Fair Debt in the News
Collection News
Carrollton, TX - Southwest Credit Systems, L.P. a national provider of accounts receivable solutions, is proud to announce the addition of Sharell Weeams and Kathleen Eads to their management team.
Sharell Weeams, Director of Marketing and Client Management, will manage all marketing initiatives and maintain high-level client relationships. She has 13 years of experience, which includes six years in the collections industry and four years of agency and corporate marketing experience. Sharell holds a Master of Business Administration in Marketing Management from the University of Dallas and a Bachelor of Business Administration in Marketing from the University of North Texas.
Kathleen Eads, Manager of Client Services, will be responsible for overseeing the day-to-day management of the client services team and ensuring the highest level of service is provided to our clients at all times. She has more than 20 years of experience in the credit and collections industry working in several capacities, including 10 years of sales and marketing to top firms within the industry. Kathleen holds a Bachelors of Business Administration from the University of North Texas.
Founded in 1974, Southwest Credit Systems L.P. is a national provider of accounts receivable management services to small and large companies in the Communications, Education, Utility, Government, and Financial Services industries. Southwest Credit services consumer and commercial accounts along various stages of the credit and collection process.
Southwest Credit has a Better Business Bureau rating of A+. For more information contact 1.800.637.7439 or visit their website at www.sw-credit.com.
2010-09-02T07:57:29-07:00
SAN FRANCISCO — LiveVox Inc., the leading provider of enterprise cloud-based consumer contact solutions, today announced that Stellar Recovery Inc., a leading receivables management firm, has leveraged the integrated IVR and on-demand payment lines of LiveVox that meet the security and privacy requirements of the Payments Card Industry (PCI) Data Security Standard.
Compared to site-premised hardware solutions, LiveVox simplifies contact center compliance, because organizations can leverage existing PCI compliant infrastructure and business processes. With even the newest contact center hardware, organizations are forced to invest precious resources to meet PCI compliance. This includes an ongoing focus on implementing, auditing, updating and maintaining compliant networks, infrastructure and change control processes. Several hosted vendors have also yet to achieve PCI security and procedure standards.
“Contact centers are increasingly looking to gain efficiencies through automation, but at the same time security and compliance will always be primary concerns,” said John Schanck, Chairman/CEO, Stellar Recovery, Inc., a Kalispell, MT-based receivables management firm. “At Stellar, we leverage vendor partners that share our commitment to safety of consumer data. We can utilize the IT redundancy and process excellence of LiveVox to addresses the nuts-and-bolts of PCI compliance across multiple locations while focusing core resources on client service and business strategy.”
The complexity of compliance increases at multi-site organizations where system redundancies, policies and audits must be duplicated at each location. PCI rules around payment lines are especially stringent with requirements around transmission, processing and storing of credit card data. By leveraging already PCI-compliant infrastructure deployed in the cloud, contact center operations and IT groups can shift resources to application deployment, vendor management, analytics and strategy.
“Multi-site PCI compliance is difficult and expensive to obtain and time consuming to maintain,” said Louis Summe, Chief Executive Officer, LiveVox. “Contact centers never fully ‘outsource’ their commitment to security, but they require vendors who can facilitate compliance even as regulations change. Our more flexible infrastructure delivered from a carrier-class data center, enables us to develop GUI-based configuration tools that provide a simple path to multi-site compliance management.”
About Stellar Recovery
Stellar Recovery is an accounts receivable management company (ARM) servicing the financial services, telecommunications, utilities and retail industries. Stellar Recovery has customized processes, innovative technology and procedures that provide the information needed to maximize results. Based in Kalispell, MT, Stellar also operates in Denver. For more information, visit www.stellarrecoveryinc.com.
About LiveVox
LiveVox is the leading provider of enterprise cloud-based consumer contact solutions. LiveVox offers a patented platform with integrated IVR, ACD, call recording and automated dialing configurable by a single web-based GUI. The carrier-class solution includes web-based multi-site deployment, routing and controls that are pre-integrated with major VoIP standards and carriers, delivering capacity on demand. LiveVox is headquartered in San Francisco. For more information, visit www.livevox.com.
2010-09-02T07:53:23-07:00
Kaulkin Media, through its flagship Web publication insideARM.com, announces the launch of a special editorial series on consumer complaints against accounts receivable management firms.
The Complaints Issue will be the first in a series of topic-focused content offerings dubbed “The Big Issues.” The series will feature articles, opinion pieces, infographics, videos, training & educational materials, and other types of informative content. Over the coming weeks, insideARM.com readers will learn more than they ever thought they could know about debt collection complaints.
“Our original reporting and coverage of ARM industry news changes every day and we recognize the importance of breaking news content to our audience,” said Michael Klozotsky, Managing Editor of insideARM.com. “But we also perceived a lack of any in-depth, continuing content being produced on topics of real consequence to the credit and debt collection industry.”
Complaints against ARM firms and professionals are the stick pins used to skewer the debt collection industry like some exotic butterfly. Constantly referenced in the mainstream media, complaints against collectors have steadily increased over the past few years, according to data released annually by the Federal Trade Commission. But, as always, there is much more to the story, and all one has to do is dig a little deeper to reveal some misconstrued facts.
For example, the category of complaints that increased at the highest rate between 2007 and 2009 involves debt collectors failing to properly identify themselves on phone calls or written correspondence. Dubbed a “mini-Miranda” violation, failure to identify accounted for more than 21,000 complaints in 2009, up a staggering 1,612.5 percent from just 1,200 in 2007. While mini-Miranda may still be violation of FDCPA, it’s certainly a technical violation. But rather than investigate the actual harm done to consumers, most regulators, critics, and cranks choose to zero in on the percentage change rather than its real effects.
As a practical extension of insideARM.com’s mission to shift the public conversation about the ARM industry, The Complaints Issue will explore the subject of debt collection complaints beyond the standard headlines and conventional wisdom. It will approach the topic from a wide range of insightful perspectives across the ARM industry.
The Big Issues format also speaks to insideARM.com’s dedication to bring the most credible news and information to the credit and debt collection industry. And The Complaints Issue is another key ingredient in Kaulkin Media’s effort to lay out its goals in public.
“Almost any college student with a laptop, internet connection, and a rudimentary understanding of Google alerts could profess to run a collection industry news site/clipping service,” said Klozotsky. “insideARM.com’s standards are higher, and our experienced team works hard to produce intelligent, creative, and credibly sourced information vital to ARM business owners and front line employees alike.” Klozotsky continued, “The Complaints Issue aims to be an innovative departure from anything currently being published in the ARM industry.”
insideARM.com’s loyal readers will still get the best and most timely news on a daily basis through The ARM Insider email newsletter. But now there will be more substance on the topic of complaints.
For more information about The Complaints Issue visit http://www.insidearm.com/thecomplaintsissue/.
To complain about insideARM.com please contact Michael Klozotsky, Managing Editor.
2010-09-02T07:53:23-07:00
MINNEAPOLIS -- The International Association of Commercial Collectors, Inc. (IACC) Board of Directors is pleased to announce the 10th anniversary of its IACC Agency Certification Program. Offering members another step in quality assurance, obtaining this objective, third-party designation demonstrates an agency’s commitment to compliance and the highest standard of operations.
In August 2000, after three years of discussion with members and careful development, the IACC Board of Directors introduced the program, offering IACC members the chance to demonstrate their devotion to quality collection services.
“Far from being a simple marketing tool, a designation in name only, certification offers creditors substantive evidence of an agency's compliance with the highest standards in the industry," said Louis Figueroa, president of Credit Decisions International, Inc. in Elk Grove Village, Ill., IACC member and one of the first agencies to be certified through the program.
While meeting the membership requirements for IACC indicates that an agency is self-committed to quality, taking the additional step of attaining IACC certification indicates that a third-party has reviewed the agency’s operations and that the agency meets or exceeds the program’s standard operational guidelines.
Another important aspect of the IACC Agency Certification Program is that it is ongoing. Members must provide documentation on an annual basis supporting the program’s various requirements to maintain their certified status.
“There was value from both the standpoint of marketing and internal operations. It was a no brainer for us, we knew the value was there and realized that value as soon as we could,” said Tom Haag, president of State Collection Service, Inc. in Madison, Wis., IACC member and also one of the first to receive the certification.
In celebration of this 10-year mark, IACC would like to recognize all of the currently certified agencies who have worked hard to reach and maintain this designation. Congratulations to the following:
The Bessenbacher Co.
Kansas City, Mo.
www.bessenbacher.com
Cedar Financial
Calabasas, Calif.
www.cedarfinancial.com
Commercial Collection Corp. of NY
Tonawanda, N.Y.
http://www.commercialcollection.com
Credit Decisions International Ltd.
Elk Grove Village, Ill.
www.creditdecisions.com
Johnson, Morgan & White
Boca Raton, Fla.
www.jmandw.com
Joseph, Mann & Creed
Shaker Heights, Ohio
www.jmcbiz.com
McCarthy, Burgess & Wolff
Cleveland
www.mbandw.com
Priority Credit Recovery Inc.
Edmonton, AB, Canada
www.prioritycredit.ca
PRO Consulting Services, Inc.
Houston
www.proconsrv.com
Randall & Richards, Inc.
Tucson, Ariz.
www.rrcollections.com
Ross, Stuart & Dawson, Inc.
Auburn Hills, Mich.
www.rsdcollects.com
State Collection Service, Inc.
Madison, Wisc.
www.statecollectionservice.com
Windham Professionals, Inc.
Salem, N.H.
www.windhampros.com
To find how your agency can work toward this designation, e-mail iacc@commercialcollector.com or call +1(952) 925-0760
2010-09-02T07:53:23-07:00
Link Financial Group (“Link”), the leading European receivables management company, is today pleased to announce the appointment of Marco Angheben as Project Director in its expanding advisory team.
Marco has 10 years’ experience in the financial and regulatory world with a specific focus on structured finance. He previously was Director at the Association for Financial Markets in Europe in the European Securitisation Forum division dealing with central banks, security regulators and policy makers from across Europe. He has been at the forefront of various industry transparency initiatives creating reporting standards and increasing data availability. He has also been actively engaged in a number of expert groups working towards improving consistency for structured finance transactions and a speaker at many industry events and workshops.
Marco will initially be working on the ABS loan level data project to assist the European Central Bank (ECB) in developing a data handling infrastructure and delivering detailed loan level reporting templates across asset classes. These are some of the initiatives that are aimed at restoring confidence in the European financial markets by providing market participants with greater transparency which in turn will improve their overall risk controls.
Philippe Paillart, Chairman of Link Financial Group, commented, “We are seeing increasing demand for the services of our advisory division from clients in areas ranging from our core business in NPLs right across the wider consumer and commercial loan markets. Marco provides a huge boost to the expertise in our practice advising governments and regulatory agencies in the UK and the other major EU economies.”
Paul Burdell, CEO of Link, added: “Marco has a wealth of experience in dealing with market practice, legal and regulatory matters in structured finance, and I am very pleased to be working alongside him. Link will benefit from the additional complementary skills and knowledge he will bring on both operational and business development fronts, particularly in the German, Irish, Italian and Spanish markets where Link is currently operating.”
Marco commented on his appointment: “I am very pleased to be joining Link and working with Paul, particularly in assisting the ECB on this fundamentally important and groundbreaking new project.”
Link Financial is a leading European purchaser and servicer of performing and non-performing receivables. Link partners with most of Europe's major lenders, manages a portfolio exceeding €5 billion and employs over 500 people in contact centres in the UK and across Continental Europe.
Formed in 1998, we are one of the founding members of our industry and have remained constantly at the forefront of innovation in the markets we serve. Our proprietary operational platform allows us to service a range of asset types from within and outside the financial services industry.
2010-09-02T07:53:22-07:00
A Federal Magistrate Judge in Texas said this week that a plaintiff suing a collection agency for FDCPA violations filed the case in bad faith and that not only should his case be dismissed, but he should be found liable for the attorney’s fees accrued by the debt collection agency over the course of its defense.
Paul D. Stickney, magistrate judge in the U.S. District Court for the Northern District of Texas, wrote in his findings, conclusions and recommendations to the District Court that Craig Cunningham’s case against The CMI Group, based in Carrollton, Texas, had “no genuine issues of material fact” and should be dismissed. He further recommended a finding that Cunningham filed the action in bad faith and for purposes of harassment and that CMI should be awarded reasonable attorney’s fees.
Cunningham sued CMI in August 2009 alleging that in the course of attempting to collect a debt originating with Time Warner, the ARM firm had violated the Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act. Specifically, Cunningham claimed CMI had made false and misleading statements, threatened to take an action that cannot legally be taken, failed to cease communication after receiving notice, failed to validate debt upon request, and contacted him at an inconvenient time and place.
Using frank and direct language, Judge Stickney shot down each of Cunningham’s claims.
Stickney’s recommendations, filed on Monday, will be sent to a District Court Judge for final approval.
“We’re obviously very pleased with the way the case has gone so far,” Thomas Stockton, Chairman and CEO of CMI, told insideARM.com.
