The Rise of Fake Payday Loans

What's worse than a payday loan? a fake payday loan.  There is a breed of bottom-feeder collection agencies now that are no longer satisfied collecting on stale credit cards and predatory payday loans, some are now making up debts out of thin air.  I recently received a call from a lady who (three days before Christmas) was called by a company called Westgate Arbitration.  The "investigator" who called her allegedly said that she was under investigation for passing a bad check and she was subject to arrest.  The check allegedly related to a payday loan by a company called SGQ.

I did some checking on these companies. Based on information on the web, allegations of this type are not new to either Westgate Arbitration or SGQ.   Although the company was not named in the broadcast, it appears that Westgate Arbitration was caught on camera systematically teaching its collectors to lie by Inside Edition.  There are multiple reports of SGQ trying to collect on made-up payday loans through a number of collection agencies.



If you get calls from someone identifying himself or herself as an "investigator", "special agent" or such, and they say you owe money for a bad check or any type of commercial account, you should immediately become suspicious.  It is likely that they are collectors from a fringe, thuggish brand of collection agency. They will tell you anything to get money from you.  Real agents don't call on such things.  Real agents don't ask you to wire money or give bank or credit card info over the phone.  If you get these calls,  You should immediately contact the Consumer Finance Protection Bureau and talk to a consumer lawyer affilliated with the National Association of Consumer Advocates (NACA). Using this link, you can find an experienced consumer lawyer in your area.

Car Buying: Did you get cheated out of your employee discount?

While we are on the subject of employee discounts, I am looking into the case of a consumer who believes a car dealer cheated him by telling him he was getting the employee discount but in fact didn't give him a discount at all.  If this has happened to you, please contact me.  If you don't live in Indiana, I will try to refer you to a NACA consumer lawyer in your area.

Did a Car Dealer Steal Your Employee Discount Number?

I'm looking into complaints that a car dealer used the employee discount number that belonged to an employee of a major manufacturer without that employee's permission.  If this has happened to you, even if you don't live in Indiana, please call me.  If necessary, I can refer you to a fellow NACA consumer lawyer in your state.

State of New York Hammers Ocwen

The New York Department of Financial Institutions has settled a range of issues with the leading problem loan mortgage servicer, Ocwen Financial Corp.  The feds and other states would be well advised to look at this settlement as an example of what can be done through civil enforcement. The Ocwen Executive Chairman agreed to resign, Ocwen agreed to pay $150 million in fines and restitution (This is just for New York residents, mind you.), and Ocwen agreed to state supervision over its entire operation.  

At one time, when I worked at UAW Legal Services Plan, all of my mortgage servicing cases involved disputes with Ocwen.  Among the complaints were improper add-on charges including insurance and improper handling of  foreclosure loans, both loans where foreclosure was filed and shouldn't have been and improper conduct during the foreclosure process.  

I had a case that went on for a year before we figured out the problem was a mortgage payment that was paid to a previous servicer in the gap period between the time Ocwen bought the loan and the time Ocwen communicated the purchase to the home owner.  

If you look at your mortgage statement and see charges that you don't understand, you have the right to contact your servicer and request an explanation.  All too often the charges don't belong.  If you can't resolve the problem through contacting your serv'icer, contact a NACA consumer attorney at www.consumeradvocates.org.  

http://www.wsj.com/articles/new-york-financial-regulator-announces-settlement-with-ocwen-1419257065

Class Action Relief - Driver Solutions LLC

Not long ago, I wrote about a company called Driver Solutions, LLC, which was suing students from all over the country in Indiana no matter where they signed their contracts.  I was just made aware of a class action settlement giving relief to these consumers, even if a judgment was entered against them.  The law firm that won this settlement was the Howie Law Firm out of Dallas, Texas. Great job, Howie Law!

Follow this link for more information on the settlement.  Thanks to my fellow NACA-member, Robert Duff, a fine consumer lawyer in his own right, for the heads up about the settlement.

It appears that in the past couple years or so, Driver Solutions has been signing its new contracts in Indiana. That gives te company the right to sue in Marion County Indiana, nevertheless, if you are stuck in a problem Driver Solutions contract, and you feel like the company hasn't kept up its promises, please feel free to call me.  317-662-4529

Investigation of ementoring, emillionaire and other Work-at-Home Scams

I'm looking into a complaint that I received from a senior citizen about a company called eMentoring, which looks to be associated with another company called eMillionaire, which in tern appears to be a trade name of a company called ADM Ventures.  The company targets vulnerable people, especially seniors, with a variety of pitches to make money, including a work at home pitch.  They get authorization to take money out of your bank account, then calamity happens.  There had been a variety of complaints on ripoffreport.com, but now there is a page where Ripoffreport essentially says that ADM is their good graces, with a "commitment to total satisfaction."  Your guess is as good as mine regarding how ADM convinced Ripoff Report that it is committed to total customer satisfaction. In the past, I have found Ripoff Report more trustworthy than the Better Business Bureau, but this case gives me reason to rethink that supposition.  In the meantime, if you are solicited for any work at home program, just say no.  Don't give any telemarketer your bank account or credit card number.  If any company makes an unauthorized transfer out of your bank account, go to your bank and file a form to have the unauthorized transfer reversed.  If you are scammed you can file complaints with the Federal Trade Commision, your state attorney general, and numerous complaint sites online.

If you are a lawyer or other person who is investigating these companies, a good place to start is this bankruptcy court complaint which appears to have been filed by a creditor who allegedly was owed money by these companies.

How to Handle Medical Debt Problems on Your Credit Report

Medical debt on credit reports is a huge problem in the United States.  Small medical debts cause large unnecessary harm to the credit rating of millions of Americans. The Consumer Financial Protection Bureau just issued a press release about the problems with medical debts on consumer credit reports.  According to the CFPB, over 52% of all collection accounts on credit reports are medical debts. The tragedy is that many, if not most, of these delinquent accounts belong to people who can and do pay their bills.  Even a single unpaid bill can be a negative item on your credit report for 7 years - even if later paid - and significantly impact your credit score.  The scope of the problem is highlighted by the CFPB's graph showing the preponderance of medical accounts.

