Approximately one year ago, the United States Supreme Court in AT&T Mobility LLC v. Concepcion, upheld forced arbitration clauses and prohibited consumers from pursuing many claims in class action lawsuits. A recent article finds that consumers are disadvantaged forced arbitration clauses. Companies, not consumers, benefit when disputes are arbitrated rather than litigated and decided by a judge or jury.

AT&T MOBILITY LLC V. CONCEPCION

In AT&T Mobility LLC v. Concepcion, the United States Supreme Court extended the reach of the 1925 Federal Arbitration Act (FAA) by upholding forced arbitration clauses, which blocked consumers from bringing class action lawsuits. Prior to Concepcion, some state courts permitted consumers to bring class action lawsuits despite a forced arbitration clause. The FAA’s permitted states to invalidate these clauses based on contract law, and in particular,  the doctrines of unconscionability or duress.  A contract provision is unconscionable if it is overly one-sided and unfair. The Court in Concepcion stated:

The overarching purpose of the FAA . . . is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings. Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.

Furthermore, the majority opinion acknowledged “class proceedings are necessary to prosecute small-dollar claims that might otherwise slip through the legal system,” but, that States “cannot require a procedure that is inconsistent with the FAA.” The ultimate effect of the Concepcion decision made consumers pursue many cases, in which there was a contract that did not permit class actions or required arbitration, on an individual basis rather than as a class. This decision had the double effect of protecting corporations from large verdicts or awards, as claims cannot be consolidated leading to a large dollar amount, and deterred many people from even bringing claims as the costs of pursuing an individual claim can be worth more than the case itself.

The full United States Supreme Court opinion can be read here (AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011)).

WHAT IS ARBITRATION?

Arbitration is “the submission of a dispute to one or more impartial persons for a decision, known as an “award.” Arbitration is considered a streamlined way of resolving a dispute as the normal rules of civil procedure and evidence, which are required in the legal system, are not present and the costs are usually much lower than a trial. Arbitration agreements can have many variations such as: whether the award is binding or non-binding; whether a party has the right to appeal an arbitration award; how the arbitrator(s) are selected; who pays for the arbitrators; and what information, if any, the parties must exchange prior to the arbitration.

Forced arbitration clauses are used by many companies and corporations. You will find forced arbitration clauses in most contracts such as your cell phone and credit card agreements. These clauses require disputes between a consumer and the company be arbitrated and prevent the consumer from brining a legal action.

Forced arbitration clauses almost always favor the company over the individual. The company, in its agreements, not only requires arbitration but sets up the procedures and rules of the arbitration and how the arbitrator is chosen. There is an inherent conflict when a company gets to choose the arbitrator, who has an inherent self-interest to find in favor of the company so they can remain an approved arbitrator and continue to be selected. Also, when the company gets to set the rules of the arbitration, the rules are always set in their favor. Arbitration awards are usually also required to be kept confidential, thus not permitting other consumers to learn about the conduct that started the dispute. Forced arbitration also prevents the bringing of class action lawsuits, which has many benefits to consumers especially in low, per-person damage cases or in cases involving a significant, prevalent harm that should become public to protect and inform all potentially affected consumers.

RECENT ARTICLE FINDS ARBITRATION HURTS CONSUMERS

A recent article, co-authored by the Public Citizen (Public Citizen’s website) and the National Association of Consumer Advocates (NACA) (NACA website), maintains forced arbitration is not good for consumers. The study, Justice Denied: One Year Later: The Harms to Consumers from the Supreme Court’s Concepcion Decision Are Plainly Evident,  finds that requiring arbitration over legal action, including class action lawsuits, does not benefit consumers, as was argued by AT&T Mobility in the U.S. Supreme Court’s AT&T Mobility vs. Concepcion case. The article, after examining case studies, statistics and legal decisions, reaches the following conclusions:

Under Concepcion, companies can insert in forced arbitration clauses provisions that block consumers from banding together to pursue their claims in collective or class actions.

Forced arbitration is bad enough on its own terms, as it offers a consumer wronged by corporate misconduct no avenue for relief except a private, secretive tribunal chosen by the company. For millions of consumers in countless instances of corporate wrongdoing, class action bans sweep away even that weak chance for justice. Many consumer claims aren’t feasible as individual actions, and therefore class action bans stop them from proceeding at all. In addition to leaving consumers without remedies for harms done to them, class action bans shield law-breaking companies from accountability. For the companies, this is precisely the point.

Justice Denied is very insightful and consumers wishing to understand more about the effects of arbitration versus court actions, including class actions, should read the entire article, which is available here (Justice Denied One Year Later: The Harms to Consumers from the Supreme Court’s Concepcion Decision Are Plainly Evident).

CURRENT FEDERAL ACTION

Legislation is currently pending in Congress, the Arbitration Fairness Act of 2011, which would limit forced arbitration. The bills are currently stalled in both houses of Congress with the last hearings on the bills being held in October of 2011. You can check the status of the bills on the Library of Congress’ THOMAS system here:

Senate: 112th Congress (2011 – 2012) S.987
House of Representatives: 112th Congress (2011 – 2011) H.R.1873

In addition, the Consumer Protection Financial Bureau (CFPB) announced April 24, 2012, that it is requesting comments about arbitration clauses in financial services and products, such as those found in many bank and credit card agreements. In a press release, CFPB Director Richard Cordray, stated:

Arbitration clauses are found in many contracts for consumer financial products. . . . We want to learn how arbitration clauses affect consumers, and how effective arbitration is in resolving consumers’ issues. This inquiry will help the Bureau assess whether rules are needed to protect consumers.

