A Texas resident has filed a lawsuit against a debt collection agency after he received several automated voicemail messages from an employee that did not disclose the messages were an attempt to collect a debt.

James Jones filed suit against Lockhart, Morris & Montgomery Inc. and John D. Hickman on Aug. 10 in the Eastern District of Texas, Beaumont Division.

According to the allegations, on more than one occasion the debt collectors used an automatic telephone dialing system to make a call to Jones’ cell phone and left a voicemail message. Jones states the employee did not disclose in the voicemail message that it was a debt collector.

The defendants are accused of violating the Fair Debt Collection Practices Act, the Texas Debt Collection Practices Act, the Texas Business and Commerce Code and the Telephone Consumer Protection Act by failing to disclose in any communication that it is a debt collector

The plaintiff is asking the court to issue an injunction prohibiting the Defendants from continuing its “violative behaviors” and for an award of statutory damages, actual damages, three times actual damages, interest, attorney’s fees and court costs.

Jones is represented by Dennis R. Kurz of Weisberg & Meyers in Houston. A jury trial is requested.

U.S. District Judge Ron Clark is assigned to the case.

Case No. 1:11-cv-00373
By Michelle Keahey, East Texas Bureau

A putative class action is targeting one of New York state’s most ubiquitous firms representing lenders in foreclosure actions, claiming the firm’s alleged failure to file particular court papers is depriving homeowners of the chance to participate in mortgage modification conferences.

In a lawsuit filed in the Eastern District of New York, MFY Legal Services claims that Steven J. Baum P.C., an Amherst-based firm representing banks in a large share of New York state foreclosure actions, engaged in “unfair and unconscionable debt collection and deceptive practices” by failing to file the specialized Request for Judicial Intervention that triggers settlement conferences.

The conferences are meant to bring lenders and homeowners together to negotiate a mortgage modification before the action can proceed.

In Cole v. Baum, 11-cv-3779, MFY alleges that “Defendant Baum’s unlawful conduct has caused serious damage to Plaintiffs and the Class by prolonging the amount of time that Plaintiffs’ and Class members’ mortgage loans remain delinquent, which has caused their loan balances to swell due to unnecessary delinquent interest accruals and needless foreclosure, and delinquency related fees being assessed against their loan accounts.”

The Aug. 3 complaint coincided with the release of an MFY Legal Services study faulting the Baum firm and others that handle foreclosure matters for lenders for not filing the documents that trigger settlement conferences.

MFY tracked foreclosures filed in Brooklyn and Queens in both November 2010 and March 2011. Of 922 foreclosure actions filed in those two months, the study said 805 actions, or 87 percent, lacked the request for judicial intervention as of June 2011.

According to the study, out of 159 cases handled by the Baum firm, requests for judicial intervention were filed in 10 cases.

Steven J. Baum denied the suit’s allegations of deceptive practices and said he had not yet had a chance to verify MFY’s purported data.

But he noted in a statement that the lack of requests for judicial intervention filed actually indicates that the firms are not the problem, but illustrates the need to re-examine the court system’s filing requirements.

Baum’s statement refers to requirements that the proof of service of the summons and complaint be filed at the same time as the request for judicial intervention, and an attorney affirmation vouching for the accuracy of the underlying documents. Those requirements, he said, are time consuming and require thorough review.

Previously, only two documents, the proof of service and the request for judicial intervention, had to be filed at the same time under Uniform Rules for the New York State Trial Courts §202.12-a(b)(1).

In the wake of the “robo-signing” scandal last year, Chief Administrative Judge Ann Pfau in October added the affirmation requirement, in which lenders’ attorneys must confirm they have performed due diligence by ensuring accuracy of the documents with a representative of the foreclosing institution.

The number of foreclosure actions have dropped in the wake of the affirmation requirement. According to Office of Court Administration statistics, from January to July 2010, there were 24,169 residential foreclosure filings. From January to July 2011, there have been 4,834 filings. OCA foreclosure data is only counted from the filing of the request for judicial intervention.

The MFY suit claims foreclosure firms are “overwhelmingly reluctant” to sign affirmations, explaining the “standstill” in request for judicial intervention filings.