I receive a lot of calls from people who are surprised at medical debts showing up on their reports. Medical bills can be confusing, and they come in batches. It is easy for a bill to slide between the cracks, and collectors aren't always diligent about sending collection notices before reporting the debts.  Also, consumers often are caught in the middle between their health care providers and their insurance companies.  The providers often submit inadequate claims to the insurance companies, and the insurance companies often wrongfully delay or refuse payment.

How to get medical debts off your report

The key to getting these medical bills off your report is to become a letter-writing machine. When a provider or a collection agency puts a medical collection item on your credit report, if it is owed, you can pay the bill, BUT, pay it with conditions.  Put in your letter that you are tendering the payment under the condition that they delete the tradeline on the credit report.  (A tradeline is the term for the reporting of a single account on your credit report.) If appropriate, you can add in your letter that you are paying a disputed bill (and give the reason) or that it should not have been reported because you did not have the opportunity to pay it earlier.  Sometimes it even makes sense to pay a bill that should be covered by insurance. It is penny-wise and pound-foolish to refuse to pay a small bill on principle when it can cost you thousands of dollars in extra credit costs.  If you pay a bill the insurance company should have paid, you can always submit it to your insurance company to be reimbursed to you.

If you flat-out dispute owing the bill, you should send a letter VIA CERTIFIED MAIL (keeping a copy) to the medical provider or collector advising them that the bill is disputed and why.  You should demand that the tradeline on the credit report be removed or replaced with a notice that the account is "disputed by the consumer".  In a couple weeks you should check your credit reports, and if the disputed item is still listed (and not listed as disputed), you should send a dispute through the credit reporting agencies.  That usually solves the problem, but if it doesn't, it is time to call a NACA (www.consumeradvocates.org) consumer lawyer because you may have a case for damages under the Fair Credit Reporting Act.

If you can get to the bill before it goes on the report . . .

The best way not to have a problem with medical bills on your credit report is to get to the bill before it is reported. That isn't always possible, but it is sometimes. These bills usually fit these categories: bills you can't pay, bills that are inaccurate or incomprehensible, and bills that are subject to insurance disputes and delays.  If you can't pay the bill, it is important to make arrangements with the medical provider as early as possible and ask for payment terms and write-downs based on your ability to pay.  Make sure any plan given is backed up in writing.  If bills are inaccurate or incomprehensible, you need to advise the provider of the problem in writing and send a copy of your dispute to the insurance company.  In most cases you are supposed to receive a letter from a collection agency advising you that you have 30 days to dispute the debt before further collection actions occur, including the action of putting it on your credit report.  You need to take these letters seriously and send a dispute letter to the collection agency in writing, in a form that you can prove the agency received such as by fax with confirmation or certified mail.  No disputed account should go on your credit report as an undisputed debt.

How to handle insurance problems

For the bills that the insurance company should pay but doesn't, you need to write the healthcare provider and advise them to withhold reporting while you work it out with the insurance company. If you contact your healthcare provider soon enough, the provider might not send the bill to collections in the first place. You need to write the insurance company and tell the insurer why the bill should be paid. If the insurance company says the provider did not submit the appropriate claim, you need to forward your insurance correspondence to the provider advising them to keep working on the claim.  In some cases, if the healthcare provider is a member of a preferred provider network, the provider is contractually obligated to go through a dispute procedure with the insurance company rather than billing you directly.  If your insurance company unreasonably withholds payments, you can and should file an administrative complaint. For private insurance that you acquire directly, you can complain to your state's insurance commission.  For medicare and medicaid, there is a claims denial process, and a complaint process.  For government-backed plans, you can also file a complaint with with the constituent services office of your congressional representative.  For insurance that you receive through work (ERISA), the official complaint path goes through the United States Department of Labor Employee Benefits Security Administration, an agency that I have found is pretty close to useless.  Another avenue for complaints is through your benefits representative at work, which is especially useful if you are in a union.   Remember to make your complaint in writing and include documentation.

Negotiating discounts

Some bills you can negotiate a discount with the collection agency.  When you bargain to a discounted amount, you should make it a specific term of the deal that in exchange for the payment, the collection agency agrees to delete the tradeline.  When you submit the payment, you should include reference to the agreement to delete the tradeline in your cover letter accompanying the payment (keeping a copy, naturally).  Often the collection agencies say they can't or aren't supposed to bargain to delete tradelines. They often do it anyway. There is no law saying any creditor has to report any debt. There might be a contractual agreement between a collector and a credit reporting agency not to settle debts in exchange for an agreement to delete the tradeline; but that's not your problem. Whenever you are negotiating with a collection agency, you need to convince them that the money you are giving them is money that they would never be able to get otherwise.  If you are married, you should let them know that you are basing your offer on the income of the person who received the services and not the other spouse.  If your entire income is social security, tell the collector that.  Most collectors know they can't garnish social security, so they will usually be very reasonable with terms. I strongly discourage making payment plans with debt collectors. They rarely give you a good deal, and it just sets you up for hounding calls.  Wait until you have a lump sum to offer; make your offer and stick to your guns.

HIPAA
Finally, there is the issue of HIPAA privacy.  Some medical collection items on credit reports come from providers whose very names broadcast private information about your health.  You can object to the inclusion of these tradelines on your credit reports with disputes to the credit reporting agencies.

As a side note, any time you dispute anything with the credit reporting agency, do it in writing, by letter, and keep a copy. If it is an important dispute that you don't want to have to do over, send it by certified mail. DO NOT use the agency's telephone or internet dispute mechanism because there is no good evidence to track your dispute.

The good news about health care collections on your credit report is that these are among the easiest credit reporting problems to solve if you are diligent with your letters.  The bad news is that it takes a lot more time and hassle than it should.  The new Consumer Financial Protection Bureau has recognized the problem, and it is working on regulations to make the process more fair. Until this regulatory response is in place, there is no substitute for your own efforts, backed up by a consumer lawyer when necessary.  The CFPB is interested in hearing your story and handles complaints regarding the reporting of medical (and other) debt.  You can contact the agency through this link.

