Class Action Lawsuit Alleges Collection Agencies' Credit Card Offer Contains Multiple FDCPA Violations

National consumer law firm Weisberg & Meyers, LLC announced Thursday that a class action lawsuit against Genesis Financial Solutions, Inc.(GFS), NCO Portfolio Management Inc. and WebBank continues to move forward. The lawsuit (CaseNo. 3:10-cv-02037-L), filed in the United States District Court for the Northern District of Texas (Dallas Division) alleges that Defendants deceptively used an offer for a pre-approved Pearl Card® Gold MasterCard® to collect or receive payment for an alleged debt, when in fact the offer was a collection letter. The lawsuit alleges multiple violations of the Fair Debt Collection Practices Act and the Texas Finance Code.

According to court documents Plaintiff Mark Myers received a mailed communication on July 12, 2010 with an offer from NCO Financial Services and GFS Financial Solutions that stated in bold print at the top, “Transfer your debt to a Pre-Approved+ MasterCard®!” The average consumer receives numerous credit card offers in the mail each month and may have perceived this offer, which was an attempt to collect a debt on behalf of the defendants, as a typical credit card application/offer, or junk mail and tossed it in the trash, and in the process, thrown away a communication that triggered specific rights under the Fair Debt Collection Practices Act.

Part and parcel of the FDCPA’s rights afforded to a debtor is what is commonly referred to as the “Mini-Miranda Warning”, a statement that identifies the name of the debt collector, the company they represent, and advises the debtor of his/her right to validate and dispute an alleged debt within 30 days. The Fair Debt Collection Practices Act mandates that each time a debtor is contacted by a debt collector via written communication, the “Mini-Miranda Warning” must be provided.

The complaint alleges that the communication received by Plaintiff Myers and others did not clearly display the “Mini-Miranda Warning” in its entirety where it could easily be viewed and read. This important information advising a debtor of his/her rights, appeared on the reverse side of the offer and thus could easily have been missed or overlooked and was overshadowed by the voluminous amount of fine print that has become standard in most credit card offers. A signature confirming acceptance of this new Pearl Card® Gold MasterCard® offer would validate the amount of the alleged debt and restart the clock on the statute of limitations, which may have already expired, unbeknownst to the debtor. By signing and agreeing to proceed with the credit card offer, the debtor has now waived his rights to validate and/or dispute the alleged debt.

The complaint also alleges that Defendant WebBank allowed GFS and NCO the use of its Utah banking charter for the credit card offer, though WebBank was not actually a party to the collection efforts. The communication itself states “GFS is not affiliated with WebBank…..” The Utah banking charter allows GFS and NCO, through alleged partnership, the opportunity to use Utah’s laws which allow for no caps on interest rates and fees for all 50 states other than what competition dictates, in the MasterCard® offer.

Plaintiff seeks to recover actual and punitive damages on behalf of class members, comprised of all those who received a correspondence similar to the mailed offer received by lead Plaintiff Mark Myers on July 12, 2010, for a period of 1 year prior to the date lawsuit was filed.

Genesis Financial Solutions, Inc., founded in 2001 and based in Beaverton, Oregon, is a consumer financial services company that engages in originating, buying, acquiring, servicing, and managing consumer receivables. Its solutions include performing and non-performing non-prime credit card, student lending, and debt buying for companies seeking liquidity for their consumer receivables. It also offers consumer debt buying and servicing solutions, including credit cards, medical, health club, retail, telecom/wireless, student loans, and auto loan portfolios.

NCO Portfolio Management, Inc. is a subsidiary of the NCO Group, Inc. and has headquarter offices in Horsham Pennsylvania alongside the parent company. NCO Portfolio Management purchases and manages investments in delinquent consumer debt, purchasing discounted portfolios of charged-off Visa, MasterCard, private-label credit card, and other consumer credit accounts directly from such credit grantors as banks, finance companies, and retailers in the US, Canada, and the UK. The company then turns over the acquired accounts to another unit/subsidiary of NCO Group for servicing and collection. NCO Portfolio Management primarily serves companies in the financial services, health care, telecommunications, and utilities industries.

WebBank has headquarter offices in Salt Lake City, Utah, and is a FDIC insured, state chartered Industrial Bank organized under the laws of the State of Utah and operating under federal law for licensing issues. Through its industrial bank charter, WebBank can provide niche financing. The charter allows WebBank to offer financing solutions on a nationwide platform for consumer and commercial private-label products and services. WebBank engages in a full range of banking activities including making loans, issuing credit cards, and taking deposits that are federally insured.

Weisberg & Meyers LLC, Attorneys for Consumers, is a nationally recognized consumer law firm, has attorneys licensed to practice in Arizona, Colorado, Florida, Georgia, Illinois, New Jersey, New Mexico, New York, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Washington, and works with attorneys throughout the country to protect the rights of aggrieved consumers. The Firm’s diverse practice includes claims under the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA), as well as violations of the Truth In Lending Act (TILA), the Electronic Fund Transfer Act (EFTA), and Fair Credit Billing Act (FCBA). The Firm also offers Debt Settlement services, prosecutes Class Actions Lawsuits, and handles Breach of Warranty, Lemon Law and Consumer Fraud Claims.