Under CPLR 3408(a), the settlement conference is to be scheduled by the court within 60 days of proof of service.

Meanwhile, lenders are coping with increased scrutiny and regulations that often vary from state to state. For example, 16 of the nation’s top mortgage servicers are adjusting to consent order requirements under a settlement with the Office of the Comptroller of the Currency, Office of Thrift Supervision and the Federal Reserve System. Among those requirements are the establishment of a certification process for the law firms that the lenders use.

NEED FOR CONFERENCES

Elizabeth Lynch, a staff attorney with MFY Legal Services, said that without the settlement conferences, homeowners could not avail themselves of help from local housing counselors or court oversight to counter delays from lenders.

“We basically have nobody to turn to,” she said, adding that accumulating fees could make it more difficult for homeowners to obtain modifications in the future.

Lynch said that while the affirmation had originally been implemented to protect homeowners by assuring accurate papers and a fair process, the requirement is backfiring.

The delay in filing further harms homeowners, she said, adding, “I think in a way, it makes a mockery of the due diligence affirmation.”

The suit seeks to recoup late fees, delinquent interest and other foreclosure-related expenses for homeowners who have not yet proceeded to settlement conference, she said.

Baum said in his statement that he found it ironic that MFY “seeks to speed up the foreclosure process when the October 2010 message from the Office of Court Administration concerning Affirmations was clear: foreclosure counsel should take its time and make sure all is in order before coming to court.”

In an interview, Baum added, “If the plaintiffs want these settlement conferences to be triggered faster, the answer is to have the OCA amend their current rules to allow for the affirmation to be filed at a later time and that later time could be at the settlement conference. That would allow at least 60 days to have the affirmation completed.”

The Baum firm has appeared in 67,000 settlement conference appearances since they were first mandated in 2008, according to Baum.

The OCA said courts oversaw more than 62,000 settlement conferences in the January to July 2010 period. In the comparable 2011 time period, there were just over 50,000 conferences.

A November 2010 OCA study showed that while conferences were labor-intensive, averaging about six to eight appearances per case, they were ensuring fewer default judgments and more settlements.

MFY is handling the case with the law firm of Harwood Feffer.

Andrew Keshner
Copyright 2011. ALM Media Properties, LLC. All rights reserved.

A West Virginia pension fund sued Bank of America Corp. (BAC), Citigroup Inc. (C)’s Citibank unit and UBS AG (UBSN) claiming they manipulated the London Interbank Offered Rate, or Libor, in violation of U.S. antitrust law.

The Carpenters Pension Fund of West Virginia filed a complaint in federal court in Manhattan yesterday claiming the banks and a group of unnamed co-conspirators deliberately understated their borrowing costs to depress Libor, lowering their interest expenses on products tied to the rate.

The pension fund seeks to represent a class of all clients of the banks that invested in Libor-based products between 2006 and 2009. The suit seeks unspecified damages, which may be tripled under antitrust law.

“About $350 trillion worth of financial products globally reference Libor, and the lower Libor rates during the relevant period robbed lenders of significant amounts of interest income,” the pension fund claimed in its complaint.

“We believe the suit is without merit,” said Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, had no immediate comment on the suit. Torie Pennington von Alt, a spokeswoman for Zurich-based UBS, didn’t immediately return a voice-mail message seeking comment on the suit.

On April 15, three European asset-management firms sued a group of banks including Bank of America, Citibank, JPMorgan Chase & Co. and Barclays Bank Plc, claiming they manipulated Libor.

U.S. and U.K. officials are cooperating in a probe of possible Libor manipulation, a person close to the investigation said last month.

The case is Carpenters Pension Fund of West Virginia v. Bank of America, 11-CV-2883, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York federal court at rvanvoris@bloomberg.net.

©2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

A Nevada County civil jury ruled against the former owner of a local collections agency, awarding one of its clients more than $1 million in damages.

Fischer Towing first filed suit against MGM Collections in 2008; the suit, which eventually was amended to add owner Debra Newby after the corporation filed for bankruptcy, recently ended in an award for the towing company.

