• Consumer Protection Law and Advocacy — Chicago, IL

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StacyBardo

Be Wary of Year-End Collection Calls!

As 2016 winds down, debt collectors making collection calls tend to get more aggressive.  Companies are trying to close out their books and write off accounts as “bad debt.”  Calls start to increase this time of year and you should be prepared in case you get one.  So, what do you need to know before talking to a debt collector?

  • Ask for proof of the alleged debt in writing and make sure you know who you allegedly owe.  Get the name, employee ID, telephone number or e-mail address of the collector who called you. Don’t ever agree to make a payment unless you have something in writing from the collector.
  • Find out what the alleged debt is for.  Do you recognize the account?  Do you recognize the amount?  Check your credit report after the call to see whether the debt is being reported.  Your credit report may also help you figure out how old the debt is and what the outstanding balance is.
  • If you recognize the debt, go back through your bank records to see when you last made a payment.  It’s important that you do NOT re-start the statute of limitations (the deadline for filing a lawsuit).  A $5, $10, or $25 payment on an old debt can make the entire balance due and owing again.  Talk to a lawyer about what statutes of limitations may apply on your accounts.
  • Take notes on what the collector says to you.  Did the collector threaten to mark your credit report or sue you?

If you have any questions about collection calls you may be receiving, talk to a lawyer in your state.  The National Association of Consumer Advocates has a “Find an Attorney” resource, available at http://www.consumeradvocates.org/find-an-attorney.

You can also submit a complaint against collection agencies with the Consumer Financial Protection Bureau online at http://www.consumerfinance.gov/complaint/.  There are state and federal laws (namely, the Fair Debt Collection Practices Act) that require collectors treat you fairly.

Try not to give in to high pressure tactics.  It’s important to know your rights BEFORE it’s too late.

Fair Credit Reporting & Consumer Law - Bardo Law PC

Credit Repair Scams

Credit repair scams are widespread and many consumers don’t realize they can (and should!) try and fix credit reporting errors themselves.  Watch out for companies that claim they can “guarantee results,” or “erase bad credit.”  These companies often charge steep fees and make promises they can’t keep.  Watch out for any credit repair company that demands fees before performing any work or tells you to dispute information that is correct.  Even though it may seem unfair, if you do have a negative payment history, time and debt repayment will help raise your credit score over the years.  You should watch out for companies that tell you to dispute 30, 60 or 90-day late payment records if those payments are accurately reported.

How can I fix my credit report myself?

  • If you have applied for credit, a job or insurance, and you’ve been denied, you’re entitled to receive a free credit report.   Make sure you ask for your report within 60 days of receiving notice you were denied.
  • You’re also entitled to a free copy of your credit report every year from the nationwide credit reporting companies — Equifax, Experian, and TransUnion.  To order your report, visit annualcreditreport.com, or call 1-877-322-8228.
  • It is FREE to dispute mistakes or outdated items on your credit report.   So once you receive your reports through either method above, review them and circle any problems.  Then, write to the credit reporting company and the company who reported the information to tell them what the error is and why they should fix it.  Because the credit reporting companies and the information reporter must provide accurate information, and must correct inaccurate or incomplete information, there is no reason to pay anyone to handle this dispute for you.
  • The Federal Trade Commission has a sample letter you can use to help you write your dispute — https://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report.

If I did use a credit repair company, how do I know if it’s legitimate?

  • A credit repair company MUST tell you your legal rights in writing, exactly how much the repair services will cost, and how long the process will take.
  • If you do sign a contract, you have a 3-day right to cancel it.
  • Check out the Credit Repair Organizations Act or call an attorney.  The Act bars companies from demanding advance payment and gives consumers the right to file a legal dispute if they have been defrauded.

Consumer Protection In 2017 And Beyond

With the election behind us, there are many questions about what consumer protection role the Consumer Financial Protection Bureau (CFPB) will have going forward.  Today’s edition of The Consumerist notes: “Even before the CFPB launched in 2011, it’s been opposed by many in the financial industries, and by the lawmakers they back.”  Many banks, debt collectors, and payday loan lenders have already paid back millions to consumers as a result of the CFPB’s work and investigations so a diminished role could have a negative consumer impact.