(Source: Consumer Financial Protection Bureau launches public inquiry into arbitration clauses). The CFPB is specifically requesting comments from the public on the following:

• The prevalence of arbitration clauses in consumer financial products and services;
• What claims consumers bring in arbitration against financial services companies;
• If claims are brought by financial services companies against consumers in arbitration;
• How consumers and companies are affected by actual arbitrations; and
• How consumers and companies are affected by arbitration clauses outside of actual arbitrations.

The CFPB press release also stated:

Companies that use pre-dispute arbitration clauses claim that arbitration is faster and cheaper than litigation, and at least as fair. Others disagree, noting that consumers may not realize that they have waived their right to a trial because of an arbitration clause. And even if consumers understand arbitration clauses, these clauses may still have significant impacts that warrant study by the CFPB.

The public comment period ends on June 23, 2012.

WHAT YOU CAN DO- CALL TO ACTION

Lapin Law Offices urges you to contact your congressional representatives and ask them to support legislation that limits forced arbitration clauses. Nebraskans are urged to contact their United States Congressional Members:

Senator Ben Nelson
Senator Mike Johanns
Representative Jeff Fortenberry
Representative Lee Terry
Representative Adrian Smith

You can also submit letters to congressional members at OpenCongress.org.

In addition, consumers should submit comments to the CFPB about arbitration clauses. The CFPB reference information is: Docket No. CFPB-2012-0017. You can submit comments by any of the following methods:

Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.
Mail/Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street, NW, Washington, DC 20552

RECENT LAPIN LAW OFFICES BLOG POSTS

Consumers: 11 Ways To Protect Yourself From Scams

Consumers: Beware Of Scams

Protect Yourself Against Phantom Debt Collectors

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers harassed or abused by debt collectors or telemarketers. We believe consumers who are wronged should be able to bring their claims in court. You can learn more about your rights by calling us at 402-421-8033 or through our websites: Lapin Law Offices or StopBadCollectors.com for a free consultation.

By: Jeffrey Lapin

If you have been injured, abused or harassed here are 10 reasons why you should call Lapin Law Offices: 

1. You have nothing to lose by calling us, but think of what you could lose if you do not.
2. We only get paid if we get money for you. No recovery – No fee.
3. We represent people that have been injured and abused; physically, emotionally, and financially.
4. We treat callers and clients with the dignity and respect they deserve. We listen; we do not judge.
5. We have experience and are not afraid to go to court.
6. We understand that accidents and injuries affect all aspects of a person’s life.
7. We let you focus on getting better while we deal with the insurance company.
8. Insurance companies do everything they can to pay you as little as possible. Our job is to get them to pay you everything you deserve.
9. We do not let our clients fall victim to the insurance company’s tactics of: deny, delay and defend.
10. We are respected because we know how to represent clients that have been injured, abused or harassed.

And here are two bonus reasons you should call Lapin Law Offices. Just because we said 10 reasons does not mean there are only 10.

11. We offer a free initial consultation twenty-four hours a day seven days a week (24/7).
12. We represent clients with caring, passion and dedication.

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents injured, abused and harassed clients throughout Nebraska. Give us a call at 402-421-8033 (Lincoln), 888-525-8819 (Toll Free) anytime (24/7) for a free initial consultation.

Consumers beware: scammers are lurking everywhere trying to separate you from your money or to steal your identity. With some simple precautions you can prevent yourself from being their next victim. Below are 11 ways you can protect yourself:

11 WAYS TO PROTECT YOURSELF

1. Wait. According to Dr. Doug Shadel, the current State Director for AARP Washington, the best advice is: Never decide to buy something at the time you hear a sales pitch. There’s no deal out there that can’t wait 24 hours. Source: ABC News: Outsmarting the Con Artists: Top 5 Ways to Avoid Scams.

2. Be aware. Another way to protect yourself is to know the scams that are currently going on. The national BBB’s website offers a separate section and permits you to sign up for scam alerts: Scam Source: Scam, Con and Rip Off Resources at www.bbb.org/us/scam-source/. Nebraskans can find about current Nebraska scams on the BBB Nebraska’s site in the News Center: www.nebraska.bbb.org/bbb-news/

3. Identify unrealistic or high pressure tactics. Promises to make you instantly rich with little or no risk on your part are most likely scams. So are offers involving an item so scarce, that unless you buy immediately, you will lose your opportunity to purchase the item.

4. Think about what you are being asked to do. Remember the maxim. “If it sounds too good to be true, it is.”

5. Check out the person or company. Before buying anything, check out the company online especially on governmental and consumer protection, such as the Better Business Bureau’s, websites.

6. Do not open email from people you do not know. You should not open email, especially attachments to emails, from people you do not know. These emails and attachments could contain viruses or other malware giving the sender access to your private information.

7. Do not give out your personal or financial information. Do not give out your personal or financial information to someone who calls or sends an email unless you have verified the source. If in doubt, call the company yourself to verify that the call or email originated from the company and is not a scam.

8. Do not send money to someone you do not know. You should never send money directly to someone you do not know unless you have verified their credentials and trustworthiness. If purchasing something from someone you do not know, use a source that offers some protection, such as a credit card or online payment service.