Cunningham has made a name for himself in recent years as a consumer that “turns the tables” on debt collection agencies by aggressively filing suit for FDCPA claims, and teaching others how to follow his lead. He has written numerous articles on the Internet guiding debtors through the steps they should take to sue collectors, and In January he was favorably spotlighted in a lengthy feature in the Dallas Observer which called him “a radical enemy of the banking system.” His case against CMI was discussed in the article; Cunningham claimed he was going after the company for $200,000.
Stickney noted Cunningham’s writings in his recommendations. When discussing whether Cunningham acted in bad faith filing the suit, Stickney wrote, “Plaintiff offers himself as an ‘angry and litigious consumer’ and an expert in debt collection. Plaintiff also authors articles on how to sue debt collection companies for profit.”
Debt collection agencies are often faced with a difficult choice when sued on FDCPA claims. Defending a case is often far more expensive than settling up front, a fact that consumer attorneys and pro se litigants know all too well. But there is a growing movement in the ARM industry for companies to defend cases that they see as frivolous.
“I hope this case further exposes the cottage industry of suing debt collection firms for profit,” said Mike Ginsberg, President and CEO of ARM advisory firm Kaulkin Ginsberg, a sister company of insideARM.com. “Some tactics they use are deplorable, and everyone should know about it.”
CMI noted that in their case, Cunningham deployed some questionable tactics he preaches.
After the initial round of discovery, Cunningham amended his complaint to include 28 of CMI’s employees, regardless of whether the employees handled his account, according to CMI General Counsel Chris Meier. “Cunningham claimed that each of the named defendants had violated at least one of the laws set forth in his complaint, but it was clear from the articles Cunningham had published that he had ulterior motives—to increase CMI’s legal fees by increasing the workload of its retained counsel, Robbie Malone,” said Meier. Meier noted that Cunningham called Malone 2-3 times each day despite having no new information to discuss.
Stickney noted that the court found the most offense with this behavior. “Most worrisome to the Court, Plaintiff took actions in bad faith in attempt to multiply his claims. Plaintiff repeatedly called Defendants in an attempt to multiply his claims under the FDCPA, asking questions in hope that he could construe the answer as a false misrepresentation,” Stickney wrote.
According to CMI, the opinion -- which will likely be published if accepted by the District Court judge -- contains very favorable case law. First, the magistrate states that a collection agency does not “threaten” a consumer with credit reporting if it is merely responding to a direct inquiry. Second, the magistrate addresses Cunningham’s allegations that CMI failed to provide verification of the debt by stating, “While the FDCPA does give debtors an opportunity to dispute the validity of a debt, it does not give a ‘debtor’s veto’ that allows debtors to cease all collection efforts by rejecting a debt collector’s verification.” Third, the magistrate held that 15 U.S.C. §1692c’s prohibition on calls at an inconvenient time or place did not apply to calls on Cunningham’s cell phones merely because he deemed them “inconvenient.” Fourth, and perhaps most importantly according to CMI, the magistrate held on the TCPA matter that (a) prior express consent is imputed to a debt collector if it is previously given to a creditor and (b) any revocation of such consent must be done in writing, not verbally as attempted by Cunningham.
2010-09-02T07:53:22-07:00
The Federal Trade Commission announced Friday that it has issued its annual report on the Fair Debt Collection Practices Act (FDCPA) to Congress.
At a time when many consumers are facing debt problems, the Federal Trade Commission has issued its annual report detailing the steps the agency has taken to protect consumers from unfair, deceptive, and abusive debt collection practices and educate the public on the subject.
The 32nd Annual Report to Congress on the Fair Debt Collection Practices Act presents, for 2009, an overview of the types of consumer complaints received by the FTC, descriptions of the agency’s debt-collection law enforcement actions, and a summary of its consumer and industry education efforts and research and policy initiatives. The FDCPA prohibits deceptive, unfair, and abusive practices by third-party debt collectors.
The FDCPA requires the FTC to submit annual reports to Congress.
Download the complete report at http://ftc.gov/os/2010/04/P104802fdcpa2010annrpt.pdf.
2010-09-01T01:14:18-07:00
In 2009, consumer complaints to the Federal Trade Commission about third-party collectors increased in absolute terms, but decreased as a percentage of overall consumer complaints filed with the agency, the FTC said in its annual report to Congress.
The FTC received 88,190 Fair Debt Collection Practices Act (FDCPA) complaints about third-party debt collectors in 2009, representing 16.8 percent of all consumer complaints. In 2008, the FTC received 78,925 third-party debt collector complaints, representing 19 percent of all consumer complaints.
ACA International, the debt collection industry’s largest trade group, said that the FTC’s methodology for analysis paints an incomplete and inaccurate portrayal of consumer complaints against the third-party collection industry.
“We agree with the FTC about the importance of consumer protection from debt collectors who engage in deceptive, unfair or abusive collection practices,” said Rozanne Andersen, ACA International CEO. “But, respectfully, by counting solely the number of consumer complaints without verification of whether they were actually illegal or a violation of the FDCPA, or whether the complaints were resolved, only tells a small part of the real story.”
In the report, the FTC admitted that the numbers tell only a part of the story.
“The FTC recognizes that third party collectors contact millions of consumers each year,” the report said. “The number of consumer complaints the FTC receives about these collectors is therefore only a small percentage of the overall number of consumers contacted by collectors). Nevertheless, the FTC receives more complaints about the debt collection industry than about any other specific industry.”
ACA said that it is working diligently to reduce the number of consumer complaints, adding that the Better Business Bureau’s annual report on complaint resolution released in early March 2010, showed that the collection industry resolved 85 percent of the complaints it had received in 2009, compared to the average of 73.8 percent among all industries in the U.S. (“Credit and Collection Industry Complaint Resolution Exceeds National Average,” March 23)
“Effective complaint resolution helps consumers find answers to their questions and reduces the likelihood and expense of adjudication through the legal process,” Andersen said.
Since 2002, the credit and collection industry has resolved an average of 82.5 percent of the complaints filed with the BBB, exceeding by 11.5 percent the average of complaint resolution by all industries. From 2002-2009, all other industries resolved on average 71.45 percent of the complaints received.
“We are proud of our rate for complaint resolution, but we are pushing ourselves to do better," said Andersen. "That’s why ACA is resolved to continue working with the FTC, state attorneys general, regulators and others to better assess consumer complaints and ensure that, as an industry, we better understand and diligently address them."
If looking strictly at percentage terms, the industry is improving, according to FTC figures.
The FTC report added that in 2009, the number of complaints the FTC received about creditors’ in-house collectors increased in absolute terms, but decreased slightly as a percentage of total complaints. In 2009, the FTC received 32,076 complaints about in-house collectors, representing 6.1 percent of all complaints the FTC received. In 2008, the FTC received 26,652 complaints about in-house collectors, representing 6.4 percent of all complaints received.
Combined, complaints about third-party and in-house collectors totaled 119,364, representing 22.8 percent of all complaints received, compared to 104,766 complaints in 2008, which represented 25.2 percent of all complaints.
The FTC broke the complaints into five major categories, with tabulations on each (complaints can fall into more than one category, so they can be counted more than once):
- Harassing the alleged debtor or others: In 2009, 46.5 percent of complaints fell into this category, making it the most frequently cited FDCPA violation in consumer complaints, as it was the year before.
- Demanding larger payment than is permitted by law: A total of 31.1 percent of the complaints fell into this category
- Threatening dire consequences if the consumer fails to pay: A little more than one-fifth (20.9 percent) of complaints cited this part of the law.
- Impermissible calls to the consumer’s place of employment: The percentage of complaints in this area jumped to 13.6 percent, compared to 10.3 percent a year earlier.
- Revealing alleged debt to third parties: Violation of this part of the law was cited in 12.2 percent of complaints.
FTC Enforcement Actions Against Collection Agencies
The FTC currently is conducting a number of non-public investigations of debt collectors to determine whether they have violated FDCPA or the FTC Act, the report said. The FTC has also filed or settled four public law enforcement actions in the past year: Two new law enforcement actions alleging FDCPA and Section 5 violations against companies collecting debts, and settlements in two previously filed cases.
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In June 2009, the FTC settled an action against Oxford Collection Agency, Inc., its officers, and an attorney who acted as its agent, for collection practices allegedly in violation of the FTC Act and the FDCPA (“
Collection Agency Settles with FTC for $225,000,” July 6, 2009).
The FTC’s complaint alleged that the defendants falsely threatened to garnish consumers’ wages, bring lawsuits against them, or have them arrested. It also charged that the defendants used illegal and abusive collection methods such as calling consumers before 8 a.m. or after 9 p.m.; calling their workplace; telling employers, co-workers, relatives, and neighbors about the consumers’ debts; continuing to call after receiving consumers’ written demands to stop; calling consumers repeatedly throughout the day; calling back immediately after the consumer hung up; and using profane or other abusive language.
Separate FTC settlements, one with Oxford and its officers, and the other with the attorney and his law firm, each imposed a $1.06 million civil penalty, which was partially or wholly suspended based on inability to pay. Both settlements enjoin the defendants from violating the FDCPA, and from making misrepresentations in connection with the collection of a debt.
In September 2009, the FTC concluded its case against Academy Collection Service, Inc., by settling with the two remaining corporate officer defendants, Albert Bastian and Edward Hurt III, who operated Academy’s Las Vegas collection center (“Debt Collection Supervisors Settle FTC Charges,” Jan. 8).
The complaint alleged that the individual defendants “formulated, directed, participated in, controlled, or had the authority to control” the actions of Academy’s collectors, which included misleading, threatening, and harassing consumers; depositing postdated checks early; falsely threatening or implying that the company would garnish consumers’ wages, seize or attach their property, or initiate lawsuits against the consumers if they failed to pay; making unfair and unauthorized withdrawals from consumers’ bank accounts; communicating impermissibly with third parties about consumers’ alleged debts; and engaging in harassing or abusive behavior, such as threatening the use of physical violence, using obscene or profane language, and repeatedly or continuously causing the telephone to ring.
The settlement imposes civil money judgments against Bastian and Hurt of $375,000 and $300,000, respectively, which were partially suspended based on their inability to pay. The consent decree enjoins them from violating the FDCPA and from, in connection with debt collection, making withdrawals from consumers’ bank accounts without express informed consent and from making misrepresentations.
In October 2009, the FTC and the State of Nevada settled an action filed in November 2008 against an international Internet payday lending operation that used unfair and deceptive debt collection tactics. The defendants, ten related Internet payday lenders (including Cash Today) and their principals, operated from the United Kingdom and targeted consumers in the United States (“FTC Slaps $1 million Fine on Internet Lender Over Collection and Loan Practices,” Sept. 22, 2009).
The FTC charged them with, among other things, violating the FTC Act by: falsely threatening consumers with arrest or imprisonment; falsely claiming that consumers were legally obligated to pay the debts when they were not; making false threats to take legal action that they could not take; repeatedly calling consumers at work; using abusive and profane language; and disclosing consumers’ purported debts to third parties.
Under the terms of the settlement, the defendants had to pay $970,125 in consumer redress for distribution by the FTC and $29,875 to the State of Nevada. They are enjoined from, in connection with debt collection, making misrepresentations or engaging in unfair practices in violation of the FTC Act.
In February 2010, the FTC settled an action against Credit Bureau Collection Services and two of its officers to resolve allegations that the defendants violated the law in the course of collecting debts from consumers (“Collection Agency Settles FTC Credit Reporting Charges for $1 million,” March 4). Among other things, the complaint alleged that the defendants violated the FDCPA by misrepresenting both to consumers and to consumer reporting agencies (“CRAs”) that consumers owed the debts and by failing to inform the CRAs that consumers disputed those debts.
The complaint also alleged that the defendants violated the FTC Act by misrepresenting that consumers owed debts or by failing to have a reasonable basis for such representations.
The consent decree filed requires the defendants to pay a $1.09 million civil penalty. Among other things, it also prohibits violations of the FDCPA, and requires the defendants to have a reasonable basis for representations that a consumer owes a debt, and requires them to conduct a reasonable investigation when the truth of those representations is cast in doubt.
2010-09-01T01:14:18-07:00
Bradley Rice, president of collection agency Central Credit Control, is the winner of insideARM.com’s “What Summer Looks Like to Me” photo contest. Rice’s photo was neck-and-neck with B. Majewski’s entry for most of the voting, but he pulled away at the very end to capture 27.4% of the vote, with second place getting 21.1%.
Voting was very spread out among the entrants, and with nearly 400 votes in the contest, every one counted. Thanks to all who voted!
Rice has worked in the debt collection industry for 17 years. His firm, Central Credit Control, has been in business since 1987 and is a third party contingency agency that concentrates on recovery work in Canada. Rice is also currently serving as President of the Ontario Society of Collection Agencies.
As for the winning shot, Rice said the picture was taken after a hot day on the soccer field. He was snapping pictures of his older son practicing, when his younger son picked up the hose and decided to have some fun.
Vengeance is a dish best served wet, as we all know.
Thanks to his boys, Rice will receive a $50 gift card to Amazon.com and the permanent adoration of the entire ARM industry. Congratulations, Bradley!