Every six months, the CFPB releases its semi-annual report that highlights its important work.  According to the Spring 2016 report:

In the six months covered by this report, our supervisory actions resulted in financial institutions providing more than $44 million in redress to over 177,000 consumers. During that timeframe we also announced orders through enforcement actions for approximately $82 million in total relief for consumers who fell victim to various violations of consumer financial protection laws.

So, what can you do to ensure the continued viability of the CFPB?

  • Talk to your U.S. Representatives and Senators.  Contact my office if you would like specific information on your district’s representatives and who to call or write.
  • File a consumer complaint online with the CFPB at http://www.consumerfinance.gov/complaint/.
  • Learn more about other advocacy organizations, such as the National Association of Consumer Advocates and National Consumer Law Center.

Most of all, stay informed and encourage your friends and family to do the same.  Don’t ignore collection letters, be sure to monitor your credit report, and feel free to report bad acts to the Better Business Bureau and your local Attorney General.  The more we let our political leaders know consumers need assistance, the harder it will be to chip away at those protections.  It’s a long road ahead but together, we can continue to battle injustice.

Prepaid Debit Card Rules Released

Prepaid debit card rules have never been as stringent as those that apply to other debit and credit cards.  That’s why the Consumer Financial Protection Bureau’s October 2016 approval of prepaid debit card rules is so noteworthy.

First, what is a prepaid debit card?  It’s a card that usually does not require a credit check and is not tied to an established bank account.  Instead, consumers can add or subtract funds to a reloadable card.  These cards come with downsides.  The fees charged on each transaction can vary from card to card and can be rather hefty.  Also, you can’t use prepaid debit cards to build your credit rating.

Because these cards have traditionally been marketed to consumers with low credit who don’t have checking accounts, new regulations are aimed at increasing cardholder protections.  The Consumer Financial Protection Bureau’s new rules provide, in part:

  • enhanced disclosure requirements
  • agreements to be posted online
  • account information to be available by phone, online or in writing upon request
  • error resolution processes
  • protections against unauthorized withdrawals
  • limitations on consumer liability for fraudulent transactions

According to the Bureau’s press release, the goal is to “Know Before You Owe.”  http://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-strong-federal-protections-prepaid-account-consumers/:

The new rule requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, and give consumers free and easy access to account information. The Bureau also finalized new “Know Before You Owe” disclosures for prepaid accounts to give consumers clear, upfront information about fees and other key details. Finally, prepaid companies must now generally offer protections similar to those for credit cards if consumers are allowed to use credit on their accounts to pay for transactions that they lack the money to cover.

Some employers pay their workers using these cards and prepaid debit cards are one of the fastest growing consumer financial products.  These new rules are the first step towards ensuring prepaid debit cards don’t avoid consumer protection scrutiny.

Arbitration rules are stacked against consumers

Arbitration Update

In a new arbitration update, six United States Senators have spoken out against the enforcement of Wells Fargo’s arbitration clause:

“A major reason that these outrageous practices continued for at least five years is that Wells Fargo’s customer account agreement includes a forced arbitration clause,” reads the letter. “These clauses eliminate consumers’ ability to bring a claim in open court or to band together in a class action, before any dispute has arisen. Forced arbitration clauses deny access to the courts even when consumers are seeking to enforce their rights under fundamental state and federal laws. Instead, consumers must seek justice individually, on a case-by-case basis in closed-door arbitration proceedings that are often stacked in favor of the corporate defendant.”

Given recent revelations that Wells Fargo opened fraudulent accounts for thousands of consumers who didn’t know or didn’t ask for them, it’s questionable whether the victims of this conduct will be able to seek relief in court.  As the Senators note in their letter to Wells Fargo CEO John Stumpf, https://consumermediallc.files.wordpress.com/2016/09/9-23-16-wells-fargo-letter-re-arbitration-final.pdf, “[T]his forced arbitration system helps hide fraudulent schemes such as the sham accounts at Wells Fargo from the justice system, from the news media, and from the public eye.”  That’s because arbitration filings and decisions are not matters of public record, as are court filings.