Newby will be in court in May for a debtors examination; a hearing to garnish the earnings of her husband is set for April 22.

And Newby’s troubles might not end there. A criminal investigation has been forwarded to the Nevada County District Attorney’s Office and is being reviewed to determine whether criminal charges will be filed.

“They were taking (collection) accounts, collecting money and not giving it to us — that’s what it boiled down to,” said Debbie Fischer.

Fischer said the towing company first contracted with MGM Collections in 1997, before Newby bought the business in 1999. MGM was to collect the outstanding debt and in return keep a commission of 25 percent to 40 percent, with their expenses to be paid out of what they collected.

If a case went to trial, the court and attorney costs would be deducted. In 1998, a new contract was signed that increased MGM’s commission to 45 percent, although Fischer said in court she did not approve that change.

Fischer said the collections side of the towing business had no continuity, with a lot of staffing changes.

But in 2008, she started going through paperwork and came to a stunning realization. Not only did she not have any records from MGM acknowledging they had been taking files, the towing company had not received any checks from MGM since 2006.

A series of confrontations with Debra Newby led Fischer to file a lawsuit, she said.

“I filed … to get the information,” she said.

After months of work, Fischer found that over the 13-year period, her tow company had sent 1,700 files to MGM that added up to more than $2 million in collectable debt.

“I started looking at some of the files, and went to court and saw the judgments were satisfied, but I didn’t get the money,” she said. “It was a very time-consuming process.”

In one example presented as evidence in the court case, MGM had collected $1,700 on a file in 2007, but paid Fischer Towing nothing.

In all, Fischer said, MGM paid Fischer Towing less than $9,000 between 1997 and 2006, with nothing paid out after July 2006. Newby claimed most of the monies collected had gone to pay her overhead costs.

“Normally we would get 70 percent, but they were taking our 70 percent and paying their overhead costs,” Fischer said. “They weren’t giving us the money we were due.”

Fischer filed suit in November 2008, alleging breach of contract, fraud, and conversion of funds for personal use, and requesting an accounting.

After MGM filed for bankruptcy in May 2009, the suit was amended to add Debra Newby.

Newby and her attorney, Megan Thomas Petty, did not return calls for comment.

“The whole thing has been lengthy,” Fischer said, “We had to depose (Newby) five times to get answers out of her, she was so evasive … That was their tactic, trying to get us to spend as much money as they could so we’d give up.”

The case went to trial at the end of January and the jury returned verdicts of conversion damages and punitive damages against MGM Collections and against Newby, totaling $1,092,516.

“The important thing for Fischer was to be able to hold Debra Newby personally accountable, if they are to be able to recover any of their losses, since the corporation had ceased to function,” said Fischer’s attorney, Craig Diamond.

“We are pursuing collecting the judgment,” Fischer said.

That includes filing a motion to garnish the earning

of Newby’s husband, Spike

Newby; a hearing is set for 10 a.m. April 22.

By Liz Kellar
lkellar@theunion.com
Source: TheUnion.com

A woman files suit in Philadelphia against Capital One for debt collection harassment, including numerous phone calls to her workplace and letters to her home, escalating into a demand for $286 million.

Philadelphia, PA (PRWEB) December 13, 2010

A woman saying she was harassed by Capital One for a disputed $4,000 credit card debt has filed suit after the bank demanded more than $ 286 million dollars. Attorney Craig Thor Kimmel of Kimmel and Silverman, P.C., an Ambler-based consumer law firm, has filed the suit on behalf of Patrice Perry in Philadelphia County, Pennsylvania. (Case ID# 101200540, Philadelphia County Court of Common Pleas)

According to the complaint, Capital One first demanded Perry pay $3,845 for purchases on a credit card. Perry disputed the debt and turned the letter over to her family lawyer, who wrote Capital One to cease and desist contacting Perry directly. Disregarding the letter, Capital One allegedly stepped up collection efforts, placing more calls to Perry and claiming that it was doing so because the lawyer did not make a substantial settlement offer to resolve the account. Telephone calls were made to her home and workplace, where she alleges, her employer does not allow personal calls.