9. Do not play foreign lotteries. First, these are almost always scams. Second, it is illegal to play a foreign lottery.

10. Do not agree to deposit a check from someone you do not know. You should never agree to deposit a check from someone you do not know and then wire all or part of it back. Scams using this tactic request you send the money before your bank has a chance to determine that the check is not good.

11. Practice saying No. You should practice a simple line to say to telemarketers. It can be simple as “No thank you.” Once you say it, hang up the phone before the caller can say anything else.

There are a number of other things you can do besides these 11 items. The most important thing to remember: it is your money and identity, both of which you have worked hard to maintain. Do not be taken in by a scammer and have these stolen from you.

PRIOR POSTS ABOUT SCAMS, DEBT COLLECTION OR TELEMARKETERS

Consumers: Beware Of Scams

Protect Yourself Against Phantom Debt Collectors

FTC Targets Phantom Debt Collectors

Proposed FDCPA Amendment Would Allow Messages By Collectors

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers scammed or abused by debt collectors or telemarketers. You can learn more about your rights by calling us at 402-421-8033 (Lincoln), 888-525-8819 (Toll Free) or through our websites: Lapin Law Offices or StopBadCollectors.com.

Consumers beware: scammers are working overtime to separate you from your money and identity. Their techniques are becoming more sophisticated as many consumers have become more wary. Not only are scammers targeting your money they are also trying to steal your identity, which can be more profitable than just getting a single payment from you. These scams are taking place by telephone, online, email, text and regular mail.

2011 TOP SCAMS

The Better Business Bureau released a very good Infographic (Top 10 Scams of the Year: 2011) listing the top 10 consumer scams from 2011. These scams used a variety of tactics and were aimed at either obtaining money or personal information. The top scam areas were:

Financial Scams
Online Dating and Social Media
Job Seeker Scams
Check Cashing and Money Order Scams
Phishing (attempting to acquire information through electronic methods)
Sweepstakes and Lottery
Identity Theft
Home Renovation
Sales Scams

The top scam of 2011 was actually a false BBB phishing email with the subject line “Complaint Against Your Business.” This email contained a link or attachment that would infect your computer with malware that would locate your bank information and transfer your money. Source: (http://www.bbb.org/blog/top-scams-of-2011.html)

HOW MOST SCAMS WORK

Dr. Doug Shadel, the current State Director for AARP Washington, recently published a book, Outsmarting the Scam Artists: How to Protect Yourself From the Most Clever Cons, which offers practical advice for consumers who want to protect their money. The advice comes from a surprising source: convicted con artists who reveal how they have scammed consumers. In an interview with ABC News, Dr. Shadel stated that every con man uses the same basic technique, which is to get a person into a heightened emotional state that is referred to as “the ether.” He added, “If anyone spent five seconds thinking logically about any of these offers, they would never do it.” (Sources: ABC News: Outsmarting the Con Artists: Top 5 Ways to Avoid Scams  and Outsmarting the Scam Artists: How to Protect Yourself From the Most Clever Cons.) Dr. Shadel’s book offers concrete examples of the intricacies and complexities of some of the scams that yielded a lot of money for the scammers until they were eventually caught.

IF YOU ARE A VICTIM

If you are victim of a scam in Nebraska there are various agencies you can contact who might be able to help:

National Better Business Bureau (BBB): bbb.org

Nebraska Better Business Bureau: nebraska.bbb.org

Nebraska Attorney General’s Office: www.ago.ne.gov

Federal Trade Commission (FTC): www.FTC.gov

Federal Communication Commission (FCC): www.FCC.gov

United States Postal Service (USPS): www.usps.com

CONCLUSION

While scammers will do whatever they can do separate you from your money or identity, there are things that you can do to protect yourself. Our next blog article, Consumers: 11 Ways To Protect Yourself Against Scams, will offer practical advice on how to avoid being scammed. The best advice is to always be cautious and remember if it sounds too good to be true it probably is.

PRIOR POSTS ABOUT SCAMS AND DEBT COLLECTION

Protect Yourself Against Phantom Debt Collectors

FTC Targets Phantom Debt Collectors

Proposed FDCPA Amendment Would Allow Messages By Collectors

CFPB Proposes Rule to Define “Larger Participants” It Will Monitor

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers scammed or abused by debt collectors or telemarketers. You can learn more about your rights by calling us at 402-421-8033 (Lincoln), 888-525-8819 (Toll Free) or through our websites: Lapin Law Offices or StopBadCollectors.com.

Generally, no person has a duty to help another in need. Supreme Court Associate Justice Anthony Kennedy noted this during oral arguments on President Obama’s healthcare law on March 27, 2012 and added that while this may seem immoral or wrong, it is the law and has been for a long time. There are a few exceptions to this general rule, which are primarily related to a person’s job in relation to a victim. This post will discuss the duty of private citizens to help another in need. It will not wade into the question of the government’s duty especially those issues involving the President Obama’s Affordable Care Act (also known as Obamacare).

NO GENERAL DUTY

The 2-part finale of “Seinfeld” had a trial in which the main characters were charged with violating the city’s “Good Samaritan” Law that required bystanders to help those in need. Jerry, Elaine, George and Kramer witnessed an overweight man getting carjacked at gunpoint. Rather than helping, they made jokes about the man’s large size and later get arrested under the law for not calling police to help the man.

