy any one with an 8th grade education should understand that.