2010-09-01T08:40:24-07:00
Buyers are out in force, scouring the ARM industry looking for collection platforms and add-ons. If you are like most debt collection agency owners, you probably field multiple calls a week or receive “We Have a Buyer” letters from private equity firms, investors, M&A advisors (folks like me), business brokers, other collection agencies and India-based call centers or BPO companies. I would be surprised if you didn’t!
I would love to say that all agency owners will call me or our firm before responding to an inquiry but, believe it or not, that doesn’t always happen!
Here are a few tips before spending too much time with an unsolicited buyer prospect:
- Utilize Google – This sounds obvious but spend 5-10 minutes and type in the buyer or the principal’s name into Google and see what comes up. You may be surprised what you learn. An agency owner called me last week after receiving an offer from a buyer and then did an Internet search at my suggestion and found out that the buyer had substantial FDCPA and State AG actions against him and also determined that one of the principals had gone bankrupt. If the owner had done this search before engaging in discussions, he could have saved himself a lot of time and energy.
- Understand Financial Capability – Find out up front if the buyer has the financial resources to complete a transaction. Determine whether they will need to raise capital or have the cash on hand to complete a deal with you. It is okay to ask for a statement of net worth or a commitment letter from the buyer’s bank or capital provider during your discussions. We sometimes hear horror stories where a seller will go down the path with a buyer only to find out later on that they can’t fund the deal. This is a nightmare that can be avoided very early in the sale process by asking the right questions up front.
- Valuation Approach - Confirm the buyer’s approach to value as early as possible. A buyer will typically value your business on a multiple of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization normalized for any excess or one-time add-backs) if you are a “going concern.” However, if you know that you are looking for a buyer that will go “beyond the numbers” to calculate enterprise value, no need to waste much time talking if you know they will come up short at the end of the day.
- What are the Buyer’s Intentions? – Try to figure out what the buyer wants to do with your collection agency before getting too far in your discussions. Do they want to use your agency as a platform investment or will you be add-on to another agency? Do they want to move business near-shore/off-shore? What will happen with management and staff? If they are going to consolidate the business, change the name, or down-size staff make that determination early in your discussions so you know what you are walking into.
Be selective with who you give your time and confidential information to and, I cannot emphasize enough, do your own due diligence upfront. I assure you that the buyer will shake you from your ankles upside down before funding and closing a transaction. You have the right to do the same.
Have you ever found out something about a buyer and had to stop discussions and kill a deal? How do you qualify a buyer prospect? I look forward to your comments. Feel free to call/email me.
Michael D. Lamm advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly at 240-499-3808 or by email. You can also read his blogs, follow him on Twitter, or network with Michael from his social media page on insideARM.com.
2010-09-01T07:20:54-07:00
Bismarck, ND -- Over the past few years the number of FDCPA (Fair Debt Collection Practices Act) and FCRA (Fair Credit Reporting Act) law suits filed against collection agencies and collection firms have risen significantly, as a result the need for experienced attorneys that focus their practice on creditors' rights and FDCPA defense is evident now more than ever. The world of collections is becoming more complex with court rulings constantly influencing interpretations of the law so utilizing an attorney that is well versed and up to date on these changes is crucial.
The National List of Attorneys, an organization that has provided quality legal representation to the credit and collection industry nationwide since 1900, has established an online directory of experienced creditors' rights and FDCPA defense attorneys nationwide, CreditorsRightsLawFirms.com.
CreditorsRightsLawFirms.com is an index of attorneys that are experienced and want to put that knowledge to work for your company. The attorneys you will find here concentrate in creditors’ rights, commercial litigation, FDCPA Defense, FCRA defense, Truth in Lending Act, TCPA and/or class action defense. They can represent your company in bankruptcy proceedings and provide compliance counseling in collections matters.
For more information please contact Rose Heeb at (800) 227-1675 ext 108 or rheeb@nationallist.com.
About The National List
The National List of Attorneys began serving the credit and collections industry in 1900. Through the years, The National List of Attorneys has pioneered significant advances in referrals and communication. Today The National List of Attorneys offers the most advanced debt collection attorney referral service while maintaining the highest levels of friendly, personalized service. Our goal is to assist companies in finding quality legal representation for their collection, subrogation and bankruptcy matters, provide professional service, and protect the interest of our clients. Our professionalism and attention to detail differentiates The National List of Attorneys from other referral services. For more information please visit www.nationallist.com or call (800) 227-1675
2010-09-01T07:20:54-07:00
Debt Purchasing
Kaulkin Media, through its flagship Web publication insideARM.com, announces the launch of a special editorial series on consumer complaints against accounts receivable management firms.
The Complaints Issue will be the first in a series of topic-focused content offerings dubbed “The Big Issues.” The series will feature articles, opinion pieces, infographics, videos, training & educational materials, and other types of informative content. Over the coming weeks, insideARM.com readers will learn more than they ever thought they could know about debt collection complaints.
“Our original reporting and coverage of ARM industry news changes every day and we recognize the importance of breaking news content to our audience,” said Michael Klozotsky, Managing Editor of insideARM.com. “But we also perceived a lack of any in-depth, continuing content being produced on topics of real consequence to the credit and debt collection industry.”
Complaints against ARM firms and professionals are the stick pins used to skewer the debt collection industry like some exotic butterfly. Constantly referenced in the mainstream media, complaints against collectors have steadily increased over the past few years, according to data released annually by the Federal Trade Commission. But, as always, there is much more to the story, and all one has to do is dig a little deeper to reveal some misconstrued facts.
For example, the category of complaints that increased at the highest rate between 2007 and 2009 involves debt collectors failing to properly identify themselves on phone calls or written correspondence. Dubbed a “mini-Miranda” violation, failure to identify accounted for more than 21,000 complaints in 2009, up a staggering 1,612.5 percent from just 1,200 in 2007. While mini-Miranda may still be violation of FDCPA, it’s certainly a technical violation. But rather than investigate the actual harm done to consumers, most regulators, critics, and cranks choose to zero in on the percentage change rather than its real effects.
As a practical extension of insideARM.com’s mission to shift the public conversation about the ARM industry, The Complaints Issue will explore the subject of debt collection complaints beyond the standard headlines and conventional wisdom. It will approach the topic from a wide range of insightful perspectives across the ARM industry.
The Big Issues format also speaks to insideARM.com’s dedication to bring the most credible news and information to the credit and debt collection industry. And The Complaints Issue is another key ingredient in Kaulkin Media’s effort to lay out its goals in public.
“Almost any college student with a laptop, internet connection, and a rudimentary understanding of Google alerts could profess to run a collection industry news site/clipping service,” said Klozotsky. “insideARM.com’s standards are higher, and our experienced team works hard to produce intelligent, creative, and credibly sourced information vital to ARM business owners and front line employees alike.” Klozotsky continued, “The Complaints Issue aims to be an innovative departure from anything currently being published in the ARM industry.”
insideARM.com’s loyal readers will still get the best and most timely news on a daily basis through The ARM Insider email newsletter. But now there will be more substance on the topic of complaints.
For more information about The Complaints Issue visit http://www.insidearm.com/thecomplaintsissue/.
To complain about insideARM.com please contact Michael Klozotsky, Managing Editor.
2010-09-02T07:53:23-07:00
Link Financial Group (“Link”), the leading European receivables management company, is today pleased to announce the appointment of Marco Angheben as Project Director in its expanding advisory team.
Marco has 10 years’ experience in the financial and regulatory world with a specific focus on structured finance. He previously was Director at the Association for Financial Markets in Europe in the European Securitisation Forum division dealing with central banks, security regulators and policy makers from across Europe. He has been at the forefront of various industry transparency initiatives creating reporting standards and increasing data availability. He has also been actively engaged in a number of expert groups working towards improving consistency for structured finance transactions and a speaker at many industry events and workshops.
Marco will initially be working on the ABS loan level data project to assist the European Central Bank (ECB) in developing a data handling infrastructure and delivering detailed loan level reporting templates across asset classes. These are some of the initiatives that are aimed at restoring confidence in the European financial markets by providing market participants with greater transparency which in turn will improve their overall risk controls.
Philippe Paillart, Chairman of Link Financial Group, commented, “We are seeing increasing demand for the services of our advisory division from clients in areas ranging from our core business in NPLs right across the wider consumer and commercial loan markets. Marco provides a huge boost to the expertise in our practice advising governments and regulatory agencies in the UK and the other major EU economies.”
Paul Burdell, CEO of Link, added: “Marco has a wealth of experience in dealing with market practice, legal and regulatory matters in structured finance, and I am very pleased to be working alongside him. Link will benefit from the additional complementary skills and knowledge he will bring on both operational and business development fronts, particularly in the German, Irish, Italian and Spanish markets where Link is currently operating.”
Marco commented on his appointment: “I am very pleased to be joining Link and working with Paul, particularly in assisting the ECB on this fundamentally important and groundbreaking new project.”
Link Financial is a leading European purchaser and servicer of performing and non-performing receivables. Link partners with most of Europe's major lenders, manages a portfolio exceeding €5 billion and employs over 500 people in contact centres in the UK and across Continental Europe.
Formed in 1998, we are one of the founding members of our industry and have remained constantly at the forefront of innovation in the markets we serve. Our proprietary operational platform allows us to service a range of asset types from within and outside the financial services industry.
2010-09-02T07:53:22-07:00
The Federal Trade Commission announced Friday that it has issued its annual report on the Fair Debt Collection Practices Act (FDCPA) to Congress.
At a time when many consumers are facing debt problems, the Federal Trade Commission has issued its annual report detailing the steps the agency has taken to protect consumers from unfair, deceptive, and abusive debt collection practices and educate the public on the subject.
The 32nd Annual Report to Congress on the Fair Debt Collection Practices Act presents, for 2009, an overview of the types of consumer complaints received by the FTC, descriptions of the agency’s debt-collection law enforcement actions, and a summary of its consumer and industry education efforts and research and policy initiatives. The FDCPA prohibits deceptive, unfair, and abusive practices by third-party debt collectors.
The FDCPA requires the FTC to submit annual reports to Congress.
Download the complete report at http://ftc.gov/os/2010/04/P104802fdcpa2010annrpt.pdf.
2010-09-01T01:14:18-07:00
In 2009, consumer complaints to the Federal Trade Commission about third-party collectors increased in absolute terms, but decreased as a percentage of overall consumer complaints filed with the agency, the FTC said in its annual report to Congress.
The FTC received 88,190 Fair Debt Collection Practices Act (FDCPA) complaints about third-party debt collectors in 2009, representing 16.8 percent of all consumer complaints. In 2008, the FTC received 78,925 third-party debt collector complaints, representing 19 percent of all consumer complaints.
ACA International, the debt collection industry’s largest trade group, said that the FTC’s methodology for analysis paints an incomplete and inaccurate portrayal of consumer complaints against the third-party collection industry.
“We agree with the FTC about the importance of consumer protection from debt collectors who engage in deceptive, unfair or abusive collection practices,” said Rozanne Andersen, ACA International CEO. “But, respectfully, by counting solely the number of consumer complaints without verification of whether they were actually illegal or a violation of the FDCPA, or whether the complaints were resolved, only tells a small part of the real story.”
In the report, the FTC admitted that the numbers tell only a part of the story.
“The FTC recognizes that third party collectors contact millions of consumers each year,” the report said. “The number of consumer complaints the FTC receives about these collectors is therefore only a small percentage of the overall number of consumers contacted by collectors). Nevertheless, the FTC receives more complaints about the debt collection industry than about any other specific industry.”
ACA said that it is working diligently to reduce the number of consumer complaints, adding that the Better Business Bureau’s annual report on complaint resolution released in early March 2010, showed that the collection industry resolved 85 percent of the complaints it had received in 2009, compared to the average of 73.8 percent among all industries in the U.S. (“Credit and Collection Industry Complaint Resolution Exceeds National Average,” March 23)
“Effective complaint resolution helps consumers find answers to their questions and reduces the likelihood and expense of adjudication through the legal process,” Andersen said.
Since 2002, the credit and collection industry has resolved an average of 82.5 percent of the complaints filed with the BBB, exceeding by 11.5 percent the average of complaint resolution by all industries. From 2002-2009, all other industries resolved on average 71.45 percent of the complaints received.
“We are proud of our rate for complaint resolution, but we are pushing ourselves to do better," said Andersen. "That’s why ACA is resolved to continue working with the FTC, state attorneys general, regulators and others to better assess consumer complaints and ensure that, as an industry, we better understand and diligently address them."
If looking strictly at percentage terms, the industry is improving, according to FTC figures.
The FTC report added that in 2009, the number of complaints the FTC received about creditors’ in-house collectors increased in absolute terms, but decreased slightly as a percentage of total complaints. In 2009, the FTC received 32,076 complaints about in-house collectors, representing 6.1 percent of all complaints the FTC received. In 2008, the FTC received 26,652 complaints about in-house collectors, representing 6.4 percent of all complaints received.
Combined, complaints about third-party and in-house collectors totaled 119,364, representing 22.8 percent of all complaints received, compared to 104,766 complaints in 2008, which represented 25.2 percent of all complaints.
The FTC broke the complaints into five major categories, with tabulations on each (complaints can fall into more than one category, so they can be counted more than once):
- Harassing the alleged debtor or others: In 2009, 46.5 percent of complaints fell into this category, making it the most frequently cited FDCPA violation in consumer complaints, as it was the year before.