The four are convicted after a number of witnesses are called to testify about their “character.” The Judge, after the verdict is read, states:

I do not know how, or under what circumstances the four of you found each other, but your callous indifference and utter disregard for everything that is good and decent has rocked the very foundation upon which our society is built. I can think of nothing more fitting than for the four of you to spend a year removed from society so that you can contemplate the manner in which you have conducted yourselves.

Nebraska does not have such a law.

In Nebraska, there is no general duty to help another in need, whether it is a crime victim or someone who has sustained an injury. During the United States Supreme Court oral arguments on the Affordable Care Act (“Obamacare”) on March 27, 2012, when discussing his concerns about the federal government’s ability to require people buy a product, Associate Supreme Court Justice Anthony Kennedy stated:

The reason this is concerning is because it requires the individual to do an affirmative act. In the law of torts, our tradition, our law, has been that you don’t have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him absent some relation between you. And there is some severe moral criticisms of that rule, but that’s generally the rule.

This general rule is echoed in Nebraska. For a discussion of this rule in Nebraska read Dowis v. Continental Elevator Co., Inc., decided by the Nebraska Supreme Court in 1992, and which can be found here.

EXCEPTIONS: SPECIAL DUTY TO HELP

Despite the general rule that there is no duty to help, there are exceptions that are primarily based on the relationship or employment status of the person who could render aid or assist a victim. Police officers and firefighters, by the very nature of their jobs, are required to assist citizens, in both rendering aid, if possible, and trying to apprehend the person committing the crime or causing the injury.

Nebraskans are required to immediately report suspected child abuse. Nebraska Revised Statute § 28-711 provides, in part:

When any physician, medical institution, nurse, school employee, social worker, or other person has reasonable cause to believe that a child has been subjected to child abuse or neglect or observes such child being subjected to conditions or circumstances which reasonably would result in child abuse or neglect, he or she shall report such incident or cause a report of child abuse or neglect to be made . . .

Violation of the statute is a Class III misdemeanor, which could result in up to 3 months imprisonment, a five hundred dollars fine or both.. This statute does not limit it to professionals who might work with children. However, it is usually the professionals listed in the statute who are prosecuted for failing to report.

VOLUNTEERS

When someone, who is not under a duty to do so, does voluntarily act to help someone, the volunteer can be liable if harm occurs as a result of aid or actions. This has also been long established law. In 1928, New York Judge Benjamin Nathan Cardozo, who later would be become an Associate United States Supreme Court Justice, said of this rule:

The hand once set to a task may not always be withdrawn with impunity though liability would fail if it had never been applied at all.

A volunteer must use the same care as a reasonably careful person would have used under similar circumstances. However, there is an exception for those rendering care at the scene of an emergency. Nebraska Revised Statute § 25-21,186 provides:

No person who renders emergency care at the scene of an accident or other emergency gratuitously, shall be held liable for any civil damages as a result of any act or omission by such person in rendering the emergency care or as a result of any act or failure to act to provide or arrange for medical treatment or care for the injured person.

This exception only applies to “actual” volunteers; it does not apply to police, rescue or other professionals who have a duty to render aid in these situations.

FINAL THOUGHTS

The general rule that private citizens do not have an affirmative duty to render any type of assistance is very longstanding. This includes even just reporting a crime or accident. There are some laws where a duty has been imposed to report but those usually only apply to child abuse or persons society considers in need of special protection. Professionals have a duty but that is imposed by the job itself; they are not truly “volunteers.”

While this is the law, we do live in a society where people voluntarily render aid to others in need. It does not occur all of the time but there are enough “Good Samaritans,” especially in Nebraska, throughout the news for not offering assistance tends to occur much more often than not. Fortunately, there are laws that protect people who do help others. These types of laws need to be protected. In addition, remember the Golden Rule, which is to treat other people as we would wish to be treated yourself.

OTHER POSTS YOU MIGHT BE INTERESTED IN

Protect Yourself Against Phantom Debt Collectors

DOT Proposes Guidelines For Automakers To Reduce Driver Distraction

FCC Issues New Rules For Telemarketing Robocalls

Bill Would Limit Liability in Escaped Cow- Vehicle Collisions

Drivers: Beware of Deer

Drivers Understand But Often Ignore Risks of Texting or Talking on Cell Phone

Distracted Driving: Risks Inside Your New Car or Truck

LAPIN LAW OFFICES

Lapin Law Offices represents injured, abused and disabled clients throughout Nebraska. If you have been questions about a potential case please give us a call at 402-421-8033 (Lincoln) or 888-525-8819 (Toll Free) anytime (24/7) or contact us through our website: www.LapinLawOffices.com.

Lapin Law Offices urges consumers to protect themselves against phantom debt collectors. A phantom debt collector is a debt collector who attempts to collect on a debt that never existed or that you do not owe. They may also be known as fake debt collectors or false debt collectors. As we recently posted, the FTC filed a lawsuit against phantom debt collectors who allegedly collected over $5 million dollars from U.S. consumers. In that case, the alleged phantom debt collectors obtained information about people when they applied for online payday loans. The people who paid these phantom debt collectors did do based on threats of lawsuits, going to jail or the loss of their job.

