Tag Archives: debt collection

HSBC to pay back customers for ‘unreasonable’ debt collection

Europe’s largest bank is to contact customers to offer them redress after regulators identified ‘unreasonable’ debt collection practices.

The Financial Conduct Authority (FCA) said HSBC had offered to establish a £4m fund to repay 6,700 people hit with unfair legal charges after they fell into arrears between 2003 and 2009.

The City watchdog said the costs were imposed by HSBC-owned HFC Bank and John Lewis Financial Services after customers were referred to the firms’ nominated solicitors.

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Inside the Dark, Lucrative World of Consumer Debt Collection

One afternoon in October 2009, a former banking executive named Aaron Siegel waited impatiently in the master bedroom of a house in Buffalo that served as his office. As he stared at the room’s old fireplace and then out the window to the quiet street beyond, he tried not to think about his investors and the $14 million they had entrusted to him. Siegel was no stranger to money. He grew up in one of the city’s wealthiest and most prominent families. His father, Herb Siegel, was a legendary playboy and the majority owner of a hugely profitable personal-injury law firm. During his late teenage years, Aaron lived essentially unchaperoned in a sprawling, 100-year-old mansion. His sister, Shana, recalls the parties she hosted — lavish affairs with plenty of Champagne — and how their private-school classmates would often spend the night, as if the place were a clubhouse for the young and privileged.

So how, Siegel wondered, had he gotten into his current predicament? His career started with such promise. He earned his M.B.A. from the highly regarded Simon Business School at the University of Rochester. He took a job at HSBC and completed the bank’s executive training course in London. By all indications, he was well on his way to a very respectable future in the financial world. Siegel was smart, hardworking and ambitious. All he had to do was keep moving up the corporate ladder.

Instead, he decided to take a gamble. Siegel struck out on his own, investing in distressed consumer debt — basically buying up the right to collect unpaid credit-card bills. When debtors stop paying those bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks “charge off” the accounts, taking a loss, and other creditors act similarly. These huge, routine sell-offs have created a vast market for unpaid debts — not just credit-card debts but also auto loans, medical loans, gym fees, payday loans, overdue cellphone tabs, old utility bills, delinquent book-club accounts. The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it “paper.” That was Aaron Siegel’s business.

 

 

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FTC: Bill collectors posed as cops to threaten arrest

Right on the heels of news that one in three Americans is behind on bills, comes this report about the lengths some are going to collect those debts.

The latest Consumer Financial Services Alert, from law firmBallard Spahr, is highlighting some alleged nefarious tactics from bill collectors in New York.

The New York Attorney General and Federal Trade Commission are working together to put an end to several companies, working together, who violated the rights of distressed borrowers.

“This filing is further evidence of the heightened scrutiny faced by debt collectors in New York at both the state and federal level,” the note to Ballard Spahr clients said.

Read a copy of the asset freeze and temporary restraining order, by clicking here.

The main defendant is the National Check Registry, though many other companies are named in concert.

“Weighing the equities and considering Plaintiffs’ likelihood of ultimate success, a temporary restraining order with an asset freeze, appointment of a receiver, immediate access to business premises, expedited discovery as to the existence and location of assets and documents, and other equitable relief is in the public interest,” the order states.

So what did the collectors do to deserve such an extensive correction and potential restitution for the borrowers they allegedly hounded?

According to the complaint, the defendants are suspected of, among other things:

1. Pretending to be affiliated with government entities, including law enforcement agencies.

2. Pretending to act on behalf of an attorney.

3. Telling people that nonpayment of debt will result in arrest, garnishment of wages and/or confiscation of their driver’s license.

4. Threatening other legal action if debt doesn’t get paid.

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1 in 3 Americans being chased by debt collectors

A new report form the Urban Institute shows how weak the U.S. economy is, and offers at least one reason for the housing doldrums – one in three Americans is so far behind in paying their bills that they are in collections.

An estimated 1 in 3 adults with a credit history — or 77 million people — are so far behind on some of their debt payments that their account has been put “in collections.”

That’s a key finding from a new Urban Institute study.

It examined non-mortgage debt, including credit card bills, car loans, medical bills, child support payments and even parking tickets.

The debt in collections ranged from as little as $25 to a whopping $125,000. But the average amount owed was $5,200.

Geographically, no area of the country is untouched.

Among the states, Nevada had the highest percentage of residents with debt in collections — 47% — as well as the highest average amount owed —7,198. That was helped in part by the Las Vegas metro area, where 49% of residents had debt in collections.