Subsequently, Perry received more letters, each demanding different amounts, some higher than others, all threatening legal action if not paid promptly. The letters failed to state how the varying amounts were calculated or if amounts sought were based upon any contract between Capital One and Perry authorizing such charges. After a second cease and desist letter from the family lawyer was disregarded, Capital One in response sent a letter demanding immediate payment of $286,651,237 from Perry. The letter went on to instruct Perry to mail full payment in the envelope provided. It was at this time that Perry’s family lawyer contacted Kimmel, who assumed representation.

The complaint alleges the $286 million demand was so outrageous that it could not be the result of a computer glitch, and that it required human intervention to be sent. Perry alleges the basis for sending it was embarrass, humiliate, intimidate and cause emotional distress, of amounts incapable of being understood.

The lawsuit alleges that Capital One was compelled to cease communication upon receipt of the initial letter from her family lawyer and used false, deceptive and misleading communications to collect a debt.

Perry further claims that Capital One threatened to report the disputed debt to the credit reporting agencies, which would adversely affect her FICO credit score and unnecessarily make her other creditors insecure.

“Harassing calls, disregard for a lawyers written instructions on two occasions, demands for payment of differing and arbitrary amounts and the final letter seeking more than $286 Million, demonstrates serious abuses at the collection office of Capital One.” says Attorney Kimmel. “From this example we see how a financial terrorist works in today’s economic times and that is by escalating tensions, pushing the person to the limit, and making threats, without regard for civility, accuracy or the legal rights of the individual. No one should ever suffer the indignity and humiliation my client has experienced.”

Kimmel advises consumers to be guarded with creditors and debt collectors working for them. He recommends seeking legal advice before paying disputed debts, entering repayment agreements or providing/confirming personal information. Under the federal Fair Debt Collection Practices Act consumers have substantial protection from this type of behavior with the debt collector, who must pay all legal fees of the consumers lawyer”, says Kimmel, “and most states, like Pennsylvania in this case, offer similar protections from creditor abuse of the type Capital One undertook with Ms. Perry.”

For more information regarding consumers’ rights in dealing with debt collection harassment, please visit creditlaw.com.

###

Michael Sacks
Kimmel & Silverman
800-536-6652 ext. 131
Email Information

CHARLESTON — A Kanawha County couple is suing Enhanced Recovery Company and Accounts Receivable Management in separate suits after they claim the companies continued to attempt to collect on debt after they retained an attorney.

The defendants continued to call Gerald T. Noeske and Terri L. Noeske multiple times after they were aware that the couple had retained an attorney, according to two complaints filed Nov. 9 in Kanawha Circuit Court.

The Noeskes claim they were indebted to Chase Bank in the amount of $687.02 and Premier Bankcard, Inc., in the amount of $372.35.

After the Noeskes retained an attorney on May 11, they informed the defendants and provided their attorney’s contact information, according to the suits.

The Noeskes claim after informing the defendants that they retained an attorney Enhanced Recovery Company called them “at least 16 times,” and Accounts Receivable Management called “at least 23 times,” to attempt to collect their debt.

The defendants’ phone calls were made with the intent to annoy, abuse, oppress or threaten the Noeskes.

The Noeskes are seeking damages in the amount of $74,000 in both suits for violation of West Virginia code. They are being represented by Robin L. Godfrey.

The Enhanced Recovery Company case has been assigned to Circuit Judge Louis Bloom. The Accounts Receivable Management case has been assigned to Circuit Judge Charles King.

Kanawha Circuit Court case numbers: 10-C-2018, 10-C-2019
By Kyla Asbury -Kanawha Bureau

Lawsuit Alleges That Credit Card Company Deceptively Charged Customers For Pricey Financial Products Marketed As A Way For People To Protect Themselves From Fraudulent Charges and Financial Instability

Minnesota Attorney General Lori Swanson today filed a lawsuit against Discover Bank for deceptively charging some credit card customers for pricey optional financial products that the company markets as a way for people to protect themselves from fraudulent or unauthorized charges and to enhance their financial security in the bad economy. Discover, one of the nation’s largest credit card companies, claims to be in one out of four households with 54 million credit cards in circulation.