- Demanding larger payment than is permitted by law: A total of 31.1 percent of the complaints fell into this category
- Threatening dire consequences if the consumer fails to pay: A little more than one-fifth (20.9 percent) of complaints cited this part of the law.
- Impermissible calls to the consumer’s place of employment: The percentage of complaints in this area jumped to 13.6 percent, compared to 10.3 percent a year earlier.
- Revealing alleged debt to third parties: Violation of this part of the law was cited in 12.2 percent of complaints.
FTC Enforcement Actions Against Collection Agencies
The FTC currently is conducting a number of non-public investigations of debt collectors to determine whether they have violated FDCPA or the FTC Act, the report said. The FTC has also filed or settled four public law enforcement actions in the past year: Two new law enforcement actions alleging FDCPA and Section 5 violations against companies collecting debts, and settlements in two previously filed cases.
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In June 2009, the FTC settled an action against Oxford Collection Agency, Inc., its officers, and an attorney who acted as its agent, for collection practices allegedly in violation of the FTC Act and the FDCPA (“
Collection Agency Settles with FTC for $225,000,” July 6, 2009).
The FTC’s complaint alleged that the defendants falsely threatened to garnish consumers’ wages, bring lawsuits against them, or have them arrested. It also charged that the defendants used illegal and abusive collection methods such as calling consumers before 8 a.m. or after 9 p.m.; calling their workplace; telling employers, co-workers, relatives, and neighbors about the consumers’ debts; continuing to call after receiving consumers’ written demands to stop; calling consumers repeatedly throughout the day; calling back immediately after the consumer hung up; and using profane or other abusive language.
Separate FTC settlements, one with Oxford and its officers, and the other with the attorney and his law firm, each imposed a $1.06 million civil penalty, which was partially or wholly suspended based on inability to pay. Both settlements enjoin the defendants from violating the FDCPA, and from making misrepresentations in connection with the collection of a debt.
In September 2009, the FTC concluded its case against Academy Collection Service, Inc., by settling with the two remaining corporate officer defendants, Albert Bastian and Edward Hurt III, who operated Academy’s Las Vegas collection center (“Debt Collection Supervisors Settle FTC Charges,” Jan. 8).
The complaint alleged that the individual defendants “formulated, directed, participated in, controlled, or had the authority to control” the actions of Academy’s collectors, which included misleading, threatening, and harassing consumers; depositing postdated checks early; falsely threatening or implying that the company would garnish consumers’ wages, seize or attach their property, or initiate lawsuits against the consumers if they failed to pay; making unfair and unauthorized withdrawals from consumers’ bank accounts; communicating impermissibly with third parties about consumers’ alleged debts; and engaging in harassing or abusive behavior, such as threatening the use of physical violence, using obscene or profane language, and repeatedly or continuously causing the telephone to ring.
The settlement imposes civil money judgments against Bastian and Hurt of $375,000 and $300,000, respectively, which were partially suspended based on their inability to pay. The consent decree enjoins them from violating the FDCPA and from, in connection with debt collection, making withdrawals from consumers’ bank accounts without express informed consent and from making misrepresentations.
In October 2009, the FTC and the State of Nevada settled an action filed in November 2008 against an international Internet payday lending operation that used unfair and deceptive debt collection tactics. The defendants, ten related Internet payday lenders (including Cash Today) and their principals, operated from the United Kingdom and targeted consumers in the United States (“FTC Slaps $1 million Fine on Internet Lender Over Collection and Loan Practices,” Sept. 22, 2009).
The FTC charged them with, among other things, violating the FTC Act by: falsely threatening consumers with arrest or imprisonment; falsely claiming that consumers were legally obligated to pay the debts when they were not; making false threats to take legal action that they could not take; repeatedly calling consumers at work; using abusive and profane language; and disclosing consumers’ purported debts to third parties.
Under the terms of the settlement, the defendants had to pay $970,125 in consumer redress for distribution by the FTC and $29,875 to the State of Nevada. They are enjoined from, in connection with debt collection, making misrepresentations or engaging in unfair practices in violation of the FTC Act.
In February 2010, the FTC settled an action against Credit Bureau Collection Services and two of its officers to resolve allegations that the defendants violated the law in the course of collecting debts from consumers (“Collection Agency Settles FTC Credit Reporting Charges for $1 million,” March 4). Among other things, the complaint alleged that the defendants violated the FDCPA by misrepresenting both to consumers and to consumer reporting agencies (“CRAs”) that consumers owed the debts and by failing to inform the CRAs that consumers disputed those debts.
The complaint also alleged that the defendants violated the FTC Act by misrepresenting that consumers owed debts or by failing to have a reasonable basis for such representations.
The consent decree filed requires the defendants to pay a $1.09 million civil penalty. Among other things, it also prohibits violations of the FDCPA, and requires the defendants to have a reasonable basis for representations that a consumer owes a debt, and requires them to conduct a reasonable investigation when the truth of those representations is cast in doubt.
2010-09-01T01:14:18-07:00
Bradley Rice, president of collection agency Central Credit Control, is the winner of insideARM.com’s “What Summer Looks Like to Me” photo contest. Rice’s photo was neck-and-neck with B. Majewski’s entry for most of the voting, but he pulled away at the very end to capture 27.4% of the vote, with second place getting 21.1%.
Voting was very spread out among the entrants, and with nearly 400 votes in the contest, every one counted. Thanks to all who voted!
Rice has worked in the debt collection industry for 17 years. His firm, Central Credit Control, has been in business since 1987 and is a third party contingency agency that concentrates on recovery work in Canada. Rice is also currently serving as President of the Ontario Society of Collection Agencies.
As for the winning shot, Rice said the picture was taken after a hot day on the soccer field. He was snapping pictures of his older son practicing, when his younger son picked up the hose and decided to have some fun.
Vengeance is a dish best served wet, as we all know.
Thanks to his boys, Rice will receive a $50 gift card to Amazon.com and the permanent adoration of the entire ARM industry. Congratulations, Bradley!
2010-09-01T08:40:24-07:00
Buyers are out in force, scouring the ARM industry looking for collection platforms and add-ons. If you are like most debt collection agency owners, you probably field multiple calls a week or receive “We Have a Buyer” letters from private equity firms, investors, M&A advisors (folks like me), business brokers, other collection agencies and India-based call centers or BPO companies. I would be surprised if you didn’t!
I would love to say that all agency owners will call me or our firm before responding to an inquiry but, believe it or not, that doesn’t always happen!
Here are a few tips before spending too much time with an unsolicited buyer prospect:
- Utilize Google – This sounds obvious but spend 5-10 minutes and type in the buyer or the principal’s name into Google and see what comes up. You may be surprised what you learn. An agency owner called me last week after receiving an offer from a buyer and then did an Internet search at my suggestion and found out that the buyer had substantial FDCPA and State AG actions against him and also determined that one of the principals had gone bankrupt. If the owner had done this search before engaging in discussions, he could have saved himself a lot of time and energy.
- Understand Financial Capability – Find out up front if the buyer has the financial resources to complete a transaction. Determine whether they will need to raise capital or have the cash on hand to complete a deal with you. It is okay to ask for a statement of net worth or a commitment letter from the buyer’s bank or capital provider during your discussions. We sometimes hear horror stories where a seller will go down the path with a buyer only to find out later on that they can’t fund the deal. This is a nightmare that can be avoided very early in the sale process by asking the right questions up front.
- Valuation Approach - Confirm the buyer’s approach to value as early as possible. A buyer will typically value your business on a multiple of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization normalized for any excess or one-time add-backs) if you are a “going concern.” However, if you know that you are looking for a buyer that will go “beyond the numbers” to calculate enterprise value, no need to waste much time talking if you know they will come up short at the end of the day.
- What are the Buyer’s Intentions? – Try to figure out what the buyer wants to do with your collection agency before getting too far in your discussions. Do they want to use your agency as a platform investment or will you be add-on to another agency? Do they want to move business near-shore/off-shore? What will happen with management and staff? If they are going to consolidate the business, change the name, or down-size staff make that determination early in your discussions so you know what you are walking into.
Be selective with who you give your time and confidential information to and, I cannot emphasize enough, do your own due diligence upfront. I assure you that the buyer will shake you from your ankles upside down before funding and closing a transaction. You have the right to do the same.
Have you ever found out something about a buyer and had to stop discussions and kill a deal? How do you qualify a buyer prospect? I look forward to your comments. Feel free to call/email me.
Michael D. Lamm advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly at 240-499-3808 or by email. You can also read his blogs, follow him on Twitter, or network with Michael from his social media page on insideARM.com.
2010-09-01T07:20:54-07:00
The state of Maryland announced late Thursday that it has reached a settlement agreement with debt purchasing business units related to West Asset Management (WAM) over debt collection lawsuits the entities filed against consumers in the state.
Maryland’s Commissioner of Financial Regulation, Sarah Bloom Raskin, made the announcement noting that the agreement settled alleged violations of state and federal collection laws related to litigation activities in Maryland State courts. The company will pay an $85,000 civil penalty and has agreed to conform their business practices to ensure that both their litigation-related collection activities, as well as their non-litigation debt collection activities, comply with all applicable state and federal laws.
The announcement released by the state did not detail allegations against the business units named in the lawsuit (Worldwide Asset Management, LLC; Worldwide Asset Purchasing, LLC; and West Asset Purchasing, LLC). But the full settlement agreement alleges that WAM’s debt purchasing sister units were filing debt collection lawsuits in Maryland without being licensed as collection agencies with the state even though they were acting on their own behalf after purchasing the accounts.
West Asset Management itself is licensed as a debt collection agency in Maryland.
The Commissioner also alleged unspecified violations of the Fair Debt Collection Practices Act (FDCPA) and the Maryland Consumer Debt Collection Act.
The companies admitted no wrongdoing in the agreement and further denied all allegations spelled out in the document. But they agreed to “resolve the alleged violations in lieu of an administrative action being filed, thereby avoiding the costs associated with an administrative hearing and any potential appeals.”
Greg Hogenmiller, WAM’s VP and Deputy General Counsel, noted the company disagreed with the Commissioner’s contention that it, acting on behalf of Maryland's executive branch, had the right to decide if a violation had occurred. “It was our position that it’s the judiciary’s job to decide whether evidence is sufficient or not and they disagreed,” he told insideARM.com. The two sides never reached an agreement on the point, leading to the settlement.
The units noted that they have completely ceased filing debt collection-related legal actions in Maryland courts, and if they ever decides to file lawsuits in the state, they will become fully licensed as collection agencies before doing so.
The agreement will not impact current or pending collection cases in the courts.
At any rate, the debt buying business related to WAM is in the process of being shuttered. In 2009, WAM’s parent company, West Corp., announced that it will no longer support the purchase of charged-off consumer receivables. The company noted in a recent SEC filing that it has not bought a debt portfolio since the first quarter of 2009.
2010-08-27T08:06:07-07:00
Grand Rapids, MI – The following statistics are provided to the ARM industry courtesy of WebRecon LLC.
*** WebRecon LLC has a new web site! Check out our swimming shark at www.webrecon.com ***
FDCPA and Other Consumer Rights Lawsuit Statistics, August 1-15, 2010
There were about 454 lawsuits filed under consumer statutes in the first half of August. Here is an approximate breakdown:
- 433 Fair Debt Collection Practices Act
- 30 Fair Credit Reporting Act
- 10 Telephone Consumer Protection Act
- 15 Truth In Lending Act
- 2 Driver's Privacy Protection Act
- 1 Equal Credit Opportunity Act
- 1 Electronic Fund Transfers Act
- 1 Fair Credit Billing Act
- 3 Home Affordable Modification Program
- 2 Home Ownership And Equity Protection Act
- 9 Real Estate Settlement Procedures Act
- 3 Racketeer Influenced and Corrupt Organizations Act
- 1 State of Alabama Consumer Statutes
- 28 State of California Consumer Statutes
- 4 State of Colorado Consumer Statutes
- 5 State of Connecticut Consumer Statutes
- 18 State of Florida Consumer Statutes
- 3 State of Maryland Consumer Statutes
- 1 State of New York Consumer Statutes
- 2 State of North Carolina Consumer Statutes
- 7 State of Pennsylvania Consumer Statutes
- 2 State of South Carolina Consumer Statutes
- 4 State of Texas Consumer Statutes
- 7 State of West Virginia Consumer Statutes
Summary:
- Of those cases, there were about 469 unique plaintiffs (including multiple plaintiffs in one suit)
- Of those plaintiffs, about 153 had sued under consumer statutes before.
- Combined, those 153 plaintiffs have filed about 850 lawsuits since 2001
- Actions were filed in 100 different US District Court branches.
- About 426 different collection firms and creditors were sued.