For more on the Wells Fargo scandal, check out the Consumerist piece at https://consumerist.com/2016/09/23/senators-to-wells-fargo-ceo-dont-strip-wronged-customers-of-their-day-in-court/.  And continue to battle back against forced arbitration – if you see an arbitration clause in new paperwork you’re asked to sign, cross it out and initial your refusal to be bound.

Has A Car Dealer Rejected You For Financing?

Has a car dealer rejected you for financing?  If so, the Equal Credit Opportunity Act requires the dealer to provide you with a written statement explaining why it rejected your credit application.  The Act’s notice requirement can be satisfied in one of two ways:

  • A dealer can routinely provide written statements of reasons for credit denials to applicants; OR
  • A dealer can advise applicants they have been denied and then explain that such applicant has the right to request a specific written explanation.

Last week, the Sixth Circuit Court of Appeals ruled that a Michigan car dealer violated the ECOA by failing to provide this explanation.  The Court stated, “any ‘creditor’—middle-men included—that regularly participates in credit decisions and takes an adverse action with regard to a credit application bears the burden of providing notice under the ECOA.”  The full text of the opinion can be found at http://www.opn.ca6.uscourts.gov/opinions/opinions.php.

This ruling is important.  First, it confirms that car dealers are active participants in setting credit terms because they prepare the contracts, select the interest rate, and discuss payment terms.  Second, it lets consumers know specifically why their credit is denied so any credit errors can be fixed and follow-up applications can be made.

The Federal Trade Commission provides additional information about your rights under the Equal Credit Opportunity Act at https://www.consumer.ftc.gov/articles/0347-your-equal-credit-opportunity-rights.  Credit decisions cannot be based on your race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.  Requiring credit denials to be explained in writing helps ensure decisions are not made for these prohibited reasons.

Mortgage Servicing Rules Updates

The Consumer Financial Protection Bureau recently announced mortgage servicing rules updates.  Read the alert at http://www.consumerfinance.gov/about-us/blog/weve-updated-our-mortgage-servicing-rules-provide-greater-protections-mortgage-borrowers-and-other-homeowners/.  Here are some of the important highlights:

  • When a homeowner applies for a modification, deed in lieu, or other alternative to foreclosure (known as “loss mitigation”), the servicer must let the borrower know when their application is complete.  In the past, servicers would fail to keep borrowers informed as to the status of their applications.  This rule seeks to improve servicer accountability.
  • Homeowners may now be eligible to apply for loss mitigation more than once.  For example, if a loan modification is initially rejected, the homeowner may re-apply.
  • Family members, heirs or successors shall have increased rights.  If ownership in a mortgaged home is transferred due to death, divorce or legal separation, servicers are now required to provide information and notices to these successors.
  • Only limited extensions will be given to new servicers on loss mitigation applications.  Now, if servicing transfers, generally, the new servicing entity must evaluate complete applications within 30 days.

In announcing the mortgage servicing rules updates, Bureau Director Richard Cordray stated:

The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon … These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.

If you are in foreclosure, or if you are behind in your mortgage payments and have applied for mortgage assistance, speak to an attorney regarding your options.  Keep track of all your correspondence with your servicer, maintain copies of your application paperwork, and don’t ignore important deadlines for submitting information to your servicer.

Wrongful Repossessions - Bardo Law PC

Illinois Law Governing Repossession Agents

Illinois law requires that repossession agents be licensed and have insurance.  It also requires that agents keep track of all repossessions with recovery tickets purchased through the Illinois Commerce Commission.  As the entity charged with regulating repossession agents, the Commerce Commission’s website has helpful information for you to check out if your vehicle is repossessed — https://www.icc.illinois.gov/CollateralRecovery/.