Types of Phantom Debt Collectors

Phantom, fake or false debt collectors typically fall within one of three categories:

You do not owe the debt collector any money;

You owe money on a debt but it is for an amount, even including interest and late fees, less than the amount being collected; or

You legitimately owe money but the collector does not have the authority to collect upon the debt.

It is this third type that are the hardest to detect.

Spotting Phantom Debt Collectors

It may be difficult to identify whether you are contacted by a legitimate or a phantom debt collector as both may have some of your personal information, like a bank account number. Here are some tips to help spot a fake or phantom debt collector:

You do not recognize the loan or debt that you are being called about;

Refuses to identify the original creditor;

The debt is not listed on your credit report;

The amount of the debt is considerably more than you could possibly owe;

Refuses to give you their name, mailing address or phone number;

Asks for personal, financial or other sensitive information that either the debtor should know or would have no reason to know; or

Exerts high pressure to try to scare you into paying, such as threatening to have you arrested or to report you to a law enforcement agency; and/or

Claims they are not governed by or aware of the Fair Debt Collection Practices Act (“FDCPA”).

Protecting Yourself Against Phantom Debt Collectors

If you have any question about whether the debt collector is legitimate, do not give out any of your personal, financial or other sensitive information. Besides trying to collect on a phantom debt, many of these phantom debt collectors will use your information to commit identity theft. If you believe you are being contacted by a phantom debt collectors here are some suggestions:

Ask the caller for his or her name, company, street address, and telephone number.

Request a written “validation notice” of the debt, which a legitimate debt collector must provide you within 30 days of your request and that must include the amount of the debt, the name of the creditor you owe, and your rights under the FDCPA.

Check your credit report to see if the debt is listed for the amount claimed.

If the caller gives you the address, send a letter to the caller and demand they quit calling you. Under the FDCPA, legitimate debt collectors must stop calling you if you ask them to in writing. Make sure to keep a copy of the letter for your records.

Contact the original creditor and ask whether the debt was assigned to the debt collector.

If You Know It Is A Phantom Debt Collector

If you are contacted be a phantom debt collector for a debt that you do not owe, hang up the phone and immediately contact the FTC and your state Attorney General’s office. In addition, if you have been harassed, intimidated or abused by the caller, contact Lapin Law Offices to see if your rights have been violated and whether you might be entitled to money damages.

Other Posts Regarding Debt Collection

FTC Targets Phantom Debt Collectors

Proposed FDCPA Amendment Would Allow Messages By Collectors

CFPB Proposes Rule to Define “Larger Participants” It Will Monitor

Social Media and Debt Collection: Facebook and Twitter: Part 1

Social Media and Debt Collection: Limited in the United Kingdom: Part 2

Social Media and Debt Collection: The United States: Part 3

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers harassed or abused by debt collectors and those whose rights have been violated under the Fair Debt Collection Practices Act (FDCPA). You can learn more about your rights by calling us at 402-421-8033 (Lincoln), 888-525-8819 (Toll Free) or through our websites: Lapin Law Offices or StopBadCollectors.com.

by Jeffrey Lapin

According to the Federal Trade Commission (FTC) many consumers though out the country have reported getting telephone calls from phantom debt collectors trying to collect on fake or false debts. The FTC has started targeting these phantom debt collectors and have filed suit against a group that has allegedly collected over $5 million dollars.

“Phantom debt collector” also called “fake debt collector” or “false debt collector” are typically scammers trying to get money or obtain information so they can commit identity theft. Usually, the phantom debt collectors call trying to collect on a debt the consumers did not receive. In some cases, the consumer did receive the loan but for amount considerable less than what is trying to be collected. Finally, some consumers are receiving calls from receiving calls from phantom debt collectors who are not authorized to collect the debt they claim to be calling about.

RECENT SCAM

According to the FTC, one scam, which began in January 2010, has taken $5 million so far from United States citizens. The scam involved approximately eight million phone calls originating from India to American consumers over an eight-month period. These phantom debt collectors collected personal information about consumers who had inquired or applied for an online payday loan. With this information, these scammers would call consumers, often posing as law enforcement officers or other governmental officials, and threaten people with arrest, lawsuits or the loss of employment, These callers would usually demand payments of about $500.00, but sometimes as much as $2,000.00. Some people, even when they knew they did not owe money, paid just to avoid a threatened potentially embarrassing situation or arrest.

FTC LAWSUIT

In an effort to stop this scam, The FTC charged California-based American Credit Crunchers, LLC, an affiliated company called Ebeeze, LLC, and the companies’ owner, Varang K. Thaker, with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA). The case is Federal Trade Commission v. American Credit Crunchers, LLC, Ebeeze LLC, and Varang K. Thaker, which is pending in in the United States District Court for the Northern District of Illinois, Eastern Division), Case No. 12cv1028, FTC File No. 1023191. The U.S. District Judge granted the FTC’s request for preliminary injunction stopping the companies from calling consumers. The FTC is seeking that these companies cease all calls and return all monies they received.

In discussing this lawsuit, David Vladeck, Director of the FTC’s Bureau of Consumer Protection stated:

This is a brazen operation based on pure fraud, and the FTC is committed to shutting it down. . . . Consumers should not be pressured into paying debt they don’t remember owing. Legitimate debt collectors must provide consumers with both written information about the debt, and instructions for protecting themselves if they don’t think they owe the debt.

The case is still pending. Updates on the case are available on the FTC’s website here.

