• Consumer Protection Law and Advocacy — Chicago, IL

Debt Collection

Citibank Ordered to Pay Nearly $8 Million in Civil Penalties

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Today, the Consumer Financial Protection Bureau (CFPB) ordered Citibank to pay nearly $8 million in civil penalties relating to its debt conduct.  Citibank has also been ordered to refund approximately $11 million to consumers and stop collections on an additional $34 million.  The CFPB’s February 23, 2016 press release can be found at http://www.consumerfinance.gov/newsroom/cfpb-orders-citibank-to-provide-relief-to-consumers-for-illegal-debt-sales-and-collection-practices/.

In one case, Citibank was charged with selling credit card debt to debt buyers with inflated interest rates and for failing to forward payments made to Citibank after the sales.  In the second case, Citibank and two of its collection law firms allegedly used falsified court documents in order to obtain judgments.

“Citibank sent inaccurate information to buyers when it sold off credit card debt and it also used law firms that altered court documents,” said CFPB Director Richard Cordray. “Today’s action provides redress to consumers who were victimized by slipshod practices as part of our ongoing work to fight abuses in the debt collection market.”

You may be impacted by these orders if:

(1) Your Citibank credit card account was sold to a debt buyer between February 2010 and June 2013;

(2) You made a payment towards your Citibank credit card account around the time your account was charged off;

(3) Faloni & Associates, LLC or Solomon & Solomon, P.C. handled your account.

Human Rights Watch Report – “Rubber Stamp Justice”

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Hundreds of thousands of consumers each year are sued by debt buyers and often, judgments in favor of the debt buyer receive a “rubber stamp.”  Because consumers aren’t aware of their rights, aren’t properly served, can’t afford to hire an attorney or perhaps have just given up, they don’t appear in court and end up with a judgment against them by default.  Now, this phenomenon is getting some much needed attention.  On January 20, Human Rights Watch published “Rubber Stamp Justice; US Courts, Debt Buying Corporations, and the Poor.” https://www.hrw.org/report/2016/01/20/rubber-stamp-justice/us-courts-debt-buying-corporations-and-poor

The article is a must read and explains that debt buyers are purchasing vast portfolios of bad debts from lenders who already charged them off.  Debt buyers purchase these debts for pennies on the dollar but sue consumers for the full amount of the debt plus interest.

Leading debt buyers rank among the heaviest individual users of state court systems across the US, and various legal actions and research, including that of Human Rights Watch, have identified repeated patterns of error and lack of legal compliance in their lawsuits. These problems are often discovered long after the debt buyers have already won court judgments against alleged debtors, a situation that arises because of the inability of alleged debtors to mount an effective defense even when they are on the right side of the law. Debt buyer lawsuits typically play out before the courts with a stark inequality of arms, pitting unrepresented defendants against seasoned collections attorneys.

While this does not mean that “debt buyers and other creditors should not be able to enforce their claims in court, … it does mean that courts have clear and compelling reasons to handle debt buyer litigation with a particular degree of vigilance.”  Because debt buyer lawsuits are often generated and filed by automated processes, they should be more thoughtfully examined by the courts being asked to render judgment.

If you have been sued by a debt buyer, don’t ignore the paperwork.  Call an attorney to assist you with a defense or visit the Clerk’s office of your local court.  There are often courthouse help desks that can provide legal assistance or counseling.

Chase Bank Credit Card Judgments in Question

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Chase Bank credit card judgments are in question after a July 8, 2015 consent order.  The Consumer Financial Protection Bureau (“CFPB”) ordered Chase to permanently halt collections on more than 528,000 accounts and consumer credit card judgments.  The July 8, 2015 Consent Order stated:

  • Chase filed lawsuits and obtained judgments against consumers using deceptive affidavits and other documents that were prepared without following required procedures because, for example, they were at times signing without personal knowledge of the signer, a practice commonly referred to as “robo-signing.”
  • Chase made certain errors calculating pre- and post-judgment fees and interest when filing debt collection lawsuits, which resulted in judgments against consumers for incorrect amounts.
  • Chase obtained judgments against consumers using documents that were falsely sworn and that at times contained inaccurate amounts, which may affect consumers’ ability to obtain credit, employment, housing, and insurance.
  • Chase’s practices misled consumers and courts.

Chase is now required to stop all efforts to enforce, collect, sell or otherwise transfer any judgment entered in a case pending between January 1, 2009 and June 30, 2014.

If Chase entered a judgment against you or a Chase credit card debt from 2009-2014 appears on your credit report, you may have the right to stop further collection conduct.  First, make sure you check your credit report to see if the debt is listed as unpaid on your report. Then, be sure to visit http://files.consumerfinance.gov/f/201507_cfpb_consent-order-chase-bank-usa-na-and-chase-bankcard-services-inc.pdf for more information on the CFPB’s order.