The Integrity Staffing Solutions Case: Little Guys Get Kicked at the Supreme Court Again - Employers Can Make You Work for Free

I missed it when it first came out, but the United States Supreme Court decided an important employment law case this week, Integrity Staffing Solutions, Inc. v. Brusk. Full disclosure: I haven't read this case, and I'm not planning to.  From the write-up in The Daily Kos, I don't have the stomach to read it.  Integrity Staffing Solutions is/was a contractor for Amazon.com.  They had an employment policy to make employees stand in line off the clock for security screening before and after each shift. Sometimes it was a half hour each way.  The issue was whether the company had to pay the employees for that time.  Guess what the Supremes said?  Yep,  the employees don't have to get paid for this time.  Now, I was taught in the context of the Fair Labor Standards Act, that if you are an hourly employee, any time that is not your own needs to be compensated.  Well, apparently that was the rule before corporations destroyed the last checks on their power.  The incredible thing is this was not the typical 5-4 crazy ruling. This was a 9-0 ruling written by jurist supreme, Clarence Thomas.  If I worked for "Integrity" the first thing I would do after this ruling is march right to the closest AFL-CIO office and ask how I can form a union.  If you are reading this, here's a link to save you the trip.

Are you having problems with the Volkswagen Jetta Sportswagen TDI?

On paper, the Volkswagen Jetta Sportswagen TDI looks like one of the best combinations of power, room, cargo utility and fuel economy, and at a reasonable price, but we are working on a case where the buyer of a Sportswagen has had confounding problems with the Diesel Particulate Filter system.  The problem is complex but, in essence, a car that is great for long distance highway cruising may be totally unsuited for consumers who drive only (or mainly) short distances due to the filter system having insufficient time to heat up and burn off particulates. As I understand it the new model, a late-arriving 2015 model will not have the same problem because it has a DEF (urea mixture) emissions reduction sytem.  

My Thoughts on the Grand Jury System in Indiana

The recent failure to indict the police officers involved in the deaths of Michael Brown and Eric Garner got me thinking about the grand jury system in Indiana.  In Indiana, a prosecuting attorney can bring any criminal case through the filing of information (a criminal complaint) or through a grand jury indictment.  In Indiana, 5 out of 6 jurors must find probable cause to return an indictment.

Note, in Indiana, ANY criminal case can be initiated by the unilateral filing of information by the prosecutor, including capital murder.  No doubt this is one reason why the job of county prosecutor is an elected office. We want the discretion to wield the power of the state to be in the hands of someone who is accountable to the citizens.  Of course the electoral system doesn't always work like it's supposed to. None of our institutions do.

If you can bring any case by the filing of information, why would you ever want to impanel a grand jury?  There are numerous ways to answer that question, and I suspect that every prosecutor would answer that question differently; but I think the number one reason would be to get a sense of the community whether the case should go forward.  If you use this philosophy, it just makes sense to provide the grand jury with both sides of the case.  When a prosecutor slants the evidence presented to the grand jury, he is putting his thumb on the scales of justice, and the system doesn't work while it should.   In a controversial case, it might be better to use a grand jury to determine whether the case should go forward.  When a prosecutor chooses to do this he or she needs to be conscious of the duty of fairness to the defendant, the community and the system.  If a prosecutor fails to do this, we the voters need to vote the bum out.  That's our safeguard in the system.

What do you do if you are in a minority, and what you want isn't what the majority wants?  You can't vote the bum out.  That's a problem. In that case, I can't think of anything better than protest.  If you show the world the injustice you see, perhaps eventually enough people will come around to seeing it your way.  The right to protest is as important as any other element in the American system.  It should be honored and respected at least as much as our public officials.

News Reporter Wants Information on Unfair Collection Practices.

It has been passed along to me that a news reporter is looking to talk to consumers with the following stories:

1. Anyone who’s been harassed or mistreated by a debt collector (especially any cases that are particularly extreme or unusual.) 

2. Anyone who’s been collected on twice for the same debt, by different collection agencies.

3. Anyone whose debt became a lot bigger as second- or third-generation debt collectors charged extra fees and interest on the principal amount owed. 

4. Anyone who’s had their ability to dispute a creditor blocked by a “forced arbitration” clause. 

5. Anyone who’s landed in financial trouble because they used an online payday lender. 

6. Anyone who's paid for "debt settlement" services and found themselves actually worse off as a result.

Actually, I am aware of more than one reporter looking for cases like these. If any of these apply to you, even if you don't live in Indiana, feel free to contact me, and I will try to get you in touch with one or more of the reporters.  It is very important that your story be told. Right now the Consumer Financial Protection Bureau is looking to strengthen regulations against debt collectors and also looking to abolish mandatory pre-dispute consumer arbitration.  We need to both build public awareness and help the CFPB as well as friendly legislators.  If it just so happens you have a good court case or a valid defense to a lawsuit, all the better.    You can contact me through my website or by calling me at 317-662-4LAW.    

Driver Solutions LLC and Marion County Small Claims Court

Back in 2011, the common practice of creditors forum shopping in Marion County Small Claims Court made national news in the Wall Street Journal.  We've made some headway thanks to the efforts of attorneys like Daniel Edelman (who successfully got a Court of Appeals ruling that debtors must be sued in the township where the debt was incurred or where they live), and Jeffrey Boulden, who fought against one of the biggest suitmongers, a trucking school called Driver Solutions, LLC.  When I was at UAW Legal Services Plans, I wasn't assigned the cases against Driver Solutions.  I just reached a settlement on behalf of a client in a Driver Solutions case.   If you have been sued by Driver Solutions, LLC, even if it has gone to judgment, especially if it has gone to judgment, no matter where you live, feel free to call me at 317-662-4529.  There may be something we can do for you.   Here's a link to the original Wall Street Journal Article.  Here's a link to an article about Jeff Boulden's work. 