Consumers who were a victim of this scam are urged to contact the Federal Trade Commission at1-877-FTC-HELP (1-877-382-4357) or online on the FTC Complaint Assistant.

PRIOR POSTS REGARDING DEBT COLLECTION

Proposed FDCPA Amendment Would Allow Messages By Collectors

CFPB Proposes Rule to Define “Larger Participants” It Will Monitor

Social Media and Debt Collection: Facebook and Twitter: Part 1

Social Media and Debt Collection: Limited in the United Kingdom: Part 2

Social Media and Debt Collection: The United States: Part 3

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers harassed or abused by debt collectors, whether real or phantom, and those whose rights have been violated under the Fair Debt Collection Practices Act (FDCPA). You can learn more about your rights by calling us at 402-421-8033 (Lincoln), 888-525-8819 (Toll Free) or through our websites: Lapin Law Offices or StopBadCollectors.com.

PROPOSED FDCPA AMENDMENT WOULD ALLOW MESSAGES BY COLLECTORS

by Jeffrey B. Lapin

Representative Barney Frank (D-Mass.) recently introduced H.R. 4101 (112th Congress, Second Session) entitled the “Fair Debt Collection Practices Clarification Act of 2012”, to the House Committee on Financial Services. The proposed Act would alter the Fair Debt Collection Practices Act (FDCPA) and permit debt collectors to leave voicemails and messages on answering machines, which is currently permitted only if the debt collectors provides certain information, which itself can cause it to violate the FDCPA. The proposed Act would require the Consumer Financial Protection Bureau (CFPB) to set forth regulations regarding these messages. In addition, H.R. 4101 would limit the ability of a debt collector’s use of arbitration to settle a dispute.

CURRENT LAW REGARDING DEBT COLLECTOR MESSAGES

The FDCPA has two provisions that relate to debt collectors leaving voice and answering machine messages: § 1692c(b) [limits communications by debt collectors to persons other than the debtor] and 15 USC 1692e (11) [requires the debt collector to provide certain information in all communications with debtors].

The U.S. District Court for the Southern District of New York, in Foti v. NCO Financial Systems, Inc., 424 F.Supp.2d 643 (S.D.N.Y. 2006), was asked to answer whether a debt collector could leave a pre-recorded, standardized message on a consumer’s answering machine that identified the name of the debt collector, indicated it related to a debt and a telephone number for the debtor to call back. The debt collector argued that the message did not constitute a “communication” as defined by the FDCPA as it did “not convey any information regarding a debt, but instead simply requests a return call regarding an important business matter.” The court rejected this argument. The debt collector further argued that if the court defined this type of message as a “communication” under the FDCPA, it would be left with a “Hobson’s Choice” because it would be required to identify itself as a “debt collector”, as required by 1692e(11) but is prohibited from leaving a message identifying themselves as such by 1692c(b)’s prohibition on communications to third parties. [A “Hobson's choice” is an apparently free choice when there is no real alternative.]. The court again rejected this argument finding that the alleged “Hobson’s Choice” was self-imposed by the debt collector. Notably, the court concluded that the debt collector could chose to not leave a message at all. The court said that debt collectors who do choose to leave voice or answering machine messages must give the “mini-miranda” warnings required by the FDCPA. [A mini-miranda warning generally requires a debt collector to that the communication is from a debt collector and that any information obtained may be used to collect the debt.] The Foti v. NCO Financial Systems, Inc. decision is available here.

The Foti decision changed debt collection activity significantly and brought about the term “Foti claim” for FDCPA claims brought against debt collectors who leave voicemail messages that do not include the required information.

H.R. 4101: THE PROPOSED FAIR DEBT COLLECTION PRACTICES CLARIFICATION ACT OF 2012

H.R. 4101, the Fair Debt Collection Practices Clarification Act of 2012, begins:

To amend the Fair Debt Collection Practices Act to exempt a debt collector from liability when leaving certain voice mail messages for a consumer with respect to a debt as long as the debt collector follows regulations prescribed by the Bureau of Consumer Financial Protection on the appropriate manner in which to leave such a message, and for other purposes.

The proposed Act would add a new section to the FDCPA permitting debt collectors to leave voice and text messages under certain circumstances:

A debt collector may leave messages for a consumer in connection with the collection of a debt on the consumer’s answering machine, voice messaging system, or other similar device, including in an initial communication with the consumer, so long as the message complies with regulations prescribed by the Bureau [CFPB to ensure the preservation of the privacy and other rights granted to the consumer.

 It would require the CFPB to promulgate regulations that would “specify the content or text of” all voice and text messages from debt collectors to consumers within 6 months of the Act’s passage.

The other significant change in H.R. 4101 is that it would limit debt collector’s ability to use arbitration to resolve a debt dispute. Debt collectors prefer arbitration over court proceedings as they are cheaper for the debt collector, debtors do not get a jury to decide the case and the debt collectors are much more likely to be familiar with the arbitrators than the average debtor. It is unfair to a consumer to require arbitration before there is a dispute. Consumers should be able to agree to arbitrate but not required to give up their right to let a judge or jury decide.

The full text of H.R. 4101, the Fair Debt Collection Practices Clarification Act of 2012, is available here.