Debt Collection Mill Faces $3.1 Million Dollar Penalty

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Debt collection mill Frederick J. Hanna & Associates faces major practice changes and a $3.1 million dollar civil penalty.  On December 28, 2015, the Consumer Financial Protection Bureau (“CFPB”) filed a proposed consent order in federal court.  If approved, Frederick J. Hanna & Associates (a Georgia-based law firm) and its three principal partners will be barred from further illegal debt collection practices.  The CFPB charged Hanna with filing deceptive court papers and relying on faulty evidence to win debt collection lawsuits.  Hanna would file suit and hope the consumer wouldn’t show up to defend the case.  For a while, this was a winning strategy for collecting on old debts it couldn’t prove were owed.

“The Hanna firm relied on deception and faulty evidence to coerce consumers into paying debts that often could not be verified or may not be owed,” said CFPB Director Richard Cordray. “Debt collectors that use the court system for purposes of intimidation should reconsider how their practices are harming consumers.”

According to the CFPB complaint, Hanna filed more than 350,000 collection suits from 2009 through 2013 and relied on an automated system to churn out complaints.  Some of the consumers Hanna sued didn’t owe the debt or had already received a bankruptcy discharge.  Now, Hanna will be prohibited from filing or threatening lawsuits unless attorneys have reviewed specific documentation related to the consumer’s debt.

For more information, visit http://www.consumerfinance.gov/newsroom/cfpb-takes-action-to-stop-illegal-debt-collection-lawsuit-mill/.


Be Wary of Recurring Auto Debits

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Consumers should be cautious when authorizing recurring auto debits.  Nearly every company — from your most aggressive bill collector to your local gym — now ask that consumers permit automatic monthly withdrawals from their checking accounts.  While this may be convenient and “eco-friendly,” it can lead to problems.  Be aware that a federal law called the Electronic Funds Transfer Act grants you rights when you agree to auto debits.  For example, the Act requires that the terms of your agreement be provided to you when you sign up or before the first auto debit occurs.  You must also be given notice of your right to stop the auto debits and the steps for doing so.

To ensure consumers are aware of these rights, the Consumer Financial Protection Bureau (“CFPB”) recently released a bulletin alerting companies that they must obtain authorization before automatically debiting a consumer’s account.  The CFPB also published a series of letters consumers can use to cancel any recurring auto debit, available at http://www.consumerfinance.gov/blog/you-have-protections-when-it-comes-to-automatic-debit-payments-from-your-account/.   According to the CFPB’s November 23, 2015 press release:

The CFPB is concerned that some companies may be failing to meet the legal requirements for obtaining authorizations from consumers for recurring auto debits. Also, through its supervisory work, the CFPB observed that one or more companies provided consumers with a notice of the terms for preauthorized auto debits that failed to disclose critical information, such as the amount and timing of the payments the consumer agreed to. If consumers are not given clear information on the terms of auto debits, they may not be able to manage payments or ensure their account balance is large enough to avoid being hit with overdraft or non-sufficient fund fees. In some cases, consumers have also reported companies not obtaining proper authorization to auto debit an account.

Don’t feel pressured to agree to monthly auto debits and if you do agree, keep close track of your monthly bank statements.  Verify the correct amounts are being debited and don’t hesitate to ask for written confirmation of your agreement.  Auto debits should be convenient, not a source of anxiety or confusion.

Debt Collector Harassment

Resource for Bad Debt Collection Tactics

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Bad debt collector tactics are finally getting some much needed publicity.  National Association of Consumer Advocates’ co-member Stephanie Tatar (of The Tatar Law Firm) posts very helpful consumer law/debt collection articles.  Visit Debt Collection Harassment Digest at http://paper.li/ConsumerLawNet/1430249856?edition_id=54af3610-8d5a-11e5-b6bc-0cc47a0d1609 to read more.  Yesterday’s shared post involves a look at the New York Times’ editorial piece “Bad Debt Collectors and their Prey.”

The editorial focuses on three areas of consumer protection concern: (1) debt collectors filing false affidavits in court when consumers have not properly been served with a collection lawsuit; (2) threatening to sue on debts that are too old to collect on through litigation; and (3) targeting of minority communities in bulk debt filings.

Also highlighted in the Digest is a discussion of the November 4, 2015 Federal Trade Commission announcement — http://www.jdsupra.com/legalnews/ftc-cfpb-and-states-collaborate-to-36291/.  The FTC’s new initiative Operation Collection Protection, is “an unprecedented coordinated federal-state enforcement effort targeting deceptive and abusive debt collection” and reports 30 new coordinated law enforcement actions targeting debt collectors using illegal methods such as harassing phone calls and false threats of litigation, arrest, and wage garnishment.

We’ll continue to keep consumers updated on problematic debt collection trends, settlements, and media alerts — an educated consumer is the first step towards fairness in the marketplace.


