Category Archives: Payday Loan

THE BBB IS UNDER ATTACK

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Recently I read an article written by the BBB indicating they are being overwhelmed by the number of Pay-Day loan scams. Supposed “debt collectors”, generally with heavy foreign accents, have been calling individuals and trying to collect on debts that weren’t really owed. The collectors calling have a vast amount of personal information about the victims of this fraud and are using the typical scare tactics to pressure payment such as threats to sue, threats to garnish wages, threats to arrest, etc. For further information the article can be found at http://www.turnto23.com/news/25430839/detail.html

We at Krohn & Moss have had no shortage of panicked telephone calls from potential clients stating they were receiving these types of calls. Some of the unsuspecting victims have provided sensitive bank account information and set up payments to these scam artists in hopes of avoiding the potential “jail time / felony counts, etc.” that were wrongfully threatened. As the article indicates, any legitimate company that is trying to contact you to collect a debt should send you written verification of the alleged debt within 5 business days of first contacting you. Indeed, Section 1692g of the FDCPA states:

(a) within five days after the initial communication with a consumer in connection with the collection of any debt, ad debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing —
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

If you have been the unfortunate target of these scammers, demand the information listed above. If a company fails to provide it or refuses to give pertinent information about the debt, including their address and contact information, it could be a scam. Individuals should be extremely cautious not to give their bank account or any other personal identifying information out over the phone without having something in writing from a reputable company.

The BBB is a valuable resource in determining the reputation of a company. If you think you are the victim of a pay day loan scam, unfortunately many law firms are unable to help you as they cannot determine who the proper defendant would be. What’s more, even if you could pin down the specific collector your odds of ever being able to collect on a judgment are unlikely as many of the companies have no assets. As the article stated, you do have recourse. You can file a complaint with the BBB, the FTC (www.ftc.gov) or with your State’s Attorney General’s Office (I would do all three). Although this sounds appealing, my fear is that these entities are quickly becoming overwhelmed with the sheer amount of complaints and may not have the resources to process each claim in a timely manner. The most important thing for a consumer to do is recognize these scams early, determine the validity of the company, and the debt, and avoid being pressured into a quick payment – In the vast majority of circumstances, there is noting criminal about running into hard times and being unable to pay a debt. The Scammers use the intimidation and threats to scare you into payment – don’t get caught with your guard down. Demand information in writing, confirm the company and the debt are legitimate, and then make the determination if you should pay.

Don’t Get Scammed

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In talking with potential clients, I have noticed an increasing problem in the debt collection industry – SCAMS. It seems more and more that innocent consumers are receiving some of the most horrific telephone calls from people allegedly attempting to collect old debts.Don’t be fooled; there are legitimate collection agencies that conduct legitimate business (although these companies may violate the federal collection laws for harassing conduct), and then there are “scams”, people who have no relationship with the creditor they claim to be collecting for.Yes, these people are trying to commit fraud, they are trying to scam you out of money and you should not pay them ANYTHING. Below are a few tips to separate the actual collection agencies from the scams.

Payday Loans:
The vast majority of these scams involve payday loans. For whatever reason, when consumers apply for payday loans, the information they provide does not stay with the lender only.Unfortunately, these “scammers” find out that consumers applied for payday loan, and use that to pick their victims. I have spoken with individuals who were not even approved for the loan (information that the “scammers” did not know, but do not care).This is not to say that all collectors calling on payday loans are scams, but it is something to keep in mind.Also, this is why the calls mostly come to the consumer’s place of employment – because that is on the application.

Fake Company Name:
Legitimate collection agencies have no problem informing you who they are.Those companies have been hired to the creditor and want to let consumers know who they are so they can collect for the creditor to keep the creditor as a client.When called in one of these scams, however, there is often a refusal of the scammers to provide a name.The primary reason; there is no name (remember, these people do not work for an actual company). However, the scammers sometimes provide fake names to try and appear legitimate. When this occurs, the name is typically an acronym, but the scammer refuses to ell consumers what it stands for.Other times, the fake company name includes legal terms thrown together in an attempt to scare consumers into believing (1) that the company is legitimate and (2) that the consumer will suffer serious legal consequences unless they pay.I have heard fake names such as “Affidavit Consolidated Services” (FYI – these words do not make any sense used together).Other fake names often use the word “legal”.Again, they do this to try and sound more legitimate and to make consumers believe they may suffer serious legal repercussions.

“I am Investigator Common Name”:
While it is no secret that collectors in the collection industry use aliases, with scammers, the “aliases” used are extremely common.Also, the often scammers claim to be more than just John Smith or Joe Brown; they are “Investigator Smith” and “Investigator Brown”.This is just another trick the scammers use to try and sound important and legitimate.

Threats of Arrest or Criminal Charges:
Just know that consumers cannot be arrested because they fell behind in debt. It is not a crime.