Student Loans Got You Feeling Hopeless? 1. You're not alone. 2. The CFPB is paying attention

The Consumer Financial Protection Bureau is examining the problems people are having with student loans. The most pressing problem is that student loans cannot be discharged in bankruptcy most of the time. This can leave desperate borrowers with no workable solutions.  The worst problems are with private student loans. Often the private student loans have higher interest than government-backed loans, and there may be no structured procedures for you to file in times of hardship. Private student loans don't necessarily have income-contingent repayment plans or any consolidation options. (Federal loans can only be consolidated one time.)

As a consumer lawyer, I regularly get called by people with student loan problems. I have a few suggestions that work sometimes but far from always.
1. When you are having a hardship WRITE to your lender and ask for relief.
2. If the lender does not provide a workable payment plan, be a squeaky wheel. Make formal written complaints to the lender, the CFPB, and your congressional representative. I have seen cases of private student loans (where the congressional complaint shouldn't make a difference) get special consideration after a call from a congressperson's constituent services office.  Congressional complaints also let your representative know how important it is to get statutory relief in the form of lower interest rates and bankruptcy dischargeability.

If you get sued on a student loan, you should at least talk to a consumer lawyer and possibly a bankruptcy lawyer.  Sometimes the party that sues you is an assignee who can't prove the assignment or is claiming the wrong amount.  Sometimes the loan actually can be discharged in bankruptcy through a showing of substantial hardship.  Even if the student loan can't be discharged, you may get enough relief on your other bills to keep up your student loan payments.

Does Your Credit Card Insurance REALLY Cover Damage to Your Rental Car?

I actually read the rental car coverage provided with my business American Express Card, and I was somewhat surprised by the exclusions. I wasn't surprised that off-road use wasn't covered, but I was surprised that any rental vehicle with an MSRP over $50,000 was excluded. All "exotic" cars were excluded including Toyota Supra.  (How many years has it been since Toyota made the Supra?) All full-sized SUVs are excluded. All trucks are excluded. All cargo vans and passenger vans larger than minivans are excluded.

What that tells me is that you should be careful relying on your credit card coverage to cover damage to your rental car. You should make sure that your regular car insurance has rental coverage, hopefully with fewer exclusions. You should be careful accepting upgrades. If you are offered a free upgrade to a Cadillac, a full-sized SUV or a sporty car, you should be aware that your credit card coverage might not cover it.

CONSUMER LAW OFFICE OF STEVE HOFER OFFERS FREE ATTORNEY CONSULTATIONS FOR WAL-MART WORKERS

If you read the post below, you will see that I'm really angry at Wal-Mart for effectively cutting the pay and worsening the working conditions of already put-upon workers.  I thought about it, and the best think I can do is offer my time to Wal-Mart workers for free.  If you are a Wal-Mart worker or immediate family member, from now until the end of the year, I will give you a free one-hour attorney office conference at no charge.  What you use it for is largely up to you.  I'm hoping you use it to keep debt collectors at bay or to work through another consumer problem like a bad used car deal.  Just call my office at 317-662-4529 and mention that you are a Wal-Mart worker and I will schedule you in.  Because I only have a finite amount of time, I reserve to cap the offer to 30 callers.  I hope to schedule people through the end of the 2014.   I challenge other NACA attorneys to do the same or something similar.  In truth, I know that NACA attorneys already spend most of their time dealing with the problems of low-income individuals. Still, I think we can do more in the way of outreach to specific groups, and this is as good a place to start as any.

SCUMBAG WAL-MART STRIKES AGAIN! Eliminates insurance for 30,000 employees, raises the cost on the rest

Just when you think Wal-Mart can't treat their workers any worse, they manage to find a way.  Yesterday, Wal-Mart announced that it was eliminating the health insurance option for workers who worked less than 30 hours per week.  About 30,000 workers are afffected. That's roughly 2 NBA arenas worth.  Wal-Mart says it is taking this position because its healthcare costs have increased $500 million in the past year, $130 million more than they projected.  Wal-Mart didn't say so directly, but indirectly it suggested that Obamacare was to blame.  Let me raise another possible cause: greed. Half a billion dollars is a lot of money, but that's not the cost of the insurance of the 30,000 dropped workers, that's the total marginal increase for its 1.2 million workforce.  If you look at the big picture though, last year, Wal-Mart had $473 Billion in revenue and $16 Billion in profit after taxes.  Wal-Mart returned $13 Billion of that profit to shareholders in the form of dividends. Walmart's largest shareholders include members of the Walton family with a combined net worth of over $150 Billion. (I always capitalize Billion because any time you are talking about a thousand times a million dollars, I think it's worth an upper-case letter.)

In other words, Wal-Mart is cutting the insurance of 30,000 workers (and more family members) because Wal-Mart billionaires weren't rich enough.  Now, Wal-Mart is getting all of the benefit of cutting the insurance completely right. What are they doing for the affected workers?  They are hiring a consultant to help them find "affordable" health insurance.  You know what would make health insurance affordable?  A RAISE.  No sign of that.   Those who aren't having their insurance eliminated are having their premiums increased. You know what would make that affordable? A RAISE.  Again - silence.   

If Wal-Mart admits that 30,000 workers are affected, you can bet in the real world the number is much higher, because there is even more incentive now to keep workers' hours under 30 per week.  If you work at Wal-Mart, you need all the hours you can get because even 40 hours a week doesn't necessarily mean you can provide for your family.  If you have been getting 33-34 hours per week, you can bet that a week after this policy goes into effect you will be getting 29.  That means you will lose your insurance and have your pay cut 10% or more.  You will still be working too many hours to fill in with another job that provides benefits.  In states like Indiana (that refused to expand Medicaid under Obamacare) there may be no subsidized health insurance that you qualify for.  