Source: CNN Money
 

Thank You for Your Service: How One Company Sues Soldiers Worldwide

With stores near military bases across the country, the retailer USA Discounters offers easy credit to service members. But when those loans go bad, the company uses the local courts near its Virginia headquarters to file suits by the thousands.

This article was co-published with The Washington Post.

Army Spc. Angel Aguirre needed a washer and dryer.

Money was tight, and neither Aguirre, 21, nor his wife had much credit history as they settled into life at Fort Carson in Colorado in 2010.

That’s when he saw an ad for USA Discounters, guaranteeing loan approval for service members. In military newspapers and magazines, on the radio, and on TV, the Virginia-based company’s ads shout, “NO CREDIT? NEED CREDIT? NO PROBLEM!” The store was only a few miles from Fort Carson.

“We ended up getting a computer, a TV, a ring, and a washer and dryer,” Aguirre said. “The only thing I really wanted was a washer and dryer.”

Aguirre later learned that USA Discounters’ easy lending has a flip side. Should customers fall behind, the company transforms into an efficient collection operation. And this part of its business takes place not where customers bought their appliances, but in two local courthouses just a short drive from the company’s Virginia Beach headquarters.

From there, USA Discounters files lawsuits against service members based anywhere in the world, no matter how much inconvenience or expense they would incur to attend a Virginia court date. Since 2006, the company has filed more than 13,470 suits and almost always wins, records show.

“They’re basically ruthless,” said Army Staff Sgt. David Ray, who was sued in Virginia while based in Germany over purchases he made at a store in Georgia.

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I-Team: Many can still owe on homes after foreclosure

BALTIMORE —Thousands of Maryland families have lost their homes to foreclosure or short sales, but many don’t know that third-party debt collectors can still come after them for money they may not have known they owed.

In 2005, Miranda Cisneros Bell and her husband, Ed Bell, bought a house in Emmitsburg for $535,000. They still had the house they are living in currently in Frederick County.

“We could not sell this house. We were stuck between two mortgages,” Cisneros Bell said.

They were forced to let the Emmitsburg house go into foreclosure in 2009. Thinking that the case was over, they moved on with their lives, but then a third-party debt collector out of Texas started calling.

“The debt collector was saying I owed $51,000,” Cisneros Bell said.

“It’s like jumping out of the bushes. You’ve got a person who has moved on with their lives, and they’re walking down the street and someone jumps out of the bushes and says, ‘Got you,'” said Avy Mallik, an attorney with the group Civil Justice.

He said many people don’t realize after a foreclosure sale that they can still be on the hook for the deficiency.

“The deficiency is the difference between what the home sold for at a foreclosure sale and what they owed the bank — what their balance was when the sale occurred,” Mallik said.

For example, if a person borrowed $200,000 from the bank and their house sold at foreclosure for $100,000, the bank could come after them for the $100,000 difference.

Read more: http://www.wbaltv.com/money/iteam-many-can-still-owe-on-homes-after-foreclosure/27130826#ixzz38SD2smDJ

Debt Collection ‘Factory’ Preyed On Broke Americans: Lawsuit

A federal watchdog is suing a collection agency that allegedly operated like a “factory”churning out lawsuits against cash-strapped borrowers, often using misleading, deceptive and illegal practices.

The suit is the latest effort by regulators to crack down on debt collection abuse. The billion-dollar industry has ballooned in size over the past two decades and is under firefor filing wrongful lawsuits against vulnerable borrowers.

The Consumer Financial Protection Bureau (CFPB) announced on Monday that it had sued Frederick J. Hanna & Associates, a Georgia-based law firm that sues consumers for old, outstanding debts owed to banks, debt buyers and credit card companies.

The complaint against Hanna & Associates alleges that the firm operated as a lawsuit “factory,” cranking out more than 350,000 suits in Georgia alone since 2009. What’s more, the company operates with a skeleton staff of eight to 16 lawyers who merely put their signature on lawsuits, while the bulk of the work at the firm is performed by “automated processes” and non-attorney staff, according to the CFPB complaint.

In 2009 and 2010, the suit claims, a single lawyer at the company signed off on about 138,000 lawsuits, an average of about 1,300 a week. Such a feat would seem to test the limits of physical endurance. The firm’s lawyers were expected to spend “less than a minute” looking at each lawsuit before signing it, the suit contends.

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