Chicago Waiving Certain Penalties, Interest, and Collection Costs

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Effective Sunday, November 15, 2015, the City of Chicago is offering a form of debt relief.  On certain fines and tickets, the City will waive penalties, interest, and collection costs from now until December 31, 2015.  This reduces the total amount due to the original fine or tax amount.  For information about whether your debt is eligible, visit http://www.cityofchicago.org/city/en/depts/fin/provdrs/accounts_receivabledivision/news/2015/october/DebtReliefProgram.html.

Under the amnesty program, consumers and businesses can pay outstanding parking and red light camera tickets, taxes and administrative hearing fines issued before January 2012 without paying additional charges.  Payments must be made before the end of the year to take advantage of these fee waivers.

Given the City’s budget woes, it’s possible you’ve recently received notice of an unpaid ticket or fine from ten, fifteen or even twenty years ago.  As noted by reporter John Byrne in the Chicago Tribune,

Faced with pushing through City Council a massive property tax increase and other fees as part of a 2016 budget, Mayor Rahm Emanuel is trying to slightly soften that politically difficult package by offering an amnesty program for people who have unpaid tickets and back taxes they owe the city.

Under the program announced Friday, people or businesses with parking tickets and other vehicle violations and back taxes issued before 2012 would be eligible for amnesty. Emanuel’s office said applicants will not have to pay any late fees or fines added on qualifying unpaid debts between Nov. 1 and Dec. 15.



What if I get a Citation to Discover Assets?

Consumer Law Q&A: What happens after judgment?

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If you were sued on a consumer debt and a judgment is entered against you, Illinois law still provides you with rights to make sure that judgment is being collected fairly. One method a judgment creditor will use to try and collect from you is called a “Citation to Discover Assets.”

If you are served with a Citation, it is best to speak with an attorney first. Organizations such as CARPLS https://www.carpls.org/ and Illinois Legal Aid Online http://www.illinoislegalaidonline.org/ have resources available that may assist you. But here are some general tips.

If you receive a citation, you will be asked to appear in court on a particular date and discuss your assets. You may be asked to bring certain documents with you (such as pay stubs or tax returns). You will be asked questions such as: Do you own a home? A car? Do you work full-time? Do you have checking and savings accounts?

You must answer these questions honestly but if you feel like the collector is badgering you or going on a true “fishing expedition,” and asking irrelevant questions that do not have to do with your ability to pay the judgment, ask the Judge for help.

Also, if any of your income comes from Social Security, disability or child/spousal support, make sure to let the collector know right away. Unemployment compensation, public assistance benefits, veteran’s benefits, pensions, and other retirement benefits are some of the types of income and property that may be exempt from collection.

Remember – collectors cannot take more from you than the law allows so don’t be intimidated from exercising your rights to claim exemptions.

Wrongful debt? Bardo Law can help you deal with credit fraud, wrongful debt and defense.

How to Fight Wrongful Debt Collection

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Debt collection comes in many forms – phone calls, letters, text messages, lawsuits, and lines on your consumer credit report.  Not surprisingly, with today’s mobile society, you may even receive calls or texts intended for someone else and be facing a wrongful debt.

Here are some simple steps to follow

If you are being wrongly harassed for a debt that isn’t yours:

  • Tell the debt collector you are not the debtor
  • Ask the debt collector to send you proof of the debt — when you receive it, you’ll have the debt collector’s business address and/or fax number to send a letter back
  • Send a fax or certified mail letter explaining this is not your debt and all further collection conduct should cease
  • Check your credit report — if the unrecognized account appears, send a dispute letter to Equifax, Experian, and TransUnion via certified mail
  • Send a copy of the credit report dispute letter to the debt collector
  • If this doesn’t work, or if you think you have been the victim of an identity theft, contact an attorney for further assistance

If you are receiving collection calls or text messages on your cell phone:

  • Tell the debt collector you are not the debtor
  • Advise the debt collector that he/she does not have authority to call your cell phone
  • Follow any opt-out instructions on a pre-recorded voice or text message
  • If the calls or texts continue, keep track of who is calling and the dates and times of the calls, and consult an attorney

If you have been served with a debt collection lawsuit:

  • Pay attention to all deadlines on the court papers and act before those deadlines pass
  • Do not ignore a court date even if you speak with the debt collector
  • Call an attorney — if you have been sued on a debt that isn’t yours, the court may order your fees and costs reimbursed

CFPB scores a win for consumers

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CFPB scores a win for consumers - Financially vulnerable consumers have for years been the target of businesses promising debt relief. This month, the Consumer Financial Protection Bureau (CFPB) scored an important victory against several such entities. A federal district court in Florida granted the CFPB's request for an injunction, which includes an asset freeze, a receiver appointment, and disablement of the companies' websites.