The arrogance of Wal-Mart never ceases to amaze me.   A highly profitable company, already under presssure for low wages, poor working conditions and open hostility to unionization going out and CUTTING the wages of its most vulnerable employees.  I would boycott Wal-Mart if I wasn't doing so already.  I thought about what I can do to show compassion and solidarity to these workers, and I decided to give a FREE ONE HOUR ATTORNEY CONSULTATION TO WAL-MART WORKERS.  For the rest of 2014, I am going to give a free 1-hour attorney consultation to the first 30 (maybe more) Wal-Mart workers and their dependents who contact me, with no obligation or expectation that they will pay any more.  Although I usually talk to people on the phone the first time for free, I usually charge for office consultations. So this is a significant perk for Wal-Mart workers.  I hope quite a few take advantage of it.  I'm sure I'll be able to be of significant help with debt collection matters in particular.  

Beware of Pension Factoring Ripoffs

I've been a lawyer for 27 years, more than half my live.  I've handled over 100,000 intakes in that time. Recently I was approached regarding a a type of transaction that I had never seen before. It involved pension factoring and a company called Voyager Financial Group, LLC.  Voyager approaches people who need money and have an income stream from a pension fund or something similar, and they offer their services as brokers to get the person cash up front for his or her pension scheme. the pensioner pledges the income from the pension as security for the advance. It seems obvious to me that this is a loan by any other name but so far Voyager and like companies have dodged scrutiny as lenders.  Voyager has run afoul of securities commissioners in several states because Voyager does not put up its own money, it recruits investors to buy the income streams. Because this is passive income for the investor, it is a security and should be registered.

The best mainstream journalistic article that I've seen on the subject is this one from the New York Times.

In the business world, factoring is common. The most common factoring is accounts receivable. Another type of factoring involves payment in advance for structured settlement payments.  The intermediaries in these transactions can potentially rip off both the investors and the person obtaining the lump sum, a/k/a the borrowers.  The implied interest rates in these deals are quite high. From what I've seen the rates exceed the 21% maximum legal rate for mainstream lenders in most states.  It's not such a great deal for the investor, either. The pensioner can actually cut off the stream of income. I think it's arguable whether these contracts are ever legal due to lack of disclosure on the consumer side and lack of registration of the various lenders and intermediaries.

If you have a problem with a pension factoring company, or of you sold pension payments, especially if you are getting collection letters relating to the pension assignment, I am interested in hearing from you. Call me at 317-662-4529. If you are not in my area (Indiana), I will try to link you up with a NACA attorney.  

The FTC SUES MULTIPLE FIRMS FOR FAKE PAYDAY LOANS

What's worse than a payday loan? Not much, but one thing that is worse is a fake payday loan. The FTC has taken action against a group of firms they say bilked consumers out of tens of millions of dollars by putting through electronic funds transfer requests for payments on loans that never existed. The companies allegedly used personal information gathered by sneaky means to drain the bank accounts of  its victims.

I ran into a couple of instances of fake payday loans when I worked for UAW Legal Services. It wasn't the scam artists that troubled me the most in these cases, it was the banks who refused to follow proper procedures when customers made claims of unauthorized withdrawals.  If you find that your bank account has been tapped to pay for payday loans real or fake without authorization, I suggest that you start taking steps to close your account.  Once they have your information, they can start fake transfer requests again using multiple corporate identities.   Below are the company names listed in the FTC press release. There could be many more.

The complaint announced today was filed against: 1) CWB Services, LLC; 2) Orion Services, LLC; 3) Sand Point Capital, LLC; 4) Sandpoint, LLC; 5) Basseterre Capital, LLC (based in both Nevis and Delaware); 6) Namakan Capital, LLC; 7) Vandelier Group, LLC; 8) St. Armands Group, LLC; 9) Anasazi Group, LLC; 10) Anasazi Services, LLC; 11) Longboat Group, LLC, also doing business as (d/b/a) Cutter Group; 12) Oread Group, LLC, also d/b/a Mass Street Group; 13) Timothy A. Coppinger, individually and as a principal of one or more of the corporate defendants; and 14) Frampton T. Rowland, III, individually and as a principal of one or more of the corporate defendants.

UAW Legal Services Plans - Not Dead Yet

For many years, I was a staff attorney with UAW Legal Services Plans (UAWLSP) in Indianapolis. The legal services benefit was a casualty of the bargaining process in the last contract between the automakers and the UAW. UAWLSP stopped taking new cases at the end of 2013 and has been closing cases and phasing out operations ever since. The website at www.uawlsp.com has apparently not been updated since sometime in 2013. Unfortunately, this means that plan members have no easy way of finding out the status of their local legal services office, and they may not know what happened to their files and the attorneys who served them for many years.  The last thing that I heard is that UAWLSP will continue in at least nominal existence through at least part of 2015, but some local offices may be closed in the meantime.  If you are looking for an ex-UAW Legal Services (ex-UAWLSP) attorney, even if you are outside of my area, send me an email through my webpage at www.hoferlawindy.com, and I will either try to find your old attorney or find you a new attorney through my contacts at the National Association of Consumer Advocates.  

IF YOU ARE A FORMER UAWLSP ATTORNEY AND YOU HAVE JOINED A NEW LAW FIRM OR STARTED YOUR OWN PRACTICE, PLEASE POST A COMMENT IN THE SPACE BELOW INCLUDING YOUR NAME, OFFICE ADDRESS, PHONE, WEBSITE URL, AND ANYTHING ELSE YOU WANT THE PUBLIC TO KNOW. I will be happy to link blogs with you.  Gee, that sounds kind of dirty.

(Note to the Python folks. Don't sue me for using the picture, just tell me to take it down if it bothers you.  I've spent a lot of money on Python stuff. Be nice to me.)  

HOFER LAW FILES OPEN RECORDS COMPLAINT AGAINST LOCAL SMALL CLAIMS COURT

Today I filed  an official Access to Public Records Act complaint against the Wayne Township Small Claims Court in Indianapolis. I don't do this lightly. Twenty years ago, I filed a complaint against a judge who was letting collection lawyer run the court, and although the judge was reprimanded, I was effectively blacklisted from all the Small Claims Courts.  I filed the complaint because I intend to continue to investigate patterns of filing collection cases in the small claims courts, and I can't afford to go to each court twice, once just to get turned down and the second time to get the information after convincing the court staff that the open records act applies.   My complaint is below.