THE FDCPA SHOULD NOT BE AMENDED TO PERMIT DEBT COLLECTORS TO LEAVE MESSAGES

There are a number of reasons why H.R. 4101’s changes to the FDCPA, which would permit voicemails and ansering machine messages, should not be passed. First, it is important to note that Representative Frank, who is not seeking re-election, is one of the main authors of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB. The CFPB did not have a Director due to political opposition to the CFPB itself until January 4, 2012. Richard Cordrey, the CFPB Director, was a recess appointment. Both the CFPB and its appointment are highly political issues. Representative Frank, by giving the actual rule making authority to the CFPB, may be attempting to help legitimize and provide additional power to the CFPB.

Second, the power given to the CFPB regarding this substantial change to FDCPA usurps legislative authority and gives it over to the CFPB to set through the rule-making process. As the CFPB Director is a political appointment, a Director more sympathetic to the collections industry can alter the rules and cause potential conflicts with other third-party FDCPA disclosure prohibitions. The result will likely lead to confusion and the debtors will be the one left to suffer the impact.

Third, the stated purpose of the FDCPA is:

To eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses

As the N.Y. court in Foti noted, debt collectors are not left with a “Hobson’s choice” regarding voicemail and answering machine messages. They can choose to not leave a message; they can try calling again or sending a letter. The proposed Act would likely change the protections set forth in Foti and expose debtors to potential embarrassment and abuse.

Finally, there is a serious question about potential conflict with the Telephone Consumer Protection Act (TCPA), which prohibits autodialed (robodialed) or prerecorded calls to cellular phones without the prior express consent of the debtor. Would the next step if H.R. 4101 is passed be to change the TCPA to permit debt collectors to use autodialers and prerecorded messages. The penalties for TCPA violations are much greater than for the FDCPA and consumers can ill afford to lose the little protection they have.

WHAT YOU CAN DO

Lapin Law Offices urges you to contact your Representatives and Senators to oppose those provisions of H.R. 4101, the Fair Debt Collection Practices Clarification Act of 2012, that would alter the FDCPA and permit debt collectors to leave voicemail and answering machine messages. Specifically, Section 2 of the Act.

Nebraskans are urged to contact their United States Congressional Members:

Senator Ben Nelson

Senator Mike Johanns

Representative Jeff Fortenberry

Representative Lee Terry

Representative Adrian Smith

Representative Barney Frank may be contacted through his website by clicking here.

You can also submit letters to congressional members at OpenCongress.org. In addition, you can track this and other federal legislation at the Library of Congress THOMAS page here.

PRIOR POSTS REGARDING DEBT COLLECTION AND TELEMARKETING

CFPB Proposes Rule to Define “Larger Participants” It Will Monitor

Social Media and Debt Collection: Facebook and Twitter: Part 1

Social Media and Debt Collection: Limited in the United Kingdom: Part 2

Social Media and Debt Collection: The United States: Part 3

Proposed Act Would Permit Debt Collectors to Use Auto-Dialers to Call Cellular Telephones

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers harassed or abused by debt collectors and those whose rights have been violated under the Fair Debt Collection Practices Act (FDCPA). You can learn more about your rights by calling us at 402-421-8033 or through our websites: Lapin Law Offices or StopBadCollectors.com for a free consultation.

THE CFPB’S ROLE

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorizes the CFPB to supervise “larger participants” for nonbank markets for consumer financial products or services, such as debt collection and credit reporting. The Act requires the CFPB to define “larger participants” by July 21, 2012.

When announcing the proposed rule, Richard Cordray, the CFPB Director stated:

Consumer financial products and services have become more complex over the years and they have expanded well beyond traditional banks. . . Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks. This oversight would help restore confidence that the federal government is standing beside the American consumer.

The actual proposal, Defining Larger Participants in Certain Consumer Financial Product and Service Markets, can be viewed here or on the CFPB’s website: www.consumerfinance.gov

DEBT COLLECTION

The CFPB approximates that 30 million Americans have debt held by a debt collector, with the average debt amount of $1,400.00.

Under the proposed rule, debt collectors with more than $10 million in annual receipts from debt collection activities would be subject to supervision. Based on available data, the CFPB estimates that the proposed rule would cover approximately 175 debt collection firms, which account for about 4 percent of debt collection firms. These firms account for 63 percent of annual receipts from the debt collection market.

CONSUMER REPORTING AGENCIES

As cited by the CFPB, according to the Consumer Data Industry Association, each year there are 36 billion updates to consumer credit reporting files and three billion reports are issued. The three largest consumer reporting agencies, Equifax Credit Information Services, Inc., (Equifax), Trans Union LLC (Trans Union), and Experian Information Solutions, Inc. (Experian), maintain information on 200 million Americans. A person’s credit report affects both whether they can get credit or borrow money and the interest rate in which it is lent. These reports also may prevent someone from obtaining a job. While a person is entitled to a free copy of their credit report from the three major agencies once a year, which everyone should do, it is difficult to obtain information from the so-called “Fourth Bureau” firms. These firms, which target approximately 30 million consumers, fall outside of the mainstream lending system. These “Fourth Bureau” firms get information from payday lenders, check cashers and prepaid cards, among others. The typical users of these “lenders” are low income consumers, students and immigrants.

Under the proposed CFPB monitoring rule, consumer reporting agencies with more than $7 million in annual receipts from consumer reporting activities would be subject to CFPB supervision. This would include approximately 7 percent of consumer reporting agencies based on available data and would cover about 30 consumer reporting agencies. The CFPB estimates that these 30 companies account for approximately 94 percent of the annual receipts from consumer reporting. This would include the 3 major agencies, Equifax, TransUnion, and Experian, as well as some of the “Fourth Bureau” firms.