The top courts where lawsuits were filed:
- 40 Lawsuits: Illinois Northern District Court - Chicago
- 25 Lawsuits: Pennsylvania Eastern District Court - Philadelphia
- 24 Lawsuits: Minnesota District Court - DMN
- 21 Lawsuits: Florida Southern District Court - Fort Lauderdale
- 21 Lawsuits: Colorado District Court - Denver
- 16 Lawsuits: Connecticut District Court - New Haven
- 14 Lawsuits: New York Southern District Court - Foley Square
- 13 Lawsuits: New York Western District Court - Buffalo
- 12 Lawsuits: Missouri Eastern District Court - St. Louis - Eastern Division
- 12 Lawsuits: New York Eastern District Court - Central Islip
The most active consumer attorneys were:
- Representing 34 Consumers: Jack Dennis Card, Jr
- Representing 17 Consumers: David J. Philipps
- Representing 17 Consumers: Michael S Agruss
- Representing 16 Consumers: Mark L. Vavreck
- Representing 16 Consumers: Sergei Lemberg
- Representing 14 Consumers: Brent F. Vullings
- Representing 10 Consumers: Frank J. Borgese
- Representing 10 Consumers: Todd Michael Friedman
- Representing 10 Consumers: Craig Thor Kimmel
- Representing 9 Consumers: William Franklin Horn
Statistics Year to Date
7169 total lawsuits for 2010, including:
- 6711 FDCPA
- 730 FCRA
- 75 TCPA
- 342 TILA (Truth in Lending Act)
Number of unique Plaintiffs: 6908 (including multiple plaintiffs in one suit)
The most active consumer attorneys of the year:
- Representing 241 Consumers: Sergei Lemberg
- Representing 209 Consumers: Brent F. Vullings
- Representing 171 Consumers: David Michael Larson
- Representing 159 Consumers: Todd Michael Friedman
- Representing 146 Consumers: Donald A. Yarbrough
About WebRecon LLC
Creditors and collection firms use WebRecon’s services to easily segregate predictably litigious consumers from their databases. A significant percentage of consumer litigation is initiated by the same consumers over and over again, and screening them out of the general population can reduce lawsuits by as much as a third.
2010-08-25T07:46:55-07:00
DENVER -- Announcing an exciting strategic partnership from industry veterans Kristin Dougherty of Dougherty Consulting Group, Chris Della Ratta and Frank Woodhouse of Alpha Recovery Corp. The three professionals have 50 years of combined debt buying & collection industry experience.
The recovery platform at Alpha Recovery is distinctive and unsurpassed, built from unique, individual knowledge from the collection floor through senior management at the largest, most successful debt buyer in the country. All had extensive success in credit card collection and purchasing as well as with consumer loans, auto deficiencies, apartment leases, telecom, cable, and payday loans. Alpha Recovery and Dougherty Consulting Group bring this rare industry knowledge and competitive edge to you!
Today more than ever, businesses will benefit from our unique competitive edge, excellent customer service and commitment to high performance from proven leaders.
“After years working with Chris and Frank at Collect America, I have personally experienced their integrity, commitment to clients and believe in the collection platform they are establishing with Alpha Recovery Corp. I know they will bring the extra “edge” clients need for successful collections in today’s market. I think this is an exciting time to become involved with them as a client,” Says Kristin Dougherty who has teamed with Alpha Recovery to get their “edge” out to the debt marketplace and to you.
“Alpha Recovery Corp is very excited to be working with Kristin, she is a tremendous leader within the debt buying and collections industry. We are confident in Kristin and Dougherty Consulting Group as a partner and look forward to creating long term successful relationships that focus on client satisfaction and results,” says Chris Della Ratta.
The principals of Alpha have the track record to consistently outperform the competition collecting purchased portfolios or contingency fee placed debt. The cornerstone of Alpha’s success comes from creating unbeaten collection programs to maximize efficiencies and our personal knowledge of the industry. Alpha’s proven programs, policies and procedures maximize the collectability of the portfolios through good analytics and a real awareness how to make a collection floor perform. Alpha’s programs will create dominance in the marketplace through high liquidation rates over short periods of time compared to traditional industry standards, regardless of the debt type. Traveling different roads to their current positions compliments each others’ abilities; we have created a dynamic, high performing agency offering best in class liquidations and customer service for debt buyers, national banks, and other debt types that are available in the marketplace.
About Kristin Dougherty, Dougherty Consulting Group, Inc.
Kristin has been a driving force in the distressed asset buying industry for several years. Collections & Credit Risk Magazine Featured her as “One of the Top 5 Women to Know in Collections” in 2009. 2010 will mark Kristin’s nineteenth anniversary in the industry. Selling over $10 Billion in purchased inventory in her 9-year tenure at Collect America alone, she has executed deals with hundreds of buyers and sellers and performed speaking engagements at industry events & conferences. Before forming Dougherty Consulting Group (www.doughertyconsultinggroup.com) this year, Kristin was the Senior Vice President of Sales for Collect America, now SquareTwo Financial, as well as their Government Affairs Liaison in Denver Colorado and held several executive positions throughout nine years at Unifund Group in Cincinnati, Ohio. She uses her extensive skills and network to assist new and established companies solve problems, create strategies and develop connections that add value to any business. Her successes with automation and process improvement will help businesses produce new levels of efficiency and success.
About Christopher Della Ratta and Frank Woodhouse, Alpha Recovery Corp.
Christopher “Dell” Della Ratta lead the Operations Department at SquareTwo Financial, formerly Collect America, responsible for over $4 billion in corporate assets and the production of dozens of franchises, law offices and collection agencies. He was instrumental in the expansion of their national collection network by adding new franchises and seeing them through start-up, survival, turnaround and growth modes. Christopher’s 13 years of management experience and industry knowledge provides the tools necessary for understanding client needs, excellent customer service and building new relationships. Frank Woodhouse was most recently the Vice President of Operational Services for SquareTwo Financial, formerly Collect America. Frank was responsible for maintaining and servicing existing client relationships with national banks and debt buyers and the company’s $4 billion dollars of purchased assets. Frank’s management experience began in 1992 overseeing the collection floor that was the beginning of Collect America, Ltd. and SquareTwo Financial as they exist today. Frank was one of three Directors in Operations managing up to 8 franchise offices at a time; training the locations on new plans, troubleshooting day to day issues, and creating new programs, driving performance and communicating goals that helped make the franchise concept successful.
2010-08-24T08:58:55-07:00
Wilmington — Global Debt Registry (GDR) is pleased to announce the hiring of Mark Parsells as Executive Chairman. Mr. Parsells brings more than 20 years of Credit Card and Banking Industry expertise to GDR, having held executive senior management and compliance positions with American Express, First USA, Bank One, and Citigroup. Most recently, Mr. Parsells was Chairman and CEO of Regulatory DataCorp, a leading risk mitigation and compliance firm supporting the financial services industry. Mr. Parsells is widely recognized as one of the industry's leading authorities on consumer data privacy and regulatory compliance.
As Executive Chairman, Mr. Parsells’ responsibilities will include overseeing strategic direction, senior executive client relationships, and GDR’s Fall 2010 migration to its next-generation platform based on Oracle’s JD Edwards EnterpriseOne application suite. GDR is the industry’s first PCI-compliant, Oracle-based accounts receivable (AR)-titling, data integrity, and media management platform. “GDR is the only company that ‘titles’ charged-off debt, giving the debt increased value, and creating an immediate, measurable impact on the bottom line,” said Parsells. “Not only does GDR provide a significant ROI benefit to all participants in the sales and collection process, our services make the debt process fully transparent to regulators, judges, and consumers — everyone wins.”
"As one of the foremost compliance experts in the country, Mark's commitment to GDR is a validation of our account-level titling, data integrity, and turnkey media management technology. He recognizes that GDR delivers the most robust and reliable debt-titling solution in the credit card, banking and debt buying industry," said Greg Ousley, Chief Executive Officer. "More importantly, Mark represents the final step in our corporate reorganization following our December 2009 acquisition by a $5 billion private equity firm. We are the most financially stable company in the industry and we have every confidence in Mark's ability to establish GDR as the gold standard in the emerging AR-Debt Titling Industry."
“Within the Accounts Receivable Industry, there is clear and immediate demand for a clean account-level chain of title and validated account-level data from Issuers, debt buyers, sellers, legal collection firms, regulators, judges, and consumers," said Mark Parsells. “It’s just common sense — one should not and could not buy or sell a house or car without a valid, clean title. Bringing titling to the debt collection industry is the long-awaited chain-of-ownership solution.”
About Mark Parsells
Mr. Parsells has held leadership positions with highly technical financial services businesses including Chairman and CEO of Regulatory DataCorp, a leader in risk and compliance solutions for the financial services industry; Chairman and CEO, Montpelier Ventures, LLC, a management consulting and private equity firm focused on financial services; President and COO of Citibank Online, where he guided the organization from the 17th rated online bank to the #1 online bank in the US in less than 6 months. Also served as the Company’s Head of Global Online Banking Technology across 72 countries; General Manager of the Revenue Services group at Bank One/First USA and first Chief Privacy Officer appointed by the Bank where he developed a detailed process to protect consumer data when dealing with external vendors; Ten years at American Express’ world Headquarters in New York in various management roles in card acquisition, retention, and product development. Launched Amex’s Government Merchant Acceptance business. Concurrently served as the Chief Compliance Officer of the $100B+ Establishment Services Division and was a member of the American Express Worldwide Compliance Council. Mark is a highly experienced board member having sat on wide variety of Public, Private and non-profit boards.
Mr. Parsells is a graduate of Harvard Business School’s General Management Program; he holds an MBA (General Management & Marketing concentrations) from Cornell University (G. Kurt Davidyan Scholar); an MBA (International Finance and Economics concentrations) from Vlerick Leuven-Gent Management School (formerly the Katholieke Universiteit Leuven); and a BA in Political Science from Emory University.
About Global Debt Registry
Global Debt Registry delivers significant ROI benefits to all participants in the Accounts Receivable Industry by providing the nation’s only proven AR titling solution. GDR’s solution includes a comprehensive Account Integrity Management Program, chain of title and customizable turnkey media management solutions. The primary purpose of the registry is to maintain the integrity of traded data (validated debt), maintain accurate ownership (chain of title), and provide automated access for maintaining media integrity and customizable media fulfillment both in the performing and non-performing ARM industry markets. For more information, contact Greg Ousley, CEO Global Debt Registry at 866-660–2341 or visit the website at www.globaldebtregistry.com.
2010-08-24T08:58:54-07:00
I love the summer. Who doesn’t? It is a great time to be with your family and friends and to be outside if it is not 100 degrees and humid, like it has been in the Philadelphia area recently! It is also a good time to reflect on how the year has been going with your debt collection agency, and to figure out your “plan of attack” for the remainder of the year and 2011.
When I write a FOS -- which stands for financial, operational and sales “plan of attack” -- I think of addressing the following questions:
1. Financial – Your budget – how are you performing actual vs. budget through July? Were the assumptions that you made entering 2010 accurate? Is your liquidation performance as expected or has it fluctuated. Why? Are you meeting the financial goals that you and your team set out back in January? If you are off the mark, question why and address with your team. Consider addressing financial performance more consistently throughout the year. Try quarterly.
2. Operational - What has and hasn’t worked? Are you being as efficient as possible? Where can you cut overhead and where should you spend? Did you obtain SAS70 or PCI? How have you addressed increases in placement volumes for certain clients vs. staffing requirements? Do you need to sub-lease space in a certain facility because of a first-party project you lost?
3. Sales – Who is really pulling their weight or who is not? Are you tracking their productivity appropriately? Are the conferences that you’re attending really supporting your sales efforts? Are your sales people focused on revenue growth at the expense of profitability?
As we sit with eight days left in August, I suggest thinking about these questions, discussing them with your team, and how to adjust your “plan of attack” to position your agency for 2011. Here are 4 quick tips to make this an easier process:
1. Use the next eight days to your advantage to develop, reevaluate or reignite the action plan. Things tend to be slower in August. Many of your staff may be on vacation. You may even be on vacation, but if you are like most owners, your business is still top of mind while you’re away. Don’t be afraid to change your plan mid-stream. It is okay -- no one is perfect!
2. Be sure to set monthly financial, operational and sales goals with your team from September forward. For example, getting SAS70 completed by year-end and then back into the steps required to make that happen. If you need to acquire additional facility capacity, who is going to be responsible for making that happen and over what period of time.
3. Get a whiteboard if you don’t already have one so that you can see every day what your company and individual goals and objectives are.
4. My biggest tip of all: nothing, I mean nothing, in this world is ever accomplished well without “passion”. If you are not passionate about what you’re doing, then don’t do it….develop a plan that will ignite and motivate you and your team!
What are you doing to gear up for September? What does your “Plan of Attack” look like?
Comments/questions are always welcome. Please email/call me.
Michael D. Lamm advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly at 240-499-3808 or by email. You can also read his blogs, follow him on Twitter, or network with Michael from his social media page on insideARM.com.
2010-08-24T08:58:54-07:00
Consumer / Retail
Alexandria, Va. — The total number of U.S. bankruptcies filed during the first six months of 2010 increased 14 percent over the same six-month period in 2009, according to data released today by the Administrative Office of the U.S. Courts. Total filings reached 810,209 during the first half of the calendar year of 2010 (January 1-June 30), compared to 711,550 cases filed over the same period in 2009. The totals represent the highest number of filings for the first six months of a calendar year since 2005, when the Bankruptcy Code was amended.
