Credit Gangsters
by digby
Even in good times, the lowest scum in the credit business are the debt collectors. In times like these they must be proliferating like a virus and I’ve been wondering when we’d start hearing stories like this:
Attorney General Tom Corbett today announced that a consumer protection lawsuit has been filed against an Erie debt collection company accused of using deceptive tactics to mislead, confuse or coerce consumers – including the use of bogus “hearings” allegedly held in a company office that was decorated to look like a courtroom.Corbett said the civil lawsuit was filed by the Attorney General’s Bureau of Consumer Protection against Unicredit America Inc., with corporate and business offices located at 1537 West 39th St., Erie, also identified as the “Unicredit Debt Resolution Center.””This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection,” Corbett said. “Consumers also allegedly received dubious ‘hearing notices’ and letters – often hand-delivered by individuals who appear to be Sheriff Deputies – which implied they would be taken into custody by the Sheriff if they failed to appear at the phony court for ‘hearings’ or ‘depositions’.”Corbett said that in conjunction with the lawsuit, the Attorney General’s Office has also filed a petition for special and preliminary injunction, asking the court to freeze all Unicredit assets; prohibit the company from engaging in any debt collection; immediately cease all bogus hearings or depositions; and to provide detailed information about company bank accounts, assets and business records.According to the lawsuit, fictitious court proceedings were used to intimidate consumers into providing access to bank accounts, making immediate payments or surrendering vehicle titles and other assets – sometimes dispatching Unicredit employees to consumers’ homes in order to retrieve documents or have consumers sign payment agreements.
This is just the tip of the iceberg. If mortgage companies are stealing people’s homes out from under them, imagine what these sleazebags are doing to people all over the country. After all, the debt has been signed over to them and, unlike banks or credit card companies, they have no reputation or other businesses to protect. Their only job is coercing broke people to give them money. I’d imagine it’s quite a “market” at the moment. The New York Times did a short story on it last week:
When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen. “They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.” The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect. His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly. Sound familiar? Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures. But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years. “The difference is that in the case of debt buyers, the abuses are much worse,” says Richard Rubin, a consumer lawyer in Santa Fe, N.M. “At least when it comes to mortgages, the banks have the right address, everyone agrees about the interest rate. But with debt buyers, the debt has been passed through so many hands, often over so many years, that a lot of time, these companies are pursuing the wrong person, or the charges have no lawful basis.” The debt in these cases — typically from credit cards, auto loans, utility bills and so on — is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue.
And keep in mind that as with the foreclosure fraud issue, according to this Federal Trade Commission report from a couple of months back called Repairing a Broken System, it’s very hard to assert your rights if you’ve been improperly targeted:
Creditors and collectors seek to recover on consumer debts through the use of litigation and arbitration. Based on its extensive analysis, the Federal Trade Commission (“FTC” or “Commission”), the nation’s consumer protection agency, concludes that neither litigation nor arbitration currently provides adequate protection for consumers. The system for resolving disputes about consumer debts is broken. To fix the system, the FTC believes that federal and state governments, the debt collection industry, and other stakeholders should make a variety of significant reforms in litigation and arbitration so that the system is both efficient and fair.
I guess nobody feels sorry for people who have racked up credit card debt and are being harassed by thugs and charlatans so I have a feeling that we’re going to hear a lot about “moral hazard” and how people shouldn’t have gotten themselves into debt in the first place. We seem to be in an ugly age in which the only time people feel good about their situation is when their neighbor’s is worse.
But everyone should keep an eye on this one. As noted above, one of the big problems is that a large amount of the data is wrong and even fine upstanding, morally superior people are getting caught in this maw. And as the FTC reports, the system for straightening these mistakes out is broken. It could happen to anyone of us.
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