Through the website, you can examine current license information and learn your rights post-repossession.  For example, repossession agents must inventory any personal property left in a vehicle during a repossession and tell you how to get your property back.  Agents must also notify local police before a repossession occurs and provide the agency’s name, license number, and the color, make, model, VIN, and description of the collateral being repossessed.  Within 30 minutes of the repossession occurring, the agency must then inform police of the date and time of the repossession.

If your car has been repossessed, contact your local police department to see whether the repossession has been properly reported.  If you don’t receive a notice from your finance company within 3-5 days of the repossession, make sure you call to find out where your vehicle is and the identity of the repossession agency to minimize possible storage fees.  But watch out – repossession agents may force you to sign documents when picking up your belongings or your vehicle so be sure you don’t unknowingly release any claims you may have for damages or unfair conduct.  You have the right to refuse signing a release and consult a lawyer for assistance.

 

Tricked Into An Auto Warranty?

It’s easy to be tricked into an auto warranty.  Keep in mind that these are really not warranties but extended service contracts.  It’s often better to avoid buying extended service contracts.  In some limited instances, extended auto service contracts may be worth purchasing if:

(1) You are buying a used car that is otherwise “as is”

(2) The service contract does not specifically limit engine, transmission or other high cost repairs

(3) You’ve done your research and the company offering the contract has a solid reputation online and with the Better Business Bureau

Also, make sure you’re not buying duplicate coverage.  For example, if the manufacturer’s auto warranty is still in effect, some service contracts won’t be valid.  Don’t waste your money on a contract that won’t apply for some time in the future.  It’s an old trick to add on service contracts to increase a dealer’s profits so be especially careful if you’re offered an extended service contract on a new car that already has a manufacturer’s warranty.

Pay close attention to the warranty’s terms.  It may require you to obtain pre-authorization for any repairs and may require you to go to specific service centers.  Be sure those are terms you can live with.  And while you can normally cancel these contracts, double check the cancellation terms.

Finally, watch out for telemarketers selling auto service contracts.  Today, the Federal Trade Commission announced $4 million in refunds for one such scam – https://www.ftc.gov/news-events/press-releases/2016/07/ftc-providing-4-million-full-refunds-people-tricked-buying-bogus.

Don’t be pressured into auto add-ons – take your time, shop around, and know what you’re getting.  Even if the dealer says otherwise, that car will likely be on the lot tomorrow.

 

What if I get a Citation to Discover Assets?

Bankruptcy Filings Impact Debt Collectors

Bankruptcy filings impact debt collectors.  When a consumer seeks protection under either Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code, debt collectors are typically notified of the bankruptcy filing.  They should not continue to try and collect a debt while the consumer is in bankruptcy.

Courts differ on whether contact with the consumer during bankruptcy is just a violation of the bankruptcy stay or if it also means the debt collector violates the Fair Debt Collection Practices Act, 15 U.S.C. 1692 (“FDCPA”).  Also unclear was whether a debt collector could try and collect in bankruptcy – by filing a proof of claim – if the debt was too old.  A new court decision helps consumers by confirming debt collectors may violate the FDCPA when they file bankruptcy proofs of claim on time-barred debts.  These time-barred debts are too old to sue on and therefore, consumers have the right to file claims under the FDCPA when this happens.

The Eleventh Circuit Court of Appeals stated, “Although the Code certainly allows all creditors to file proofs of claim in bankruptcy cases, the Code does not at the same time protect those creditors from all liability.  A particular subset of creditors – debt collectors – may be liable under the FDCPA for bankruptcy filings they know to be time-barred.”  This May 24, 2016 ruling was in the consolidated cases of Johnson v. Midland Funding, LLC and Brock v. Resurgent Capital Services, L.P. and LVNV Funding, LLC, Nos. 15-11240 and 15-14116.

Because it’s unlawful to make false, deceptive or misleading representations when collecting a debt, it should also be unlawful for debt collectors to make bankruptcy filings that misrepresent the age or ability to sue on a particular debt.  This decision makes good sense for consumers and helps keep collectors honest.

If you filed bankruptcy and have questions about debt collection in bankruptcy, talk to your bankruptcy attorney or turn to a consumer protection attorney for help.