California Debt Blog

Former Debt Collector Ran Collection Business from Prison

If you believe that most professional debt collectors are honest, hardworking, salt of the earth type people, this story may change your mind.

Lamont Cooper, age 38 and from New York, owned a business called Legal Action Recovery, which was a professional debt collection firm. In April 2009, a court found that his company used intimidation tactics to scare its victims into paying debts, some of which they didn’t even owe, were discharged in bankruptcy or had already passed the statute of limitations. The collectors threatened to send the alleged debtors to prison for failure to pay, sometimes going so far as to pose as law enforcement officers.

Many individuals sent the firm money – between May and August 2009, deposits of $1.38 million were made into accounts which were connected to the debt collection company. These deposits are believed to be from payments from victims of the company.

In 1997 Cooper, the owner of the company, pleaded guilty to drug charges. He was later paroled. In October 2009, he violated the terms of his parole and was sentenced to 14 months, to be served at the Batavia Detention Facility in New York.

While he was in prison, he allegedly continued to operate his debt collection firm. Surveillance showed that during his time in prison, Cooper was still corresponding with his employees, telling them how to manage accounts and personnel issues, and he also requested that he be kept apprised of all banking activities. The New York Attorney General’s Office has filed charges against Cooper for continuing to operate the firm. He will be arraigned on the charges once he’s released from federal custody.

First Class of Credit Card-Restricted Students Enters College

The first wave of freshmen affected by the new credit card reform act are beginning college this month, leading experts to wonder how successful the law will turn out to be.

Under the new laws, if you are under 21 and want a credit card, you must either provide proof of income or get a co-signer who’s 21 or older. The law is aimed at preventing students from graduating with thousands of dollars in credit card debt, which in recent years has almost become the norm.

Credit card companies are now restricted from marketing credit cards within 1,000 feet of a college campus, which includes events that are related to the college. Gone are the days of free t-shirts when filling out credit card applications – credit card companies are now forbidden from offering tangible gifts to college student. However, credit card companies will still be allowed to offer airline miles, reward points, and other intangible goodies to lure students.

Some experts are doubtful that the credit card reform laws related to college students will be entirely successful. Many parents will likely be willing to co-sign for a credit card in order to help their children build credit responsibly. Some students who want cards may be able to entice their older friends to cosign. Some doubt that credit card companies will strictly abide by the rules.

For parents who are unsure about whether they should co-sign for their children or not, there are alternatives, such as prepaid debit cards or allowing their children to become authorized users on the parents’ cards.

Pressure to Pay Others’ Debts a Growing Problem

A new problem with debt collectors has been emerging in recent years – debt collectors who pursue the wrong people in order to collect a debt owed by someone else. Some collectors even know that they are pursuing the wrong person, but are hoping the individual will cave and pay the debt because of the fear of a bad debt appearing on his or her credit report.

 

This story highlights the problem, which is sometimes called debt tagging. Debt tagging often occurs when the debt collector pursues the wrong individual, who happens to have the same name as the debtor. Recently, Credit Bureau Collection Services paid over $1 million to the FTC in order to settle charges that it violated federal law by reporting incorrect credit information and by pressuring individuals to pay debts they did not owe. In 2010 alone, the FTC reported almost 120,000 complaints about debt collectors.

 

Many errors with debt collectors occur when the debtors have changed phone numbers or moved. Frequently, debt collectors purchase bad debts for pennies on the dollar, and the original creditors don’t always give the buyers a lot of information about the debtors. 

 

So what should you do if you are being pursued for a debt you don’t owe? First check your credit report to make sure there are no errors on the report. If there are, dispute the report with the credit reporting agency, and it should be corrected. If a debt collector is hounding you for a debt you don’t owe, write the collector a letter explaining that the collector is contacting the wrong person. If it doesn’t stop, consult an attorney.

 

Company Blacklists Customers Requesting Credit Card Refunds

According to this article from WalletPop.com, a consumer watchdog site, the company BadCustomer.com keeps a list of customers who request a credit card reversal after making a purchase with a company. One single credit card reversal can land customers on the list. Companies can then obtain the list from BadCustomer.com and reject customers who have requested credit card reversals in the past.

 

Previously, if a customer wanted to remove his or her name from the list, BadCustomer.com charged a $99 fee. Recently, the founder of the company announced the company would no longer charge that fee and is trying to make the list more user-friendly in order to avoid blacklisting customers who have a valid reason to request a credit card reversal.

 

Many consumer groups still find the list troubling. Customers can legitimately request credit card reversals for a variety of reasons, including receiving defective merchandise or the wrong merchandise from the company. However, companies claim they need a mechanism to identify customers who frequently purchase merchandise, use it, and then return it, requesting a refund. Credit card reversals cost U.S. merchants $11.8 billion in 2009 alone.

