American Debt Settlement Solutions

The Consumer Financial Protection Bureau (CFPB) has settled the claims asserted in its recently filed complaint against American Debt Settlement Solutions, Inc. (ADSS) and Michael DiPanni, owner of the Florida debt relief company. The complaint alleges that American Debt Settlement Solutions, Inc. misled consumers and charged illegal fees for its services. DiPanni charged consumers “enrollment” fees for work that was never allegedly performed or completed.

In the complaint, American Debt Settlement Solutions, Inc. is accused of violating the Federal Trade Commission’s Telemarketing Sales Rule (TSR) and the Dodd-Frank Act by charging the illegal fees upfront and not performing the services promised. The company is charged with misleading consumers by stating that it would settle their debt within three to six months, collecting upfront enrollment fees, and then failing to settle the debt within the timeframe originally promised. This was considered “abusive” because ADSS targeted consumers ADSS knew could not afford the debt relief program offered. CFPB believes that these deceitful tactics caused the consumers to fall further into debt and receive no benefit from the “enrollment” fee they paid.

Under the terms of the settlement, ADSS will be required to halt operations, pay a $15,000 fine, and will no longer be able to provide debt relief services to consumers. The proposed consent order would award a judgment against the company of approximately $500,000 (the amount consumers paid to the company for services).

In a press release, CFPB Director Richard Cordray, states, “Today we are taking action to halt a debt-relief company we believe has been preying on financially vulnerable consumers. Consumers struggling to pay off a debt are among the most at risk and deserve better. We will continue to crack down on this type of harmful behavior.”

 

Consumer Financial Protection Bureau to Supervise Debt Collection Firms

The Consumer Financial Protection Bureau created new rules in order to supervise large debt collection firms. Beginning January 2, the government agency will regulate debt collection firms that have over $10 million in annual receipts. The rules ensure that the debt collectors are providing consumers with disclosures and accurate information and not harassing or deceiving consumers in their attempts to collect on a debt.

The Consumer Financial Protection Bureau has authority over three types of debt collection companies – companies that buy debt and collect the proceeds (which may be a portion of what is actually owed), firms that recover the debt owed on behalf of another company (and charge a fee for their service) and lawyers who collect through litigation.

For more information, read the article in the Washington Post. http://www.washingtonpost.com/business/economy/cfpb-issues-rules-for-governing-debt-collectors/2012/10/23/5d53b656-1d2d-11e2-b647-bb1668e64058_story.html

People are losing their jobs as a result of debt collectors.

People are losing their jobs as a result of debt collectors. Debt collectors are calling consumers at their place of work and harassing them.

The New York Better Business Bureau and Attorney General’s office haver received numerous complaints about a debt collector known to harass consumers - Eltman, Eltman and Cooper. Fred Lembeck, a freelance writer, who is also on disability, claims Eltman, Eltman and Cooper began harassing him when he fell behind on his credit card payments. The firm went as far as to freeze his bank account, so that he did not have access to his only form of income, his social security check.

Harassing consumers at work and interfering with your social security payments are not allowed under the Fair Debt Collection Practices Act.

Watch a recent report by New York City Local News Channel CW11 on debt collector harassment. http://www.youtube.com/watch?v=wao6wv1Fqe4

Debt Collectors’ Automated Calls Violate the Telephone Consumer Protection Act

The U.S. Court of Appeals for the Seventh Circuit ruled that if a debt collector’s automated system continues to call a reassigned telephone number without the prior express consent of the new recipient, then the debt collector is liable for statutory damages even if the previous subscriber with that telephone number had consented to the automated calls. The actions of the debt collector were found to violate the Telephone Consumer Protection Act.


In Soppet v. Enhanced Recovery Co., two consumers with overdue bills had consented to receive automated calls on their cell phones, but then changed their phone numbers. As a result, when a debt collector’s automated system tried to contact the consumers at the provided numbers, the calls instead were received by the new subscribers to whom those cell phone numbers had been reassigned. The recipients of the calls then filed a class action against the debt collector.

The Seventh Circuit reasoned that its ruling follows the Telephone Consumer Protection Act, which consistently uses the phrase “called party” to refer to the actual rather than the intended recipient of the call.

The Seventh Circuit’s decision will require debt collectors who use automated systems to ensure that the actual recipients of automated calls have consented to receiving them, and take steps to update their records when telephone numbers have been reassigned to new subscribers.