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Wednesday, July 15, 2009

Lawsuit Might Pull the Mask off Credit-Card Industry

The attorney general of Minnesota yesterday filed a lawsuit that might expose the ugly underbelly of the credit-card industry.

Lori Swanson's lawsuit against the Minneapolis-based National Arbitration Forum (NAF) also might shine much needed light on third-party debt buyers, who form perhaps the sleaziest component of the American financial-services industry.

We've had personal experience with third-party debt buyers and the NAF, and we introduced them to you in a post titled: "A Schnauzer Warning: Beware of Bottom Feeders." We've also seen firsthand how debt buyers and the NAF routinely violate the Fair Debt Collection Practices Act (FDCPA), which governs their activities.

Our Legal Schnauzer team hardly is alone in trying to warn consumers about the lowlifes they might encounter from the debt-collection world. Business Week has a splendid overview article about the Minnesota lawsuit, including a link to an investigative report from about a year ago on the NAF.

The Alabama Consumer Law Blog, based in Birmingham, takes an in-depth look at the Minnesota case, including key segments of the lawsuit itself.

What's at the heart of the case against the National Arbitration Forum? Business Week reports:

The civil suit filed against the National Arbitration Forum in state District Court in Minneapolis alleges that far from being an impartial venue for resolving such disputes, the NAF has conflicting ties to major collection law firms that represent credit-card companies. Indeed, the case claims that New York hedge fund Accretive LLC—in which Seagram heir Edgar Bronfman Jr. is a general partner—has cross ownership of such major collection law firms and the NAF, sending collection cases between the two. The suit also alleges Accretive is involved in the arbitration firm's business development. Accretive isn't named as a defendant in the suit. There is no allegation of wrongdoing by Bronfman.

Among the debt-collection firms that Accretive has acquired is a California-based outfit called Eskanos & Adler. We've had firsthand experience with Eskanos & Adler and seen how the firm violates the FDCPA with impunity.

How is the NAF cheating American consumers? Business Week reports:

"The Forum represents to the public, the courts, and consumers that it is independent, operates like an impartial court system, and is not affiliated with any party," says Attorney General Lori Swanson's suit, which charges NAF with consumer fraud, deceptive trade practices, and false advertising. "The consumer does not know that the Forum works alongside creditors behind the scenes—against the interest of consumers."

"These practices go to the foundation of our legal system," Swanson adds in an interview. "Impartial resolutions of disputes are what democracy is all about, and the actions of this company undermine justice and are a threat to the legal system."

NAF and its cronies in the debt-collection industry have tentacles that can reach consumers all over the country. They've reached my wife and me here in Alabama.

A Birmingham-based law firm called Ingram & Associates has repeatedly harassed us, trashing the FDCPA in the process. The firm is led by a woman named Angie Ingram, and I have tape-recorded evidence that shows in stark detail how her outfit conducts business in an unlawful and sleazy manner.

I also have evidence that Ingram often works in conjunction with a Pennsylvania-based company called NCO. If you want to have some fun, key the words "NCO fraud" or "NCO scam" into Google. Then sit back and see how much material comes up. You can keep yourself reading for days.

Kudos to Lori Swanson of Minnesota for having the guts to take on the NAF and its credit-card buddies. We intend to do our part here in Alabama to expose the seedy world of third-party debt buyers.


Anonymous said...

I would love to see U.S. citizens band together in the millions to force law changes in reference to sleezy law firms that buy charged off, written off and insured debts from the fraudulent credit card industry for pennies on the dollar, and then collect the full amounts plus the enormous interest charges and other charges. These wolf law firms even threaten and hold sheriff sales. Does anyone know of a blog or organization that is in force in reference to what I am saying? I had a vision of the Larry King Show exposing the very subject that I am talking about. Millions of people called in. This is how laws are changed for the people. They should all experience the same. Hit them in their pocket books.

se7ensnakes said...

There are major problems with Credit Card and debt. The first is that Banks issue counterfeit money when they issue loans. The banks do incur a liability because that fake money is going to come bank when the check is cashed or when the debit/credit card needs to pay the vendor. But most of the time thats done with counterfeit money. So yo asked what is wrong with providing this service. Well, for one, if there is going to be a charge for the use of money the public should benefit as a whole. If the banks want to create money and then charge for its use, this is wrong. Money should exist as a medium of exchange not have a private entity charge for its creation and use. The public, through government, should be managing and creating the money we use. If the people need credit, they can go to the bank, but the bank must provide exogenous money, not their own electronic money. This gives the banks the ability to control the ups and downs of the economic through inflation and deflation.