Alexander J. Douglas, Esq. | Attorney | (585) 703-9783 |   alex@rochesterdebtlawyer.com

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Large Debt Collector Pays $700K in Settlement

GC Services Limited Partnership, a large Texas-based debt collector, is paying $700,000 to settle a civil lawsuit brought by the Federal Trade Commission (FTC) for illegal debt collection practices.  The authorities announced the settlement on the same day that a U.S. Attorney sued GC for violating the Fair Debt Collection Practices Act (FDCPA).

According to the U.S. Attorney, GC was accused of repeatedly calling consumers after the person answering the phone stated that they didn’t know the consumer that GC was looking for, nor did they know where the consumer might be. The U.S. Attorney also accused GC for disclosing information about a debt to unauthorized third parties, which is a violation of the FDCPA.

In the lawsuit, the FTC stated that GC collected $1.2 billion from consumers in 2014, making them a large market participant. The company has more than 7,600 employees, including more than 1,400 employees who work exclusively in debt collection.

As we’ve reported on this blog earlier, the FTC released its debt collection press release for 2016 which states that the regulatory agency settled 12 cases against 61 defendants in that year. The FTC also banned 44 companies from continuing to collect debt from consumers.

Despite this setback of having to settle such a high value suit, GC is still doing pretty well. Last December, the Department of Education announced that it selected GC as one of seven debt collectors who were authorized to collect on federally insured student loans. The other collectors selected by the DOE include Financial Management Systems Investment Corp., Premiere Credit of North America, the CBE Group, Transworld Systems, Value Recovery Holding and Windham Professionals.

Under the FDCPA, debt collectors are prohibited from misrepresenting facts about your debt, harassing you, or using unfair practices to collect debt. A plaintiff can sue under this law and can receive upwards of $1,000 plus attorneys’ fees. As consumers continue to complain about debt collection, these lawsuits are becoming more and more common.

Victim of identity theft is harassed by debt collector.

This week, www.cleveland.com posted a great article discussing the problems of identity theft and how those problems can create headaches when debt collectors get involved.

In this case, an Ohio consumer had his identity stolen when a bank issued a credit card in his name to a Florida address. The bank sent the delinquent account to a first debt collector, and the consumer was able to identify the account as fraudulent and removed it from his credit report. However, for some reason, the account got passed to a second debt collector, who was demanding additional information from the consumer.

Fortunately, the newspaper provides some good advice for dealing with a debt collector in this situation.

creditcardsFirst, request in writing that the debt collector provide details and proof of the debt.

Second, state in the letter that you were a victim of identity theft, and that the debt is not yours.

The newspaper also recommends getting the letter notarized and sending it via certified mail, which is not a bad idea.

Finally, the newspaper recommends getting something in writing from the debt collector after you resolve the account.

If you’re having this problem, and the debt collector presses on and continues to try to collect the illegitimate debt, despite being informed that the debt was a product of identity theft and not actually owed by you, then you might want to consider talking to an attorney who is familiar with the Fair Debt Collection Practices Act (FDCPA).  According to this law, it is illegal for a debt collector to try to collect debt that is not actually owed by the consumer.

If you bring a lawsuit and win, under the FDCPA, you can receive upwards of $1,000 in damages plus any actual damages, attorneys’ fees and costs. Most FDCPA attorneys take these on contingency, so it is very unlikely that you would have to pay out of pocket.

Feds Sue Largest Student Loan Company for Misrepresentations

Feds Sue Navient, Largest Company of Student Loans for Misrepresentations.

Yesterday, the New York Times reported on the lawsuit brought against Navient Solutions, Inc., formerly known as Sallie Mae, by various state and federal governmental groups for misrepresentations of student loans.

Navient, the nation’s largest servicer of student loans, stands accused of misleading student borrowers and illegally driving up collection costs for millions of students across the country. The Consumer Financial Protection Bureau (CFPB) and two state attorneys general are bringing the lawsuits.

The company services approximately $300 billion in private and federal loans for more than 12 million citizens in the country, or about 1 in 4 student borrowers. According to the complaint, Navient messed up loan payments and obscured information in fine print for consumers. Navient is also accused of steering students away from income-based repayment programs in an effort to increase its own profits.

NY Times notes that the “mistakes and lapses in oversight” were similar to the problems inherent in the mortgage servicing industry during the 2008 recession. According to the director of the CFPB, Navient “used shortcuts and deception to illegally cheat struggling borrowers out of their rights to lower payments.”

The timing of this lawsuit is especially interesting, as President-Elect Trump will be inaugurated today. Republicans have indicated that they are interested in scaling back the Dodd-Frank Act, the legislation that helped to usher in the CFPB and its consumer protections. In relation to this, Navient believes that the timing of the lawsuit is a purely political stunt, and that the allegations are all false.

The debt collection company owned by Navient, Pioneer Credit Recovery, was also named as a defendant in the lawsuit. Previously, Pioneer was a collector of federally-insured student loans, but the Department of Education ended that relationship due to Pioneer’s “materially inaccurate representations” that it made to borrowers.

Under the Fair Debt Collection Practices Act (FDCPA), consumers, including student loan debtors, have the right to be free from misleading and inaccurate communications from debt collectors, including Pioneer and Navient.

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