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Consumer Law Office of Steve Hofer

3750 Guion Road, Suite 190

Indianapolis IN 46222

317-662-4LAW                                                                                                                  www.hoferlawindy.com

317-662-4529                                                                                                                                 hoferlawindy@gmail.com

                                                                                                             

August 21, 2014                                                Via Mail and Fax 317-233-3091

Luke Britt

Indiana Public Access Counselor

W470 Indiana Government Center South

402 West Washington Street

Indianapolis IN 46204

              OFFICIAL OPEN RECORDS COMPLAINT

                                              Agency: Wayne Township (Marion County) Small Claims Court

                                              5401 West Washington Street, Indianapolis IN 46241

                                              Date of Request/Agency Denied Access: August 4, 2014

Dear Counselor Britt:

I am hereby making a complaint of denied access under the Indiana Access to Public Records Act.  The agency in question is the Wayne Township Small Claims Court in Indianapolis.  On Monday, August 4, 2014, during regular business hours, between 2:30 and 3:00 PM; I went to the Wayne Township Small Claims Court for the purposes of reviewing a selection of recent cases filed by bad debt buyers.  The abuse of the court system by bad debt buyers is a matter of public concern.  For context see: The One Hundred Billion Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof, Peter A. Holland, published in Journal of Business & Technology Law, Vol. 6, p. 259, 2011 and online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1875727. See also the New York Times Magazine feature story Paper Boys: Inside the Dark, Labyrinth, and Extremely Lucrative World of Consumer  Debt Collection,  Jake Halpern, http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?_r=0. 

At the Wayne Township Court, I was allowed to use the public access terminal to identify a selection of recent cases. I copied down some case numbers, approximately 20, and asked to see the files that went with the case numbers.  The attendant said that I was not allowed to see the files, that they were not public. The only public information was the information on the terminal. I told the attendant that she is mistaken, these are public records that are readily accessed by collection attorneys on a daily basis.  On that same day I had inspected files without incident at Pike Township Small Claims Court. The attendant told me that I would have to take it up with the supervisor who was not in, and would not be available until tomorrow. She would not give me the full name of the supervisor. I offered to make a written request, but I was rebuffed. 

I believe it is the responsibility of the agency to have persons trained in compliance with the act on duty during all regular business hours regardless of the presence or absence of any given supervisor.  I believe my treatment at this court conveys an image that the court’s policy is to be friendly to debt collectors but not to persons who want to police the conduct of debt collectors.

Finally, I would have made an informal request for an opinion by the counselor if it were not for a disturbing fact that I found out later.  In the MYCASE online record system, the defendants’ names are missing from the online records of a number of collection cases filed in Wayne and Lawrence Townships after 8/11/2014.   (See enclosed documentation.) If researchers aren't even able to get defendant names from the online system; it will be impossible to uncover problems with debt collectors misusing the court system[1].

Sincerely,

Steven R. Hofer

Attorney at Law

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The MYCASE documents that I attached included lawsuits filed by:

Credit Acceptance Corporation

LVNV Funding LLC

Convergence Receivables LC

Calvary SPV 1 LLC

MSW Capital LLC

Second Round LP

Credit Acceptance Corporation

NCEP, LLC

Jefferson Capital Systems, LLC

Enclosures – Mycase records

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[1] The Mycase sheets are included for illustration only. Because for this purpose the names of the defendants are irrelevant, I have partially redacted those that are included.  

  Co

New York Times - Inside the Criminial Underworld of the Debt Collection Industry

Last week's New York Times Sunday magazine had a feature story detailing the criminal underworld network behind the bottom feeder debt collection industry.  The article, by Jake Halpern,  titled Paperboys: Inside the Dark Lucrative World of Consumer Debt Collection explains how the industry uses lies and pressure to make huge profits by paying 1% of the face amount of the debt and collecting 100% through intimidation and unfair collection lawsuits.

Inside the Dark, Lucrative World of Consumer Debt Collection

 

When the collectors go to court, no matter how many times the debt has been assigned, the collector maintains that the debt is absolutely legitimate and absolutely owned by the agency collecting it.  This is often a fallacy.   The debts are sometimes sold to multiple parties, each trying to collect; and sometimes unauthorized people get a hold of the accounts list and start outlaw collection.  That's why individuals and the courts must insist on strict accounting for proceeds and ownership of the accounts.   They aren't doing it right now.

John Oliver Takes on the Payday Loan Industry

John Oliver Takes On the Payday Loan Industry

Sometimes it takes somebody from somewhere else to really see how much you are messing up.  John Oliver takes the time to expose the myths and lies in the payday loan industry.  Language Alert.

Wusik Rocks

This post has nothing to do with law but does have to do with customer service.  I want to give a shout out and hearty thanks to William K.,  proprietor of Wusik.com for going above and beyond the call of duty in helping me with a software installation issue.  If you are looking for music software that is powerful, affordable and always interesting, check out Wusik.  

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Hidden Fees in the Indianapolis Bike Sharing Program

Gary Welch's Advance Indiana blog has a great post explaining hidden fees in Indianapolis's bike sharing program. If you don't dock the bike every half hour, you can be charged astonishing fees. Read about it at this link.

The Affidavit From Hell

I've been spending a lot of time working on issues regarding assigned debts.  When bottom feeder collection agencies sue on these accounts, they rely on affidavits from employees who are allegedly knowledgeable about the status of the accounts. Here is an affidavit that was filed in court by the law firm of Bowman Heintz Bocia and Vician, P.C.  from Merrillville, Indiana.

