Wednesday, January 13, 2016

Consumers Sued Over Old Debts Cannot File Class Actions Due to Arbitration Clauses


Corporations are using arbitration clauses in consumer contracts to ban class action lawsuits, anticipating that individual consumers cannot afford to bring cases to court against large corporations.  Generally, the arbitration clauses are in the contracts made with the original lenders, and not with the debt collectors. Often times, the debt collectors cannot produce copies of the arbitration agreements in court. Consumer advocates argue that the arbitration agreements should not be enforced since they are entered into with the original lenders and not with the debt collectors.

Midland Funding, part of the Encore Capital Group, garnished consumer bank accounts collecting on old debts.  In some cases, the debts were not even owed.  When the consumers tried to file a class action lawsuit in 2013, Midland Funding had the lawsuit dismissed.  The consumers were left with arbitration as the only recourse.  Since class action claims are not allowed in arbitration proceedings, each individual consumer would need to file separately.  Unfortunately, many consumers cannot afford to arbitrate their claims, so the debt collectors avoid accountability.  Records show that Encore only faced 38 arbitration cases from 2010 to 2015.

According to the New York Times, more than 67,000 collection cases were filed in 2014 in New York state by consumer debt collection companies trying to collect debts from consumers.

For more information, go to http://www.nytimes.com/2015/12/23/business/dealbook/sued-over-old-debt-and-blocked-from-suing-back.html?_r=0

Wednesday, September 16, 2015

World Law Group Sued for Debt Relief Scheme



World Law Group is accused of failing to provide legal representation to help consumers negotiate debts with creditors, while collecting illegal upfront fees.  The company misled consumers by telling them they would be represented by local attorneys.  In addition, the company failed to negotiate debt settlements and rarely settled consumers’ debts.

World Law Group allegedly told consumers to stop paying their debts and make monthly payments to World Law Group, which the lawyers would use to negotiate settlements with consumers’ creditors.  The company promised at least 21,000 consumers and collected $67 million in fees before providing any services and performing any negotiations.  Consumers were subjected to collection calls, lawsuits, late fees, and lower credit scores.

The Consumer Financial Protection Bureau obtained a preliminary injunction against World Law Group to halt operations and freeze its assets while the case is pending.  The lawsuit also names Derin Scott, David Klein, and Bradley James Haskins, who control World Law Group.  In addition, the individual defendants control Orion Processing, LLC d/b/a World Law Processing, WLD Credit Repair, and World Law Debt; Family Capital Investment & Management LLC a/k/a FCIAM Property Management; World Law Debt Service, LLC; and World Law Processing, LLC.

A copy of the complaint can be found at:

http://files.consumerfinance.gov/f/201509_cfpb-complaint-orion-processing-llc-world-law.pdf

Friday, July 10, 2015

FTC and Florida Attorney General Sue to Stop Robocalls for “Free” Medical Alert Systems

The Federal Trade Commission (FTC) and the Florida Attorney General are suing Lifewatch.  The New York-based company is charged with using illegal and deceptive robocalls to trick older consumers into purchasing medical alert systems.  The monthly monitoring fees ranged from $29.95 to $39.95.

Last year, Lifewatch’s telemarketing firm, Worldwide Info Services, had charges brought against it by the FTC and the State of Florida.  Lifewatch is alleged to be aware of, and responsible for, illegal activities in that case and to have continued the practices using other telemarketing firms.

The complaint alleges that Lifewatch violated the Do Not Call Registry by bombarding senior citizens with robocalls.  The calls typically had fake caller ID information in an attempt to further deceive the consumers.
Telemarketers would often tell the consumers that the $400 alert system had been purchased for them, so it was “free”.  Eventually, they would tell the consumers that their credit cards were needed for the monthly monitoring fee.

Lifewatch’s actions are alleged to violate the FTC Act, the FTC’s Telemarketing Sales Rule, and Florida’s Unfair and Deceptive Trade Practices Act.

For more information, go to:

Thursday, July 2, 2015

Consumer Financial Protection Bureau Consumer Complaint Database


The Consumer Financial Protection Bureau now has a consumer complaint database online.  The database contains over 7,700 consumer accounts of problems that include mortgages, bank accounts, credit cards, debt collection, private student loans, pay day loans, and more.
 

The Consumer Financial Protection Bureau was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in an effort to handle consumer complaints.  It began in 2011, and as of June 1, 2015, the Bureau has handled more than 627,000 complaints, with mortgages and debt collection at the top of the list.
 

The database will allow users to explore information and become aware of specific problems and company practices.   Users can sort complaints by state and zip code.  The identity of the consumer and any personal information has been removed from the online database.  However, consumers have the option of adding a narrative to provide a firsthand account of their experience.  The narratives will help consumers to make a more informed decision when dealing with a particular company or circumstance.