“Bankruptcy continues to be the last resort for many Americans seeking financial relief from household debt, unemployment and the economic downturn,” said ABI Executive Director Samuel J. Gerdano. “The first half 2010 filings show that bankruptcies are on pace to surpass 1.6 million by year end.”
Business filings decreased 4 percent for the six-month period ending June 30, 2010, to 29,059 from the first-half 2009 total of 30,333. Chapter 11 business reorganizations registered the sharpest decrease, as the 6,152 filings during the first half of 2010 represented a 17 percent drop from the 7,396 total chapter 11 business filings during the first half of 2009. Chapter 7 business liquidations remained nearly unchanged, as there were 20,385 in the first half of 2010, a half percent increase from the 20,375 business chapter 7 filings during the same period in 2009.
Filings by individuals or households with consumer debt increased 15 percent to 781,150 for the six-month period ending June 30, 2010, from the 2009 first-half total of 681,217. Consumers filing for chapter 7 protection increased 17 percent to 571,417 during the first half of 2010 from 489,128 during the first six months of 2009. Consumer chapter 13 filings increased as well, rising 9 percent as 208,778 consumers filed for chapter 13 in the first half of 2010 from 191,458 during the first half of 2009.
The 422,061 total filings for the second calendar quarter 2010 (April 1-June 30) represented a 11 percent increase from the second quarter 2009 filing total of 381,073. Consumer filings increased 12 percent from 365,059 recorded in the second quarter of 2009 to 407,609 filings in the second quarter 2010. Business filings decreased 10 percent from 16,014 in the second quarter 2009 to 14,452 filings in the second quarter of 2010.
The 1,572,597 total filings for the 12-month period ending June 30, 2010, represented a 20 percent increase from the same period in 2009, which totaled 1,306,315. The bankruptcy filing rate per thousand U.S. residents totaled 5.05 for all chapters during the 12-month period ending June 30, 2010, as 3.64 Americans per thousand filed for chapter 7 while 1.36 per thousand filed for chapter 13 bankruptcy.
Nevada maintained its position as the state with as the state with the highest per capita filing rate in the country, with 11.74 residents per thousand filing in all chapters, and also had the highest per capita filing rate for chapter 7 filings at 8.71. The state with the highest per capita filing rate for chapter 13 bankruptcy was Alabama at 4.16 per thousand for the 12-month period ended June 30, 2010.
Nonbusiness filings for the 12-month period ending June 30, 2010, were up to 1,521,989, a 21 percent increase from the 1,251,294 total nonbusiness filings over the same period in 2009. Business filings for the 12-month period ending June 30, 2010, totaled 59,608, up 8 percent from the 55,021 bankruptcy petitions filed in the 12-month period ending June 30, 2009.
The 1,133,320 total chapter 7 filings for the 12-month period ending June 30, 2010, represent a 25 percent increase from the 907,603 filings from the same period in 2009. Total chapter 11 filings increased 2 percent to 14,272 in the 12-month period ending June 30, 2010 from 13,951 during the same period in 2009. Total chapter 13 filings also increased 10 percent to 424,242 in the 12-month period ending June 30, 2010, from 384,187 during the same period last year. Chapter 12 filings increased 56 percent from 422 in the 12-month period ending June 30, 2009 to 660 for the same period in 2010.
Chapter breakdowns of BUSINESS filings for the 3-month period ending June 30, 2010: 10,311 chapter 7s; 2,859 chapter 11s; 194 chapter 12s; and 1,071 chapter 13s.
Chapter breakdown of NON-BUSINESS filings for the 3-month period ending June 30, 2010: 299,369 chapter 7s; 511 chapter 11s; and 107,727 chapter 13s.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,600 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
2010-08-24T08:58:55-07:00
WASHINGTON: The Association of Settlement Companies (“TASC”) announced today that its Board of Directors has voted to support the recent debt relief services rulemaking by the Federal Trade Commission (“FTC”). In addition to mandating enhanced disclosure requirements modeled on current and proposed TASC standards, the FTC rulemaking prohibits debt settlement companies from accepting fees from a consumer for debt settlement services prior to the actual settlement of the consumer’s debt.
“We recognize that the Federal Trade Commission attempted to strike an appropriate balance between improving consumer protections and ensuring continued viability for the majority of ethical, well-managed debt settlement companies,” said Robby H. Birnbaum, President of TASC. “Debt settlement companies are the only truly independent voice for the consumer when dealing with overwhelming levels of consumer debt and we are pleased that the FTC recognized that debt settlement is not only an appropriate alternative but also a necessary service when delivered by a legitimate debt settlement services provider.”
Birnbaum noted that TASC has been working for more than a year with the FTC to craft appropriate program disclosures and observed that many of the FTC’s proposals were modeled on TASC disclosure standards.
“The only significant difference between TASC and the FTC,” Birnbaum said, “was the proposal that the collection of fees be delayed until debts are actually settled, a position that, we believe, ignores the fact that services are provided throughout the customer life cycle, not just at the time of settlement. TASC proposed, and continues to believe, that a less intrusive and equally consumer-protective solution would have been to mandate a full refund policy, backed up by a surety bond. However, after much discussion, both internally and with regulators, consumers and other interested parties, we have determined that the FTC’s position of tying fees to performance is an acceptable way of ensuring that consumers actually get what they pay for and expect.”
Andrew Housser, a TASC Board member who was very involved in the FTC comment process said, “While the rule provides a significant capital challenge to our industry, we are pleased that at least a few of our comments were heard and reflected in the final rule – these changes allow good companies that are getting results for consumers a fighting chance to continue as viable businesses.” He added, “While managing working capital will be tough for the industry, we think it is time to accept these rules and get back to the business of helping consumers get out of debt.”
Birnbaum went on to state, “TASC appreciates the efforts that the FTC expended to educate itself about the industry. We believe that the process that we went through with the FTC will foster more open communication among our organization, our members and the Commission. We hope that TASC’s cooperation and acceptance of the FTC’s new rule will reinforce the message that TASC believes strongly in its mission of helping the millions of Americans who find themselves struggling with unmanageable levels of credit card debt.”
About The Association of Settlement Companies
The Association of Settlement Companies (TASC) promotes fair business practices, consumer protection and industry standards for its debt settlement industry members. TASC, founded in 2005, serves to protect consumers through best practices and standards adhered to by reputable companies. The organization also serves its member companies through lobbying efforts at the state and national levels as well as awareness initiatives to educate consumers on debt settlement as a financial solution. All TASC member companies pledge compliance to strict association standards governing business practices and ethics. For more information, visit www.tascsite.org.
2010-08-17T08:46:48-07:00
DALLAS – On July 29, 2010 Federal Trade Commission Chairman Jon Leibowitz and Vice President Joe Biden announced a new rule to protect consumers of debt relief services at a Middle Class Task Force event at the White House. Following the Chairman’s announcement, Vice President Biden discussed the administration’s consumer protection agenda and the importance of consumer protection to middle-class families.
US Debt Resolve, provider of Debt Relief Services, announces compliance with TSR put in place by the FTC Months before DUE DATE.
USDR announced that the company has received recommendation for recertification of the ISO 9000. ISO 9001:2008 is a family of standards The ISO 9000 is maintained by the International Organization for Amendments
Telemarketing Sales Rule Prohibiting Debt Relief Companies from Collecting Advance Fees Will Take Effect in October 2010
The following are a few points of the TSR. For the entire Telemarketing Sales Rule click here http://www.ftc.gov/opa/2010/07/tsr.shtm
Starting on October 27, 2010, for-profit companies that sell debt relief services over the telephone may no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.
“At the FTC we strive every day to make sure America’s middle class families get straight deals for their dollars,” Chairman Jon Leibowitz said. “This rule will stop companies who offer consumers false promises of reducing credit card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumers’ pockets – and far from leaving them better off, push them deeper into debt, even bankruptcy.”
On the subject of Open and Transparent: “Disclosures should be how well your company has performed with a particular creditor or their retention and completion rates...The consumer is saying, let me choose the company that gives me the best chance to get out of debt.” CEO of US Debt Resolve Scott Johnson said.
Additional comments http://www.ftc.gov/os/comments/tsrdebtrelief/543670-00319.pdf
Three other Telemarketing Sales Rule provisions to take effect on September 27, 2010, will:
- require debt relief companies to make specific disclosures to consumers;
- prohibit them from making misrepresentations;
- extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.
The Final Rule covers telemarketers of for-profit debt relief services, including credit counseling, debt settlement, and debt negotiation services. The Final Rule does not cover nonprofit firms, but does cover companies that falsely claim nonprofit status. Over the past decade, the FTC and state enforcers have brought a combined 259 cases to stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress.
About US Debt ResolveUS Debt Resolve (USDR) in Dallas, Texas provides debt settlement services for consumers coast to coast. To learn more about USDR, go to
http://www.usdebtresolve.com/bsi-case-study.pdf. To speak with a member of the Consulting Staff about your financial situation call 1-866-991-3328. To discuss compliance with the TSR guidelines our audit department can be reached at 1-888-991-3328.
2010-08-17T08:46:48-07:00
Costa Mesa, Calif. — Experian®, the global information services company, released its findings today on credit card trends, which provide insight into U.S. card usage. The study shows that nationally, consumers are opening 26 percent fewer credit cards* than they were three years ago. The study also reveals that out of the top metropolitan areas studied, the number of open bank cards were typically higher than retail credit cards, with the exception of four areas — Pittsburgh, Miami, Columbus and Atlanta — whose residents seem to favor their retail cards.
Additionally, the results show that New Yorkers lead the way with the highest number of open cards, and Phoenix residents have the fewest. A closer look at New York reveals that while its residents have more open cards, the data shows they aren’t using those cards as much as some of the other cities, such as Atlanta, where the highest average monthly balance is $6,753 on revolving accounts. San Francisco and Houston have the lowest average monthly balance, with $5,323 and $5,328, respectively.
Results ranked by highest to lowest number of open cards and average aggregated balances are detailed below:
| Metropolitan Area |
Average # of Open Credit Cardds |
Average Balance |
| 1. New York |
3.77 |
$5,713 |
| 2. Pittsburgh |
3.60 |
$5,989 |
| 3. Boston |
3.49 |
$6,152 |
| 4. Philadelphia |
3.45 |
$6,078 |
| 5. Minneapolis |
3.39 |
$6,610 |
| 6. Chicago |
3.31 |
$6,182 |
| 7. San Francisco |
3.24 |
$5,323 |
| 8. Baltimore |
3.23 |
$6,440 |
| 9. Washington, DC |
3.22 |
$6,190 |
| 10.(t) Miami |
3.19 |
$5,814 |
| 10.(t) St. Louis |
3.19 |
$6,111 |
| 11. Columbus |
3.17 |
$6,734 |
| 12. Los Angeles |
3.16 |
$5,681 |
| 13. Seattle |
3.15 |
$6,577 |
| 14. Detroit |
3.14 |
$6,445 |
| 15.(t) Atlanta |
3.06 |
$6,753 |
| 15.(t) Denver |
3.06 |
$6,211 |
| 15.(t) Houston |
3.06 |
$5,328 |
| 16. San Diego |
3.04 |
$6,086 |
| 17. Dallas |
2.99 |
$5,839 |
| 18. Tampa |
2.94 |
$6,066 |
| 19. Portland |
2.83 |
$6,045 |
| 20. Phoenix |
2.78 |
$6,058 |
“As expected with the current financial environment, we can see that the average person has fewer cards in their wallet and is using credit differently than in the past,” said Michele Raneri, senior director of analytics, Experian. “This implies that many American consumers are relying less on cards and potentially trying to pay down debt.”
For more information on average debt levels per consumer in the top 20 metropolitan areas, please see Experian’s previous study, Experian ranks top 20 major US metropolitan areas by average debt per consumer.
Below are some tips for using credit wisely:
- When you are extended a line of credit, use it, but use it carefully. Most important, make your payments on time.
- Set up a budget and stick to it. You need to be aware of how much debt you already have and how much you are adding to that debt by buying with credit.
- Shop around for credit. Lower interest rates, lower or no annual fees, cheaper service charges and additional benefits such as frequent flier miles or special insurance rates are available. Find the credit that is right for you.
- Once you have signed a credit agreement, you are responsible for it unless the creditor agrees to release you from the agreement.
For more information on managing credit, visit http://www.experian.com/crediteducation.
Methodology
The data was pulled and analyzed by Experian Decision Sciences using a statistically relevant sampling of Experian’s File OneSM consumer credit database. Credit files analyzed had all personal identification information removed. They then were filtered through Premier AttributesSM, the credit industry’s most robust, accurate and comprehensive set of credit attributes that provides consumer data at the most granular level, facilitating enhanced modeling opportunities. Experian’s credit study data score averages are based on VantageScore®.
About Experian
Experian is the leading global information services company, providing data and analytical tools to clients in more than 90 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2010, was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com.
2010-08-10T08:18:47-07:00
Starting on October 27, 2010, for-profit companies that sell debt relief services over the telephone may no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.