The affiant, Jennifer Bernard, states that she is an employee of "AMER. ACC CO LLC AS ASSIGN OF ALL DEBT AS ASSIGN OF PEPPERTREE AS ASSIGN OF PMD FINANCIAL AS ASSIGN OF ASSET RECOVERY AS ASSIGN OF AARON'S SALES, plaintiff or servicing agent of the plaintiff."  If her paycheck is drawn on that company name, I'd be surprised if there is any space left over for the dollar amount of her take-home pay.

Next the affiant has to swear that she is familiar with the books and records, and here is where this person amazes me with her knowledge. "I am familiar with the record keeping practices of AMER. ACC CO LLC AS ASSIGN OF ALL DEBT AS ASSIGN OF PEPPERTREE AS ASSIGN OF PMD FINANCIAL AS ASSIGN OF ASSET RECOVERY AS ASSIGN OF AARON'S SALES's business and/or have personal knowledge of the following:"  It is incredible that one person is familiar with the books and records of not just AMER ACC CO LLC but also ALL DEBT and also PEPPERTREE and also PMD FINANCIAL and also ASSET RECOVERY and also AARON's SALES.  A person this knowledgeable about the accounting systems of many companies should be writing accounting books, not signing affidavits.

Affidavits like these are ridiculous on their face, but collection companies are taking these things to court every day in the thousands, and courts are issuing default judgments on these cases almost as fast.  Look at this case as an example. At each step in the chain of this debt there were opportunities to make mistakes in he documentation of the amounts owed, the amounts paid and the status of the assignment. If there was ever a valid debt in this case, six companies have in theory had the opportunity to collect payments on this account and six companies have had the opportunity to collect money on this account.  Actually, six companies have had the opportunity to make this account up out of thin air.

What is the relationship between American Acceptance Co. LLC. and the law firm of Bowman Heintz Bocia and Vician? American Acceptance's registered agent, Glenn Vician, is a named partner in the law firm doing the collection.  How close are the companies physically?  It looks like a six minute walk if you go the long way.

Death of a Borrower Doesn't Kill Student Loans - Elizabeth Warren is Mad About It - About Time Somebody Is

If you are a parent who (or even a grandparent) who has cosigned private student loans for your family member, you are in for a rude surprise if the borrower dies. The entire loan balance often becomes immediately payable.  This is a rude surprise for an older family member who thinks Junior is going to be the one who gets the education that nobody else in the family could get, only to find that Junior is dead and the bills for a professional education are suddenly falling on a senior citizen (or near senior citizen) with anything but a professional income.  Senator Elizabeth Warren, bless her heart, is trying to bring this injustice to light and hopefully craft a policy response.

I have had to counsel several parents and grandparents who suddenly found themselves the target of aggressive student loan collections.  I can tell you that as a general rule government-backed student loans are not the type that have this problem; and thankfully, private student loans cannot result in the garnishment of Social Security income.  Unfortunately private student loans (even for a cosigner) can't generally be discharged by bankruptcy, but that's something Senator Warren hopes to change.  (There is an exception to the rule against discharge of student loans in bankruptcy; and that is in the case of "undue hardship".  I think cases involving  cosigners on a fixed income with a dead or disabled student borrower might often meet the "undue hardship" standard.)

If you are asked to cosign student loans for your son or daughter, I suggest that you get quotes on life insurance and long term disability insurance sufficient to cover the loan. The cost of that insurance should be reflected in your decision to borrow the money since that risk is a cost that you will bear.  If a grandchild asks you to cosign a loan, you should ask yourself and your grandchild what kind of college worthy of the name needs grandparent cosigners.  If they don't have faith in the student's ability to pay back the loan from future income, then maybe the program isn't worth the money anyway.  Remember, the resources of parents are considered in the formula for determining student aid; but the resources from grandparents are not.  Worthwhile schools can usually fund a way to fund qualified students without Grandma giving an IOU.

If you are in Indiana and you are being subjected to collection activity as a cosigner, I am interested in hearing from you.  Please contact me through the links at the top right of this page.

Solving the Epidemic of Bad Debt Lawsuits in Indiana

I've been trying to understand the dynamic behind what appears to be a lot more lawsuits against consumers over bad debts, especially old credit card accounts, especially old credit card accounts that have been assigned to one or more debt buying company.  Today I dusted off a law review article from 2012 that I put aside for rainy day reading. The article is by Professor Judith Fox of the University of Notre Dame Law School.  It is entitled DO WE HAVE A DEBT COLLECTION CRISIS? SOME CAUTIONARY TALES OF DEBT COLLECTION IN INDIANA.  It was published in the Loyola Consumer Law Review, and you can download it here.  Professor Fox led a survey of all the third-party debt collection lawsuits filed in Indiana from January 1, 2009 to March 31, 2009.  She made some interesting findings and I want to share some of them with you

Thirteen debt buying companies filed 79% of the lawsuits studied.  Here they are in decreasing order of frequency.

Midland Funding

Arrow Financial Services

Asset Acceptance

LVNV Funding LLC

American Acceptance

Atlantic Credit & Finance

Credit Max

CACH, LLC

RAB Performance Recovery

NCO Financial

Unifund

Patriot Recovery LLC

Portfolio Recovery  

[If you've  been sued by any of these companies contact a consumer attorney member of the National Association of Consumer Advocates. You can find one in your area through www.naca.net.  If you are in Indiana, you can call me at (317) 662-4529.  Better yet, if you get a collection letter from one of these companies but haven't been sued yet, call us before you get sued.  Frequently, a consumer lawyer can make these collectors go away forever with just an attorney letter.]

These bad debt buying companies are what we in the consumer law practice call "bottom feeder" collectors. They buy accounts after they've been written off by the collector, and perhaps they have passed through hands of several other collection companies.  Because accounts are often old and pretty doubtful. buyers pay for these accounts, usually no more than two cents on the dollar. The bad quality of the accounts is reflected in the price that the When represented consumers as an attorney at UAW Legal Services Plans, whenever my clients would get a letter from one of these companies, I would send the collector a request for validation, and usually that was the last that I ever heard from the collector. We rarely had to defend a lawsuit on one of these assigned accounts.  Still, the collectors love to file lawsuits hoping to get default judgments (suits where the consumer does not respond to the complaint) because if the collector gets a judgment, a $2.00 investment turns into a judgment for $100.00 that remains on the consumer's credit report for 10 years and is potentially collectible for 20 years.  Even one of these bad debt judgments can be a financial disaster for a consumer who is struggling to overcome financial hardships and rebuild credit.  