WHAT YOU CAN DO

Lapin Law Offices supports the proposed rules although we believe they should extend even farther. Debt collection abuse is extremely widespread and the annual receipt threshold should be lowered so more debt collectors are included. In addition, while the proposal would covers where most of the money goes for credit reporting, only 27 “Fourth Bureau” firms would be included. More of these firms should be monitored as it is extremely difficult for a consumer to even know who these firms are or how to fix incorrect information.

The comment period for the proposed CFPB Rule is 60 days, which began on February 16, 2012. If you support these proposed rules or want the CFPB to go even farther we urge you to post a comment, which you can do by clicking here and typing “CFPB-2012-0005-0003″ in the Search box.

PRIOR POSTS REGARDING DEBT COLLECTION AND CREDIT REPORTING

Social Media and Debt Collection: Facebook and Twitter: Part 1

Social Media and Debt Collection: Limited in the United Kingdom: Part 2

Social Media and Debt Collection: The United States: Part 3

Common Misperceptions About Credit Scores

Credit Scores: Why Are They So Important and How Are They Calculated

The Consumer Financial Protection Bureau (CFPB) – Will It Be Better for Consumers or Debt Collectors?

Proposed Act Would Permit Debt Collectors to Use Auto-Dialers to Call Cellular Telephones

ABOUT LAPIN LAW OFFICES

Lapin Law Offices represents consumers harassed or abused by debt collectors and those whose righs have been violated under the Fair Credit Reporting Act (FCRA). You can learn more about your rights by calling us at 402-421-8033 or through our websites: Lapin Law Offices or StopBadCollectors.com for a free consultation.

In announcing the proposals, Secretary LaHood stated, “Distracted driving is a dangerous and deadly habit on America’s roadways – that’s why I’ve made it a priority to encourage people to stay focused behind the wheel.” These guidelines are a major step forward in identifying real solutions to tackle the issue of distracted driving for drivers of all ages.

These Guidelines would not affect conventional controls and displays, such as heating, air conditioning, instrument gauges, because these are considered part of the “primary driving task.” In addition, they are not intended to limit collision warning or vehicle control systems, which are designed to aid the driver in controlling a vehicle and avoid crashes.

THE PROPOSED GUIDELINES

The proposed Phase I distraction guidelines include recommendations to automakers to:

Reduce complexity and task length required by the device;

Limit device operation to one hand only (leaving the other hand to remain on the steering wheel to control the vehicle);

Limit individual off-road glances required for device operation to no more than two seconds in duration;

Limit unnecessary visual information in the driver’s field of view;

Limit the amount of manual inputs required for device operation.

The DOT and NHTSA proposals would request automakers prevent drivers from using certain in-vehicle equipment that is believed to so interfere with a driver’s ability to safely control the vehicle that their use should not be permitted while driving. The list of tasks to inherently interfere with a driver’s ability to safely operate the vehicle include:

Displaying images or video not related to driving;

Displaying automatically scrolling text;

Requiring manual text entry of more than six button or key presses during a single task; or

Requiring reading more than 30 characters of text (not counting punctuation marks).

These items are intended to prevent many of the driver distractions created by newer technology such as text messaging, internet browsing, social media browsing; navigation system destination entry by address and manually 10-digit phone dialing. The Phase I Guidelines are intended to limit visual tasks for factory installed equipment; those tasks that could be done by voice or sound would presumably not be effected nor would after-market or portable devices.

The full Guidelines, Visual-Manual NHTSA Driver Distraction Guidelines for In-Vehicle Electronic Devices, is available here or on the Department of Transportation’s website (www.dot.gov).

FUTURE GUIDELINES

The DOT and NHTSA are considering additional guidelines, Phases II and III, to address these items not covered by Phase I. Phase II proposed guidelines may address devices or systems that are not built into the vehicle but are brought into the vehicle and used while driving, including aftermarket and portable personal electronic devices such as navigation systems, smart phones, electronic tablets and pads, and other mobile communications devices. Phase III would consider voice-activated controls to further minimize distraction in factory-installed, aftermarket, and portable devices.

CONCLUSION

These proposals are a good first step in trying to limit driver distraction. Distracted driving caused at least 3,092 deaths in 2010. However, it is important to remember these even those tasks that would not be affected still can lead to driver distraction, accident, injuries and death. The guidelines merely attempt to limit the “length” of the distraction. In addition, these are just guidelines; automakers would not be required to abide by them. Drivers needs to remember their only job as a driver is to drive and make sure everyone gets to their destination safely.

OTHER POSTS INVOLVING DRIVING

Bill Would Limit Liability in Escaped Cow- Vehicle Collisions

Drivers Prepare: Winter Weather Is Arriving Soon

Drivers: Beware of Deer

Drivers Understand But Often Ignore Risks of Texting or Talking on Cell Phone

Distracted Driving: Risks Inside Your New Car or Truck

LAPIN LAW OFFICES

Lapin Law Offices represents drivers and passengers involved in all types of motor vehicle collisions. If you have been injured please give us a call at 402-421-8033 (24/7) or contact us through our website,  LapinLawOffices.com, for a free initial consultation.