Wednesday, August 5, 2009

Debt-Collection Industry is in the Crosshairs--in Alabama and Beyond

A number of class-action lawsuits are expected to surface in the wake of news that the National Arbitration Forum (NAF) has been knocked out of the consumer-debt business amid allegations of fraud.

Sylvia Hsieh of Dolan Media Newswire reports that NAF's exit, coming after settlement of a lawsuit from the Minnesota attorney general, sent shock waves through the debt-collection industry. And consumer lawyers are reacting with appropriate urgency, reports Hsieh:

The ink was barely dry on the settlement when the American Arbitration Association announced on July 22 that it too would be getting out of debt collection arbitration until it can develop standards of practice.

Consumer lawyers reacted swiftly.

“Tons of consumer lawyers are investigating lawsuits right now,” said Paul Bland, staff attorney with Public Justice in Washington, D.C., and co-author of Consumer Arbitration Agreements.

The first NAF-related class action already has been filed. And more appear to be on the way:

Dan Edelman, a consumer rights attorney with Edelman, Combs, Latturner & Goodwin in Chicago, has already filed the first class action against credit giant MBNA/FIA and the debt collection law firm Mann Bracken, alleged to have financial ties to NAF, seeking to set aside thousands of arbitration awards and judgments entered against Illinois consumers since 2007. Bland expects more to be filed soon.

Lawyers handling individual consumer debt cases are also planning to use the recent revelations to get judgments overturned and sue for damages.

The Minnesota lawsuit essentially pulled the mask off the arbitration side of the debt-collection industry:

The complaint mapped out a “complex web” that boiled down to a cozy financial relationship: The arbitration services of NAF and sister organizations, as well as the debt collection services of the law firm Mann Bracken and other companies, have all been owned by the same New York hedge fund since 2007.

The complaint alleged that the NAF violated state consumer fraud, deceptive trade practices and false advertising statutes through “complex and opaque corporate structuring” that concealed its financial ties and represented itself as a neutral party.

“Consumers also do not know that--despite representing to the public that it has ‘no relationship with any party’ and does not ‘counsel our users’--(NAF) works closely with creditors behind the scenes,” the complaint said.

It further alleged that the NAF encouraged creditors to file arbitration claims, helped creditors draft arbitration clauses and sometimes collection claims against consumers, and referred creditors to debt collection law firms, including Mann Bracken, which then filed arbitration claims before the NAF.

We've had personal experience with the bottom feeders of the debt-collection industry, and the NAF case is just the tip of an ugly, smelly iceberg. An outfit called NCO, based in Horsham, Pennsylvania, is widely believed to be among the lowest of the low, a serial violator of the Fair Debt Collections Practices Act (FDCPA), which is supposed to govern the industry.

In truth, the FDCPA is a pathetically weak law, and debt-collection outfits know they have little to fear from it. Essentially, abusive practices pay off for debt collectors, and many consumers have no idea they are being taken for a ride.

We have some intriguing, tape-recorded evidence that shows exactly how NCO--and its affiliated law firms, such Ingram & Associates of Birmingham--operate. Angie Ingram is the lawyer who heads Ingram & Associates LLC, and she is a member of something called the NCO Attorney Network.

In a series of upcoming posts, we will give you a behind-the-scenes look at how the NCOs and Angie Ingrams of the world operate, violating federal law with impunity. You won't want to miss it.


Anonymous said...

I dont do a lot of debt collection defense, because there is no money in it. However, I have a client who stopped paying her bills due to her injury, and was eventually sued by Ingram for the debt.

I told the client about all the defenses we had because I was sure the debt was bought and they could not provide and original contract (in fact, had previously gotten one dismissed on these grounds), but she stopped me, saying something like "I spent the money, I know I owe it, let them take a judgment against me. I am not out to avoid my responsibility, I just don't have the money to pay the debt." How refreshing. Its a shame that you do not have the same sense of honor, but to each their own. Good luck tilting at windmills.
At least you have a good employment discrimination claim against UAB that you are destroying by your insistence on blogging about all the wrongs that have been committed against you.

You may see decency in your cause, but a jury will just see kook. The best advice I can give you is stop writing this blog until your emplyoment case is resolved.

btw, on a personal note, I say keep blogging. you are a hoot.

legalschnauzer said...

I'm curious about a few things:

1. Was there any evidence that Ingram had violated the FDCPA in your client's case? If not, why were you thinking about suing Ingram? And you wonder about MY sense of honor?

2. You say you got a case dismissed when the debt collector couldn't prove it owned the debt. If you are so honorable, why did you do that? You admire "honor" in your clients, but you don't have "honor" yourself?

3. Why do you assume that I actually owe the debt? You don't know that do you? Ingram and NCO certainly haven't proven it, which they must do under federal law--as you yourself admitted.

4. You want to hear "honor" being practiced? Wait til I post the audiotape I have of how Ingram treats consumers. You won't want to miss it.

4. How is blogging about what happened at UAB harming my case? Everything I've written is true and can be verified. UAB's own committee found I shouldn't have been terminated. Maybe you are from the "old school, pre-Web days," but I see no reason to hide the truth.

If I'm such a kook, why have people like Scott Horton, at Harper's, and Andrew Kreig, at Brandeis University (and many others) referenced my work? Why has the Chronicle of Higher Education, Raw Story, OpEd News and others reported on my case?

Why was my work referenced when the U.S. House Judiciary Committee referenced my work at a hearing on selective prosecution in fall 2007?

I guess Congress makes a habit out of citing kooks.

You would advise a client to lock their lips about wrongdoing when the facts and the law are on their side?

You don't sound like much of a lawyer to me.