The Debt Buyers' Dirty Little Secret - they often (usually?) can't prove their debt, and don't want to go to court.

In her law review article, Professor Fox points out that in these assigned debt cases, the accounts have usually passed through several hands, and at each step there is the potential for errors and lapses in record-keeping.  When properly challenged, it is not easy for a debt collector on an assigned debt to prove entitlement to the money claimed.  Still, in the 640 complete case files that were part of the Fox study,  the collectors almost always won a judgment.  The biggest reason is that in 535 of the cases (83%) the defendant never responded to the complaint. In only 23 cases did a defendant file a formal answer, which I believe is the consumer's best defense. In 40 cases, the consumer wrote a letter to the court. Writing a letter is sometimes better than doing nothing. Sometimes it is worse, depending on whether the trial judge treats the letter as a full answer.  Not surprisingly, in the Fox study, only 26 defendants, 4% of the total, were represented by attorneys; and some of those were represented by bankruptcy attorneys notifying the court of a pending bankruptcy.   The bottom line is that fair fights are rare in collection cases, and that's no accident. The debt companies want it to be that way. Not only are the debt collectors avoiding fair fights, they are trying to avoid showing up to court at all. 

Professor Fox's study observed that from 2005 to 2009 cases designated as "civil collection" matters in the case header (with "cc" in the case or cause number) increased 51.8%. In the same time-frame, small claims cases (designated "sc") in the header decreased 7.9%. To understand this section, you need to know that small claims ("sc") cases can be filed with a lower filing fee, but the claim cannot exceed $6,000.); whereas "cc" claims can claim any amount but require paying a higher filing fee, usually about a $50.00 difference.  Professor Fox surprisingly found that 64% of the "cc" cases were filed for a mounts less than $6,000; so, in theory, those cases could have been filed in small claims court, thereby costing the plaintiffs less to file.  Professor Fox speculates (I think correctly) on why collectors are paying more to file outside of the small claims docket.  The collection attorneys don't want to show up at court, and they don't want the consumer defendants to show up at court.  Usually on the small claims docket cases, there is an initial appearance date set that the defendant can show up and raise defenses. This isn't routinely set in the "cc" cases. Another factor is that the collection attorneys are usually from out-of-town, and sometimes from out of state. If the attorney has to show up at court even once it can make the case unprofitable.  (In the Fox study, the biggest debt buyer plaintiff was Midland Funding. Midland used a law firm in Merrillville Indiana for its collection cases all over the state. Merrillville, near Chicago, is several hours away from the southern half of Indiana.  

How can you tell if you were sued on a case where the collection attorney doesn't want to go to court?  Is the amount of the claimed debt under $6,000? if so, look at the court case number or cause number. Does the number have "cc" in it?  If yes, then the defendant could have sued you in small claims but sued you on the regular collection docket in hopes to avoid court. With this knowledge you have a lot more leverage in "cc" cases.   

Why I'm Not a Comcast Subscriber - Tips for cancelling cable, cell-phone and satellite television contracts.

People are surprised when I tell them that my family doesn't have cable television. In fact, we haven't had cable or satellite tv for more than 15 years; and we really don't miss it. A mixture of broadcast television, Netflix and Hulu Plus suits us just fine, and the money we save is enough for two Sirius radio subscriptions and a nice getaway vacation each year.  If I was ever tempted to go back to Comcast, this recording would surely warn me off. An in this recording, Ryan Block, an AOL employee recorded a Comcast employee's efforts to get him to not cancel service.  (I find that ironic, because years ago, I wasted hours of my life trying to get AOL to cancel my subscription.)

 If you are trying to cancel a cell phone contract, a cable tv contract, or a contract for satellite radio or satellite TV, go ahead and make one call, but set a strict time limit on it.  When the person tells you that they are recording the contract for quality purposes, you should tell them, "what a coincidence, so am I." Actually record the conversation if you can.  Don't let them keep you on the phone for a long time.  Ask the representative for a written address to send your cancellation complaint. Ask the representative for his or her name and employee number, then hang up and send your cancellation demand in writing. Follow up with a complaint to the FTC, the FCC, the BBB and your state's attorney general.  If the representative won't give you the address, do a google search, put the name of the company in the Google box with "address for cancellation" or "executive disputes"; and you will almost always come up with a good address.

Great Tips - What to Say to Debt Collectors if They Call

This is a very good instructional video by Alabama consumer attorney John Watts giving you tips about how to handle calls by debt collectors.  It is okay to screen repetitive calls by debt collectors, but I think it is important to talk to a collector at least once.  As John points out, the collector may not even be calling about your account.  If so, setting the record straight early on may help you avoid a lot of stress later. Another thing to keep in mind is that a telephone debt collector's livelihood depends upon establishing a position of power over you. Once it is clear in your mind that this collector can't make you do anything you don't want to do, that power goes away. Your power to waste the collector's time actually exceeds the collector's power to get money from you.  

Welcome to CLAOS - The Consumer Law and Other Stuff Blog

Welcome to Steve's (Totally Free!) Consumer Law Blog - the semi-official blog of the Consumer Law Office of Steve Hofer. I've blogged before. From 1999 through early 2014, I was the semi-official blogger of AFSCME Local 3357, the union for UAW Legal Services attorneys. If you are a UAW member, retiree, spouse, or surviving spouse, and you are looking for an attorney now that UAW Legal Services Plans are in the process of disbanding, feel free to contact me.  Even if you aren't in Indiana, where I am.  If you are out of my area, I will try to look up a former UAW member in your area who is practicing law; or in the case of consumer cases, find one of my fellow National Association of Consumer Advocates members who can help you out.  My contact links are to the right of this post.