“At the FTC we strive every day to make sure America’s middle class families get straight deals for their dollars,” Chairman Jon Leibowitz said. “This rule will stop companies who offer consumers false promises of reducing credit card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumers’ pockets – and far from leaving them better off, push them deeper into debt, even bankruptcy.”
Three other Telemarketing Sales Rule provisions to take effect on September 27, 2010, will:
- require debt relief companies to make specific disclosures to consumers;
- prohibit them from making misrepresentations; and
- extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.
The Final Rule covers telemarketers of for-profit debt relief services, including credit counseling, debt settlement, and debt negotiation services. The Final Rule does not cover nonprofit firms, but does cover companies that falsely claim nonprofit status. Over the past decade, the FTC and state enforcers have brought a combined 259 cases to stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress.
Advance Fee Ban
The Final Rule contains specific requirements for debt relief providers related to charging an advance fee before providing any services. It specifies that fees for debt relief services may not be collected until:
- the debt relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts;
- there is a written settlement agreement, debt management plan, or other agreement between the consumer and the creditor, and the consumer has agreed to it; and
- the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.
To ensure that debt relief providers do not front-load their fees if a consumer has enrolled multiple debts in one debt relief program, the Final Rule specifies how debt relief providers can collect their fee for each settled debt. First, the provider’s fee for a single debt must be in proportion to the total fee that would be charged if all of the debts had been settled. Alternatively, if the provider bases its fee on the percentage of what the consumer saves as result of using its services, the percentage charged must be the same for each of the consumer’s debts.
Dedicated Account for Fees and Savings
Another new provision of the Final Rule will allow debt relief companies to require that consumers set aside their fees and savings for payment to creditors in a “dedicated account.” However, providers may only require a dedicated account as long as five conditions are met:
- the dedicated account is maintained at an insured financial institution;
- the consumer owns the funds (including any interest accrued);
- the consumer can withdraw the funds at any time without penalty;
- the provider does not own or control or have any affiliation with the company administering the account; and
- the provider does not exchange any referral fees with the company administering the account.
Disclosures and Prohibited Misrepresentations
Under the Final Rule, providers will have to make several disclosures when telemarketing their services to consumers. Before the consumer signs up for any debt relief service, providers must disclose fundamental aspects of their services, including how long it will take for consumers to see results, how much it will cost, the negative consequences that could result from using debt relief services, and key information about dedicated accounts if they choose to require them.
The Final Rule also prohibits misrepresentations about any debt relief service, including success rates and whether the provider is a nonprofit entity. The FTC’s Statement of Basis and Purpose, which accompanies the Final Rule, provides extensive guidance about the evidence providers must have to make advertising claims commonly used in selling debt relief services.
The Rulemaking Process
In August 2009, the FTC published in the Federal Register a notice of proposed rulemaking proposing amendments to the Telemarketing Sales Rule and requesting public comments. Over 300 commenters, representing a wide variety of stakeholders, submitted comments in response. The Commission also held a public forum on the proposed amendments on November 4, 2009. The FTC developed the Final Rule based on the public comments, the record of the public forum and the FTC’s September 2008 Workshop on the debt settlement industry, recent testimony before Congress, and law enforcement actions brought by the Commission and the states.
Information for Businesses
Today, the FTC staff issued a compliance guide to help businesses comply with the new debt relief rules. The compliance guide describes the key changes to the Telemarketing Sales Rule affecting debt relief services, helps businesses determine if they are covered by the new rules, details information that covered entities must disclose to customers, and discusses how fees may now be collected. It can be found at http://www.ftc.gov/bcp/edu/pubs/business/marketing/bus72.pdf on the agency’s website and is linked to this press release.
The FTC vote approving publication of the Federal Register notice was 4-1, with Commissioner J. Thomas Rosch voting no. The notice will be published in the Federal Register shortly, and is available now on the FTC’s website at http://www.ftc.gov/os/2010/07/R411001finalrule.pdf. The provisions of the Final Rule will take effect on September 27, with the exception of the advance fee ban provision, which will take effect on October 27.
2010-07-30T07:19:29-07:00
IRVINE, Calif. – RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Midyear 2010 Metropolitan Foreclosure Market Report, which shows 154 of the 206 U.S. metropolitan areas with a population of 200,000 or more posted year-over-year increases in foreclosure activity even while foreclosure activity decreased in nine of the 10 metros with the highest foreclosure rates.
Four states — Florida, California, Nevada and Arizona — accounted for all top 20 metro foreclosure rates. Florida led the way, with nine of the top 20 metro foreclosure rates, followed by California with eight, Nevada with two and Arizona with one.
“While we’re seeing early signs that foreclosure activity may have peaked in some of the hardest-hit markets, foreclosures continued to rise in three-quarters of the nation’s metropolitan areas in the first half of the year,” said James J. Saccacio, chief executive officer of RealtyTrac. “The fragile stability achieved in many local housing markets hinges on improvements in the underlying economy, specifically job growth. If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas.”
Top 10 metro foreclosure rates
Las Vegas continued to post the nation’s highest metro foreclosure rate in the first half of the year, with 6.60 percent of its housing units (one in 15) receiving a foreclosure filing — more than five times the national average. A total of 53,525 Las Vegas properties received a foreclosure filing during the six-month period, a decrease of nearly 15 percent from the previous six months and a decrease of nearly 9 percent from the first half of 2009.
Foreclosure activity in the Cape Coral-Fort Myers, Fla., metro area decreased nearly 22 percent from the previous six months and was down nearly 30 percent from the first half of 2009, but the metro area still documented the nation’s second highest metro foreclosure rate — 4.98 percent of its housing units (one in 20) received a foreclosure filing during the six-month period. Other Florida cities in the top 10 were Orlando-Kissimmee at No. 8 (4.15 percent of housing units) and Miami-Fort Lauderdale-Pompano Beach at No. 10 (3.89 percent).
With 4.59 percent of its housing units (one in 22) receiving a foreclosure filing, Modesto, Calif., posted the nation’s third highest metro foreclosure rate. Other California cities in the top 10 were Merced at No. 4 (4.47 percent of housing units); Riverside-San Bernardino-Ontario at No. 5 (4.37 percent); Stockton at No. 6 (4.37 percent); and Vallejo-Fairfield at No. 9 (3.91 percent).
The Phoenix-Mesa-Scottsdale metro area in Arizona posted the nation’s seventh highest metro foreclosure rate, with 4.28 percent of its housing units (one in 23) receiving a foreclosure filing in the first half of 2010.
Metros with highest foreclosure totals
More properties received a foreclosure filing in the Miami-Fort Lauderdale-Pompano Beach metro area during the first half of 2010 than any other metro area with a population of 200,000 or more. A total of 94,466 properties in the Miami area received a foreclosure filing during the six-month period, a decrease of 8 percent from the previous six months, but up nearly 11 percent from the first six months of 2009.
A total of 93,263 properties in the Los Angeles-Long Beach-Santa Ana metro area received a foreclosure filing in the first half of 2010, the second highest total of any metro area nationwide and 2.11 percent of all housing units (one in 47) — ranking No. 35 in terms of foreclosure rate.
A total of 78,022 properties in the Chicago-Naperville-Joliet metro area received a foreclosure filing in the first half of 2010, the third highest total and 2.07 percent of all housing units (one in 48) — ranking No. 37 in terms of foreclosure rate.
Other metro areas with the 10 highest foreclosure totals were Phoenix-Mesa-Scottsdale (73,352), Riverside-San Bernardino-Ontario (63,717), Las Vegas-Paradise (53,525), Atlanta-Sandy Springs-Marietta (52,381), Detroit-Warren-Livonia (47,563), New York-Northern New Jersey-Long Island (44,522), and Orlando-Kissimmee (37,352).
Report methodology
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the first six months of the year for metropolitan statistical areas with a population of 200,000 or more based on Census bureau estimates. Some foreclosure filings entered into the database during a six-month period may have been recorded in previous time periods. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is received for a property during the six-month period, only the most recent filing is counted in the report. If the same type of foreclosure document was filed against a property previous to the six-month period but within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the six-month period.
About RealtyTrac Inc.
RealtyTrac (www.realtytrac.com) is the leading online marketplace of foreclosure properties, with more than 1.5 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data. Hosting more than 3 million unique monthly visitors, RealtyTrac provides innovative technology solutions and practical education resources to facilitate buying, selling and investing in real estate. RealtyTrac’s foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures.
2010-07-29T07:17:58-07:00
CHARLESTON, W.Va. – In a continuing effort to protect West Virginia consumers from unlawful Internet payday loans, West Virginia Attorney General Darrell McGraw today announced a settlement with FFD Companies, operators of at least five Internet payday loan web sites, to refund illegal fees and interest to West Virginians and halt marketing within the state.
Under the settlement, the defendants will pay refunds totaling $305,446.53 to 576 affected West Virginia consumers who obtained payday loans by computer through interactive web sites operated by the FFD Companies. Additionally, the FFD Companies, which denied wrongdoing, agree to a permanent ban on making or collecting payday loans in West Virginia.
"Payday loans are not solutions but treacherous traps that can lead to financial ruin for the many West Virginians facing difficult financial circumstances," Attorney General McGraw stated. "We will not rest until all payday lenders agree, as the FFD Companies have now done, to stop marketing these predatory payday loans over the Internet to West Virginia consumers."
Illegal in West Virginia, payday loans are high-interest loans or cash advances with interest rates that reach as high as 600 to 800% APR. The loans, typically made for 14 days, are secured by a post-dated check or an agreement authorizing electronic debits from the consumer’s checking account.
Today’s action settles a complaint filed by McGraw against the FFD Companies in a November, 2009 lawsuit that charged the defendants had engaged in the making and collection of Internet payday loans in violation of West Virginia law. Since McGraw began investigating the industry in 2005, his office has reached settlements with 107 Internet payday lenders and their collection agencies, resulting in $2,452,978.87 in refunds and cancelled debts for 8044 West Virginians.
As negotiated by the Attorney General’s Consumer Division, the settlement involves eight corporations under the FFD umbrella and their principals, with offices in Delaware, Georgia, New Mexico, Nevada, Texas, and Utah. The FFD Companies and websites that entered into the agreement include: FFD Ventures, LP of Carson City, NV, and Atlanta, GA; DFD Ventures, LP of Carson City; First Fidelity, Inc. of Carson City, Wilmington, DE, and Atlanta; FFD Resources I d/b/a Cash Supply of Espanola, NM, and Atlanta; FFD Resources II, LLC d/b/a Web Payday of Atlanta; FFD Resources III, LLC d/b/a Payday Services of Salt Lake City, UT, and Atlanta; FFD Resources IV, LLC d/b/a Payday Yes of Wilmington; FFD Resources IV, LLC d/b/a Paper Check Payday of Wilmington; and Great American Credit Management of Atlanta and Houston, TX.
2010-07-23T07:18:58-07:00
NEW YORK--A new nationwide survey issued today by Citi, and conducted by Hart Research Associates, shows that nearly two-thirds of Americans (62 percent) believe the economy has yet to hit bottom. This represents a 3 point decline from March, when 59 percent said we have a long way to go, and a return to the level measured in September (63 percent). According to the survey, just one-third (33 percent) believe the economy has hit bottom, even though Commerce Department data indicates the U.S. economy resumed growing in 2009’s third quarter.
In addition, the data reveals that, as we pass the halfway point of 2010, Americans’ expectations for when the economy will stabilize for their households have slipped quite far into the future, with 62 percent believing it will be at least two or three years, if not longer, and more than one quarter (28 percent) believing it will be four or more years until the economy stabilizes for their household.
At the same time, however, Americans’ views on current economic conditions, as well as their outlook on their own personal financial situations, are improving or holding steady.
According to the data:
- Twenty-four percent say the local economy where they live is good or excellent, up from 19 percent in March.
- The percentage of Americans who say their personal financial situation is better now than a year ago has improved slightly since March (17 percent versus 15 percent). Fifty-two percent said their personal financial situations are about the same as they were a year ago.
- Although down slightly from March, 64 percent of Americans remain very or somewhat optimistic that their financial situation will improve in the next twelve months, compared to 32 percent who are somewhat or very pessimistic.
Americans’ views on local employment opportunities, however, remained weak, with 85 percent reporting opportunities as only fair (36 percent) or poor (49 percent). In a measure of potential consumer demand, 62 percent of Americans believe that, in the current environment, it is only a fair (30 percent) or poor (32 percent) time to make a major household purchase, up from 61 percent (27 percent and 34 percent, respectively) in March.
“Clearly, the mood of Americans has been heavily influenced by the unemployment numbers here at home and the news of economic woes in Europe,” said Jonathan Clements, Director of Financial Education at Citi Personal Wealth Management. “And yet, if you dig deeper, consumers are actually feeling a bit better about their own finances and the local economic outlook. The big question is, could the gloomy news become a self-fulfilling prophesy, prompting consumers to restrain their spending, thus hurting the economic recovery?”
A Quarter of Americans Struggle with Debt, Highest-Earning Americans Impacted As Well
Americans of all ages and income levels are struggling with debt. The survey found that, while no one category of debt presents a major problem to more than about a tenth of U.S. families, as many as 25 percent responded that there is at least one category of debt that is a major challenge or is becoming unmanageable.