No Address:
These scammers do not wake up in the morning, put on a suit, go to an office, take an hour lunch, then go home at the end of the day. There is no building with the company’s name on the door (remember, there really is no company name).IF an address is provided, it is often a P.O. Box.In researching some addresses provided, I have found some that are a UPS store.A little rule of thumb: if they cannot be physically located, they do not want to be for a reason.Legitimate collection agencies have no problem informing you where they are located.

Cash Equivalent Payments:
Another characteristic is the manner in which payment is requested.As stated above, the scammers to not want to be found, so they do not want payment that can be traced.The most common forms are money orders (mailed to a PO Box – this is like sending cash), pre-paid check cards, bank account info, etc. What you will NOT see is an agreement to any form of repeated payments. The scammers do not want to establish any type of relationship with their victims; they want to get some form of immediate payment and move on.

Again, these are some tips that you can use to help separate a legitimate collection call from a scam, but just because one or two characteristics are observed does not automatically mean somebody is trying to scam you.You can always call the creditor to see if the account has been sent to collections and if so, which collection agency.Also, you can also do some independent research on these companies; if most of the blogs identify the call as a scam, it could be.If the research leads you to believe the call is from a legitimate company (particularly a company that is approved by ACA International), then it likely is.Just be smart, and you won’t get scammed.

FDCPA Reform (finally) Looming on the Horizon?

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Last month, Senator Al Franken of Minnesota announced his plan to introduce a bill to reform and amend the Fair Debt Collection Practices Act.While this proposed bill has yet to be unveiled, the Star Tribune, a Minnesota newspaper, is reporting that the proposal will eliminate the current practice of debt collectors to find loopholes in lawsuit procedures which allow them to issue warrants and seize property for non-paying consumers.In addition, Senator Franken’s bill would increase the statutory damages recoverable under the statute (currently $1,000 maximum) in addition to tripling potential damages based upon a showing of willful conduct and behavior.The bill would still provide that the enforcement of such actions would be brought namely through private civil actions by the consumer himself or herself with private counsel acting on their behalves.The actual article can be read by viewing this link: http://www.startribune.com/politics/national/103834553.html

I think that we all owe Senator Franken a thank you for bringing something to the Government’s attention that we have known for years: debt collection is becoming more aggressive and deceptive by the minute and we need to revise the FDCPA to create a stronger deterrent for those collection agencies that choose to violate the law.In the nearly 1,000 FDCPA cases I have been involved with I have seen some atrocious conduct by some collectors.I have seen collectors: use offensive and profane language with consumers; threaten to have consumers deported; threatened to arrest consumers and even falsely represent themselves as attorneys or government employees all in the name of trying to coerce consumers into paying them money (and often for something as small as a single cash advance or payday loan).While perhaps $1,000 plus attorneys’ fees was a large sum in 1977 (when the FDCPA was enacted), I think we can all agree that this is a relatively small sum of money nowadays and certainly will not deter the billion dollar a year collection industry from engaging in despicable conduct when such conduct generates so much more money than what they spend a year in fighting/settling FDCPA lawsuits (and I know that some agencies spend millions a year fighting/settling FDCPA lawsuits).We need the FDCPA to be both the shield and the sword that Congress intended it to be and it appears that finally someone understands that. The FDCPA needs to protect consumers from abusive collection tactics but also needs to be able to allow a consumer to strike back and hit the collection agency where it will hurt the most: their pocket books.

Payday Loan Scam

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The Better Business Bureau has issued a nationwide alert to consumers to warn them about phony debt collectors that are calling consumers, claiming that they defaulted on a “payday” loan, and threatening to arrest them immediately if they don’t pay.The BBB indicates that this is a scam where the callers claim to be lawyers or officers on behalf of a variety of fictitious agencies. More troubling, the callers possess a disconcerting amount of personal information about their potential victims.Unsuspecting victims who fall for the scam and make a payment by phone are not only making a payment that will never go towards any of their debts, but are also spreading their finances thinner than they already were. The BBB also is concerned not only that consumers may fall victim to such tactics and pay up, but also that it may indicate a massive data breach has already taken place.“Thousands of people may have had their personal information compromised, and given the scammers’ tactics, it appears that those who have previously used payday loan services could be particularly at risk,” said David P. Polino, president of the Better Business Bureau of Upstate New York, which serves a 50-county region from its Buffalo headquarters.According to the BBB, the perpetrators of the current scam accuse the victims of passing bad checks or defaulting on a payday loan, and allege that they are being sued with law enforcement pursuing criminal charges. If the victim doesn’t pay immediately by wire transfer, credit card or electronic funds transfer, the scammer says, he or she will be arrested immediately and sheriffs are waiting outside.The scammers already often have the victims’ Social Security numbers, old bank account numbers, or driver’s license numbers, as well as home addresses, employer information and even the names of personal friends and professional references, which serves to confuse unsuspecting victims into believing that scam is legitimate. Consumers who receive such calls should not provide or confirm any information and should ask the collector for official documentation to prove the debt. If a consumer believes the call is a scam or the caller is simply abusive or threatening, report it to the BBB or the Federal Trade Commission, at www.bbb.com or www.ftc.gov, respectively.