 

Websites that blacklist customers do not fall under the Fair Credit Reporting Act, so therefore they are not subject to the same types of regulations as credit reporting bureaus like Experian and Equifax.

 

What should you do if you find yourself on a credit card blacklist? Contact the company you originally did business with and seek to resolve the credit card reversal issue. Carefully document your interactions with that company, then contact the owners of the blacklist, providing them with documentation that you had a legitimate reason to ask for a reversal.

Removing an item from your credit report

A lot of people are doing a "New Year, New You" type program. You can buy new diet products or you can get a Bowflex on sale. But now is also a good time to review your credit report. As a reader of this blog, you understand how important it is to review your credit report regularly. Your credit report affects your interest rates, offers for credit and could impact your job.

When you get your credit report, there may be a mistake. Common mistakes include items that are not yours being reported, items not being reported properly and items that are just flat out wrong.

Get your credit report and review it carefully. If there is a mistake, you can either dispute this online with the credit reporting agencies (CRA) or you can report it in writing. I prefer to report it in writing. A simple letter with your name and social security number will do the trick. You list each account that is wrong and why it is wrong. For example "Account 1234 with NRS reports that I am delinquent when this account has been paid off." You list each account with the reason and send the letter off.

The credit bureaus will then investigate and send you a response in 45 to 60 days. All inaccurate information should be removed and you should see your credit score increase. Finally, you do not have to use a service that claims it will clean up your credit score. Only inaccurate information can be removed and anyone who claims to have a system to "fix your credit" is probably trying to just separate you for your money. 

Debt Collectors Want to Avoid You

Somehow I got on the mailing list of a company that assists debt collectors. I don't know how, but I got 6 emails from them yesterday. Then, two more today. The emails were all the same.

The gist of the emails is that for $90, this company will check out a debtor and see if the debtor has any FDCPA lawsuits against debt collectors. According to the email, this will save a debt collector over $8,500 which they say is the cost of defending one of these cases.

Yes, the debt collection industry wants to avoid you if you have asserted your rights. What does this mean? It means that if you know your rights and you assert your rights, debt collectors will be notified about this and may decide it is not cost effective to pursue you.

So, learn your rights under the FDCPA and Rosenthal Act and it could make debt collectors go away.

Adding a writen statement to your credit report

Melody Warnick wrote a couple of great articles at Creditcards.com on adding a written statement to your credit card statement.

The first article is on how to add a written statement to your credit report. What is a statement? "A provision of the Fair Credit Reporting Act allows you to add comments to your credit report that can cover 'any number of items or topics they wish,' according to Steven Katz, a spokesman for credit bureau TransUnion.

Why do you want a statement? For a variety of reasons, but as yours truly said in the story "Filing a statement shows that the consumer is educated about their rights, and that's what debt collectors try to avoid. They can't collect money as easily from people asserting their rights."

Basically, if you start asserting your rights, debt collectors will move on more often than not. Debt collectors generally want to get money from the easy consumer who will just pay. Once you make them work for it, most debt collectors go away.

The second article has sample consumer credit report statements. There are a variety of statements and you should read them to see if you find one to fit your situation.

Great work by Melody.

Credit Report Problem: Dispute it with this letter

As you know, I believe you should pull your credit report at least once a year, maybe even twice a year. You can get a free one from this website (this is the official one, not one of those that make you buy something first). But, what do you do if you find wrong information on your credit report? Send this letter:

Dear Sir or Madam:

I am writing to dispute the following information in my file. I have circled the items I dispute on the attached copy of the report I received.

This item (name of source and identity of item) is (inaccurate or incomplete) because (state specific reason here). I am requesting that the item be removed (or changed) to correct the information.

Enclosed are copies of (any supporting documentation) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Mr. And Mrs. Consumer

This letter should help you dispute wrong items. This could help you increase your credit score just by fixing problems.

FAQ: When can I have negative remarks removed from my credit report?

Q: Since California has a 4 year statute of limitations, is there a way to have those removed from your credit record?

A: You can have old debts removed from your credit, but it doesn't have to do with the statute of limitations. Rather, the Fair Credit Reporting Act discusses when old debts need to be removed from your credit. This can be up to 7 years later.

From my new report: "In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old."

To get this report, email me!

FAQ: How long does bad debt stay on my credit report?

Q: How long does a bad debt stay on my credit report?

A: The bad debt generally has to come off after 7 years and 10 years for a bankruptcy. You need to review your credit report carefully for errors.

To learn more about this, email me for a copy of my new report on understanding credit and your credit report. Just ask for it!