“The company charged some consumers for expensive add-on financial products without their understanding that their credit cards would be charged. The irony is that the credit card company markets these products as a way for consumers to protect themselves from fraudulent or unauthorized credit card charges and financial instability in the bad economy,” said Attorney General Swanson.

Nationwide, in 2009 Discover earned nearly $300 million in annual revenue from the sale of these optional financial products, an increase of over $80 million, or over 37 percent, from 2007. This is in addition to the revenue the bank charges customers for interest and penalty fees (e.g. late fees, over-the-limit fees, etc.) In 2009, Discover reported net income of $1.3 billion.

The lawsuit alleges that Discover Bank and its affiliated processing company made aggressive, misleading, and deceptive telemarketing calls to sign people up for these products. The company first lures the consumer into believing the call is a courtesy call from their credit card company and not a sales call—that is, that the caller is simply touching base to make sure the customer is aware of all the benefits of the card. In some cases, the company has charged people’s credit cards for enrollment in these add-on products even though the consumer did not agree to purchase anything. In other cases, the company tricks people into unknowingly signing up for these products, usually by inducing consumers to say “ok” or “yes” to a benign statement without understanding they are signing up and then treating that response as authorization to bill their credit cards. In many cases, Discover refuses to make refunds to aggrieved consumers.

A typical telemarketer generally cannot sign up a customer for a product or service unless the customer gives out their credit card number or other form of payment. Unlike a typical telemarketer, Discover is the consumer’s credit card company and already has their credit card number. This enables the company to charge consumers for extra financial products by making deceptive telemarketing calls in which some consumers did not give knowing consent to purchase the paid products.

As noted above, some consumers were tricked into unwittingly signing up by giving an affirmative response like “ok” or “yes” to a seemingly benign statement or question even though the consumer has no actual understanding that they are supposedly agreeing to purchase a paid product to be billed to their credit card. For example, in some cases telemarketers read the consumer a purported “disclosure” in which they butcher or alter the text, leave out key words, run sentences together, pause when there is no period, or speed read the text, all to make it incomprehensible to the consumer. In other cases, telemarketers leave out key terms like the fact the consumer is purchasing something or the price, and instead emphasize portions of the script that do not suggest a sale is taking place, like the company’s customer service number. In other cases, the company leads customers to believe they are simply authorizing the company to send them materials in the mail to look over, with no agreement to purchase a product or have their credit card billed.

Discover markets these financial products as a way of giving people more financial security in the bad economy. Two of the most common products sold by Discover are: (1) Payment Protection, marketed as a way for the customer to defer payment of their credit card bill in the event of certain hardships like job loss or disability. This plan costs $0.89 for every $100 of outstanding balance each month, or $534 per year on a $5,000 balance; and (2) Identity Theft Protection, marketed as assistance in monitoring the customers’ accounts for fraud and unauthorized charges. This plan costs $12.99 per month or approximately $160 per year. Other products involved in the lawsuit include Wallet Protection, marketed as helping the consumer report lost or stolen wallets, and Credit ScoreTracker, marketed as assistance in monitoring a person’s credit score. Because some of the charges show up as relatively low monthly fees on a person’s credit card statement, they can “fly under the radar” and go undetected by some consumers for months. Some people have paid hundreds of dollars before detecting the unauthorized charges. For these consumers, the company reaps a double-windfall because it profits from the sale of a product that the consumers didn’t know they had and therefore won’t use.

Discover’s “Payment Protection Plan” is a so-called “debt suspension” plan in which the cardholder is temporarily relieved from the obligation to make monthly payments in the event of certain hardships, like job loss, disability, hospitalization, or death of a close family member. Some consumer advocates have criticized debt suspension or forbearance plans as being unreasonably expensive in relation to the benefits provided. For example, a consumer may have limited use of the credit card if monthly payments are suspended due to hardship; however, it is when a consumer is without income due to unemployment or disability that they may need to use their credit card. In addition, debt suspension plans may be marketed to elderly consumers who are unlikely to need the plan’s benefits because they retired and won’t face job loss and whose fixed income is unlikely to go down in the event of disability or hospitalization.