- Of those surveyed, health expenses are a major or unmanageable problem for 11 percent followed by credit card debt (9 percent). Including other categories of debt such as mortgage debt (6 percent), student loans (5 percent), consumer loans (2 percent), and child support (1 percent), a full quarter of the public reports a major or unmanageable problem with at least one category of debt.
- People in their 30s (32 percent) report having at least one area of debt that is a major or unmanageable issue, higher than any other age group. This compares with Americans under age 30 (28 percent), in their 40s (30 percent), and in their 50s (27 percent) who responded similarly.
- Interestingly, among the top-income bracket (Americans earning more than $150,000 annually), 21 percent report having at least one area of debt that is a major or unmanageable issue. This compares to 15 percent of Americans earning $75,000-$150,000; 22 percent earning $50,000-$75,000 and 33 percent earning less than $50,000 annually.
“It is startling to see more than a fifth of high-income earners express concerns about their debt,” noted Clements. “This may speak to their overconfidence during the boom years, as they took on first and second mortgages to buy real estate and pay other expenses.”
Summer of the ‘Stay-cation’
Reflecting current economic worries, three in five Americans responded they will either not vacation at all or will stay home during their time off this summer.
- A full 51 percent of Americans say they will not take any vacation at all this summer.
- Sixty percent of Americans will either not vacation at all or else will stay at home as their vacation.
Clements added, “Given the sluggish economic recovery, it is no surprise that Americans remain conservative with their spending, saving and summer vacation plans. Americans’ fiscal discipline is admirable. Still, lower consumer spending may slow the economic recovery.”
Majority of Americans Believe They Are Living the American Dream, Especially Older Americans
Despite the current economic challenges, Americans remain remarkably optimistic. The survey found that 53 percent of Americans believe they are living the American dream and nearly three in four (73 percent) say they are either living the dream now or expect to live the dream in the future. Older Americans lead the way in responding they are currently living the dream, while young Americans remain hopeful.
- Sixty-five percent of Americans over age 70 believe they are currently living the American dream.
- Comparatively, more than half of Americans in their 60s (56 percent), 50s (55 percent), and 40s (51 percent) also say they are currently living the American dream.
- Forty-seven percent of Americans under age 30 say they are currently living the American dream, while just 43 percent of Americans in their 30s say they are.
- A full 83 percent of 18-to 29-year-olds believe they are or will live the American dream in the future, while people in their thirties remain hopeful, but less so (75 percent).
By 56 percent to 24 percent, a majority of Americans believe that the American dream is more defined by family, faith and freedom than it is defined by material goods or financial elements such as housing, income or lifestyle.
Citi conducted this nationwide survey as part of its ongoing effort to better understand changes in the needs of the consumers and communities the company serves.
Survey Methodology
Hart Research Associates conducted the telephone survey of 2,005 adults nationally from June 22-29, 2010. The Random Digit Dialed (RDD) survey has an overall statistical margin of sampling error of plus or minus 2.2 percentage points. The survey also included a panel of respondents who use only a mobile telephone.
About Citi
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.
2010-07-22T07:30:23-07:00
Last week CNN Money published a slideshow of ten ex-debt collection workers’ experiences in the industry centered on “in their own words” accounts of why they left the profession.
The absence of any overt editorial framing by CNN appears on the surface of things to present these former debt collectors in a disinterested manner. But calculated editorial decisions were in fact made to draw readers into the content through understated sensationalism and, once hooked, color their perceptions of the accounts receivable management industry in the same worn-out coat of paint as so many previous accounts of third party debt collectors.
First consider the title of the piece, "Confessions of Former Debt Collectors." To confess is to acknowledge, avow, or admit. The object of those admissions is typically one of two things: guilt or sin. Might CNN’s “unfiltered” exhibition of one-time collection agency representatives have been received differently had the words “stories” or “narratives” or “anecdotes” been substituted for “confessions?”
Second, not until the fifth slide do readers encounter a positive (or even neutral) account of a debt collector’s experience. On the contrary, the first four profiles describe anti-social (Mel: “I had a black heart.”), cruel (Alexis: “Collectors I knew regularly held contests to see who could make the most people cry in one day.”), sickening (“…he [the debtor] winded up going home and shooting himself.”), and illegal behavior (Anonymous: “One of the guys in a nearby cubicle called up debtors and posed as a legal counsel”). And even when a past collector demonstrates ethical business practices (Mike: “I didn't try to scare people or take advantage of peoples' ignorance by threatening things like eviction even though we weren't allowed to evict someone.”), his section concludes with a knotty sentiment: “And there's no point in telling a deadbeat they're a deadbeat. They already know it.”
Well, Mike, how about not calling them “deadbeats” in the first place? They’re debtors, just like millions of other Americans.
It’s not my job (or inclination) as an editor and writer to play apologist for the ARM industry. Even as I remain skeptical of the kinds of journalistic sleight of hand I believe are being deployed in the CNN Money example, there is undoubtedly some legitimacy to at least some of what these people have to say. And it would be wise for owners and executives in the collection industry to use these less than ideal accounts—as well as the slew of reader comments, Diggs, Tweets, and Facebook shares—as a teaching moment that starts with holding a mirror up to their own companies' training, monitoring, and collection practices.
Notwithstanding my advice to the ARM industry, I’m not quite ready to grant CNN a full pardon or total absolution for its "Confessions." "News" like this surely gives the lie to the idea that third party collection agencies operate in a vacuum. Debt collectors do what they do through contractual agreements with creditors—banks, card issuers, hospitals, automotive lenders, etc. And while those financial sectors have certainly taken their public relations body blows since the fall of Lehman Brothers in September 2008, credit grantors are rarely taken to task for initiating collection action against consumers.
While the analogy isn’t entirely copasetic, some consumers’ responses to the horrific BP oil spill—to boycott the 11,000 service stations across the U.S. that sell BP gasoline but are almost entirely owned and operated by local businesspeople—seem eerily akin to how many consumers react to a collection notice (sent on behalf of their credit card company).
And I’d wager that some percentage of boycott participants drove their shiny SUVs to protest rallies outside gas stations in their own communities, just as some consumers file online complaints to the FTC about debt collectors with one hand while the other feverishly types credit card information into the billing address field of BuyMoreStuffRightNow.com.
Michael Klozotsky is managing editor of insideARM.com. He can be reached by email.
2010-07-21T08:55:40-07:00
While some mortgage servicers are trying to work with more borrowers in the collection process, some mortgage holders are being forced down the foreclosure path.
Thanks to the decline in the real estate market over the last few years forcing more homes underwater -- meaning borrowers have no equity or negative equity -- combined with job losses and an unemployment rate near 10 percent, banks are increasingly taking possession of homes under default.
According to a report released Thursday by RealtyTrac, banks repossessed a record number of U.S. homes in the second quarter.
Banks took control of 269,962 properties in the second quarter, up 5 percent from the prior quarter and representing a 38 percent spike from the second quarter of last year, RealtyTrac said in its midyear 2010 foreclosure report. If that trend continues, repossessions could top 1 million this year.
But banks are still actively trying to avoid foreclosures and work with borrowers through the rehabilitation and accounts receivable management process.
“We’re trying to keep as many people in homes as we can by using a combination of federal home mortgage modification programs and some of our own programs,” Tom Goyda, spokesman for Wells Fargo, told insideARM.com. Goyda noted that Wells services one in six of the nation’s mortgages.
Since the beginning of 2009 through May of 2010, the bank’s mortgage division:
- Helped more than 2.2 million homeowners with new low-rate loans, either to purchase a home or refinance their existing mortgage.
- Assisted about 500,000 loan customers facing financial hardships through a trial or completed loan modification; 17 percent of which were under the federal government’s Home Affordable Modification Program (HAMP).
- Helped more than 100,000 unemployed customers with short-term modifications – well before the new government modification unemployment program was introduced.
- Provided more than $3 billion in principal forgiveness for customers facing financial hardship, permanently erasing on average 14 percent of the principal owed, amounting to more than $50,000 per loan for more than 55,000 customers. In addition, through loan modifications for investor-owned and Wells-owned loans, the mortgage division has deferred more than $600 million of principal for more than 8,700 customers.
Together, these programs have helped about two-thirds of borrowers more than 60 days delinquent avoid foreclosure, Michael J. Heid, co-president of Wells Fargo Home Mortgage, testified in late June before the House Committee on Committee on Oversight and Government Reform.
Goyda added that 92 percent of the loans originated under the Wells name are current. “Most are doing what is necessary to make the payments,” Goyda said. “There are a lot of options out there. But there are times after we’ve exhausted everything else that we have to move to foreclosure.”
Heid, in his testimony, added: “We also have improved our foreclosure prevention practices for customers who cannot afford to remain in their homes. We now are able to give Wells Fargo Home Mortgage loan customers – who have identified a home buyer and have provided the necessary paperwork – a short-sale decision, on average, in less than 5 days. For the loans we service where we do not have full delegated authority to make decisions, we have been able to work with the third parties who must be involved to provide a decision, on average, in less than 15 days.”
In Florida, Wells is testing a new voluntary deed in lieu practice for first-lien mortgage holders, whereby the lender gives borrowers who cannot afford their homes $10,000 to vacate their property in good condition within 30 days. This program is designed to help families avoid foreclosure and eases their transition to a new, more affordable residence. In three months, when the pilot is complete, Wells expects to be in a better position to share when and if this program will be expanded.
Other lenders have also participated in some of the federal foreclosure prevention programs. Even so, RealtyTrac predicts another 3 million home foreclosure filings this year.
2010-07-16T07:42:44-07:00
IRVINE, Calif. – RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Midyear 2010 U.S. Foreclosure Market Report, which shows a total of 1,961,894 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,654,634 U.S. properties in the first six months of 2010, a 5 percent decrease in total properties from the previous six months but an 8 percent increase in total properties from the first six months of 2009. The report also shows that 1.28 percent of all U.S. housing units (one in 78) received at least one foreclosure filing in the first half of the year.
Foreclosure filings were reported on 313,841 U.S. properties in June, a decrease of nearly 3 percent from the previous month and a decrease of nearly 7 percent from June 2009. June was the sixteenth straight month where the total number of properties with foreclosure filings exceeded 300,000.
Foreclosure filings were reported on 895,521 U.S. properties during the second quarter, a decrease of nearly 4 percent from the previous quarter and an increase of less than 1 percent from the second quarter of 2009. Default and auction notices were down on a month-over-month and year-over-year basis in the first quarter, but bank repossessions (REOs) increased 5 percent from the previous quarter and 38 percent from Q2 2009 to 269,962 — a new quarterly high for the report.
“The second quarter was a tale of two trends,” said James J. Saccacio, chief executive officer of RealtyTrac. “The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009.
“The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions,” Saccacio continued. “The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market.”
Nevada, Arizona, Florida post top state foreclosure rates
Nearly 6 percent of all Nevada housing units (one in 17) received at least one foreclosure filing in the first half of 2010, giving Nevada the nation’s highest foreclosure rate during the six-month period despite decreasing foreclosure activity. A total of 64,429 Nevada properties received a foreclosure filing from January to June, a decrease of 13 percent from the previous six months and a decrease of 6 percent from the first six months of 2009.
Arizona registered the nation’s second highest state foreclosure rate in the first half of 2010, with 3.36 percent of its housing units (one in 30) receiving a foreclosure filing, and Florida registered the nation’s third highest state foreclosure rate, with 3.15 percent of its housing units (one in 32) receiving a foreclosure filing during the six months.
Other states with foreclosure rates ranking among the nation’s 10 highest were California (2.54 percent), Utah (1.91 percent), Georgia (1.79 percent), Michigan (1.73 percent), Idaho (1.68 percent), Illinois (1.61 percent), and Colorado (1.40 percent).
California, Florida, Arizona post highest foreclosure totals
A total of 340,740 California properties received a foreclosure filing in the first half of 2010, the nation’s highest total but down 15 percent from the previous six months and down nearly 13 percent from the first six months of 2009.
With 277,073 properties receiving a foreclosure filing in the first six months of 2010, Florida documented the second highest state total. First-half foreclosure activity in Florida decreased nearly 9 percent from the previous six months but increased 3 percent from the first half of 2009.
Arizona’s 91,484 properties receiving a foreclosure filing in the first six months of 2010 was the third highest state total even though the state’s foreclosure activity decreased nearly 2 percent from the previous six months. Arizona foreclosure activity in the first half of 2010 was still up nearly 2 percent from the first half of 2009.
Other states with first-half totals among the 10 highest in the country were Illinois (85,223), Michigan (78,509), Georgia (71,949), Texas (64,883), Nevada (64,429), Ohio (59,927), and New Jersey (36,542).
Report methodology
The RealtyTrac Midyear U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the first six months of the year. Some foreclosure filings entered into the database during the six-month period may have been recorded in previous months. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.
About RealtyTrac Inc.
RealtyTrac (www.realtytrac.com) is the leading online marketplace of foreclosure properties, with more than 1.5 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data. Hosting more than 3 million unique monthly visitors, RealtyTrac provides innovative technology solutions and practical education resources to facilitate buying, selling and investing in real estate. RealtyTrac’s foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures.
2010-07-15T08:46:15-07:00