The Attorney General’s Office noted that it is particularly ironic for a credit card company like Discover to charge people’s accounts for optional fee-based products without their informed consent because the credit card company touts its fraud prevention capabilities in protecting consumers from unauthorized charges. For example, in its 2009 Annual Report, Discover writes, “We actively monitor customer accounts to prevent, detect, investigate and resolve fraud.”

“People expect their credit card company to help them avoid fraudulent charges, not make them,” said Attorney General Swanson.

Defendants in the lawsuit include Discover Bank, a Delaware state bank; DFS Services, LLC, its affiliated processing company; and Discover Financial Services, the parent corporation of both entities. The lawsuit was filed in Hennepin County District Court and seeks injunctive relief, civil penalties, and restitution.

The Attorney General’s Office today issued a Consumer Alert entitled “Check Your Credit Card Statements Carefully,” and Attorney General Swanson gave these tips to consumers:

“Telemarketers for your credit card company wield more power than typical telemarketers because they can directly charge your account, so be especially wary if these telemarketers ask for permission to send you materials in the mail to look over,” said Attorney General Swanson.

Carefully review all charges posted to your credit card statement each month. Optional fee-based products sold by your credit card company may appear as relatively small monthly charges that are designed to “fly under the radar” and go undetected.
If you find an unauthorized or questionable charge on your credit card statement, dispute it immediately in writing with both your credit card company and the vendor that posted the charge.

For more information or to file a complaint, consumers may contact the Minnesota Attorney General’s Office at (651)296-3353 or (800) 657-3787

STAMFORD, CT — Deploring deceptive tactics used by debt collection agencies and banks to manipulate consumers, attorney Sergei Lemberg (www.StopCollector.com) announced today that his firm filed a class action lawsuit against Capital One Bank, its in-house collection arm Capital One Services, and third-party collector United Recovery Systems. “Every day, Americans are victimized by collection agencies’ dirty tricks,” Lemberg said. “When collectors violate the Fair Debt Collection Practices Act, they must be held accountable.”

The complaint, filed in U.S. District Court for the District of Connecticut, explains that the lead plaintiff, Henry Rogers, received one of what are presumably mass-mailed collection letters with the Capital One logo on the letterhead and an offer to “Pay Over Time 0% APR” by calling a toll-free number.

But, according to Lemberg, the letter was nothing more than a trap. In fact, the letter was sent by Capital One Collections and telephone calls to the toll-free number were, unbeknownst to Mr. Rogers, redirected to United Recovery. “By enticing consumers to make a phone call on a no-lose offer, the bank trapped them into talking to trained debt collectors,” said Lemberg. “These predatory practices mislead consumers and are in clear violation of the Fair Debt Collection Practices Act.”

Lemberg noted that the FDCPA forbids false, deceptive, or misleading representation, yet the letter Rogers received appeared to come from Capitol One when it actually had been sent by debt collectors (Capital One Collections and United Collections). “It’s a classic bait-and-switch, and demonstrates the lengths debt collectors will go in order to collect nowadays,” said Lemberg. Furthermore, although the law requires that written communication with a consumer must include a notice that information provided by the consumer will be used to collect a debt, the letter that Rogers received buried that information among other notices on the back of the letter. Lemberg said, “The violations didn’t stop there. The letter also didn’t include a required notice that Mr. Rogers had the right to request validation of the debt and to dispute the debt.”

Friday’s class action filing is the second such lawsuit brought by Lemberg & Associates for violations of the FDCPA. On December 29, 2009, the firm filed suit against Capitol One Services, NCO Financial Systems, and Capital One Bank in U.S. District Court, Northern District of New York, Binghampton Division on behalf of Gareth Wood and other class members for similar FDCPA violations.

This press release references complaint 3:10-cv-00398-VLB, Rogers v. Capital One Svc LLC et al, United States District Court for the District of Connecticut.

About Lemberg & Associates, LLC
The attorneys at Lemberg & Associates, LLC are experts in consumer law, fair debt law, and lemon law. Sergei Lemberg can brief you about illegal debt collection practices, state lemon laws, and other protections afforded consumers.