In many cases you can sue a collection agency for harassment, abuse, or deception. Collection agencies are governed by the Fair Debt Collection Practices Act (FDCPA) which prohibits abusive or harassing actions when collecting a debt. Most states also have similar prohibitions under which you can also sue.
The reasons for which you can sue a collection agency can vary. For example, under the FDCPA a collection agency that calls you too often, too early in the morning, or too late at night can be held legally responsible for those calls. You can also sue a collection agency for making false threats against you. In other words, if a debt collector does not intend to sue you it cannot threaten to sue you. The collection agency also cannot threaten to garnish your wages unless it has already obtained a judgment against you. Threatening to have you criminally prosecuted is also an actionable violation.
Other actions can also violate the FDCPA. For example, a collection agency cannot sue you for a debt that is outside the statute of limitations. Statutes of limitations vary according to state law and the manner in which the debt was incurred. A collection agency also cannot collect a debt that is fully paid, falsely claim it is not a debt collector, or sue you in an improper venue.
Under the FDCPA you can sue a collection agency if it has taken any of the above acts or taken any other abusive action against you. Proceed carefully however because there are many tricks and traps under the FDCPA that can quickly cause you to lose your case. Consult with a consumer rights protection attorney for best results. A good one will know how to handle any pitfalls in your case and will help you on a contingency basis so you won’t have to pay any attorney’s fees unless you win your case.
FTC Complaint? Don’t Bother.
Thinking of filing an FTC complaint? Don’t bother. Yes, the FTC is the federal agency charged with helping consumers resolve complaints but the simple fact is that they will not actually help any individual consumers. Indeed, they will not help you.
This is not necessarily a bad thing, however. The FTC shouldn’t be handling individual consumer complaints — no government agency should. Government simply shouldn’t have that kind of authority or control over our daily lives. Instead, consumers should be in charge of advocating their own disputes whether on their own or by hiring a private attorney. Indeed, numerous state and federal laws empower consumers to act as private attorneys general for that very purpose. Consumers are simply better at advocating their own interests than the government could ever be.
Filing an FTC complaint is not a total waste of time however. The FTC complaints filed by consumers each year are helpful to consumers as a whole so it may be worthwhile to file one if you want to help other consumers as a group. Don’t be fooled however, the FTC will do literally nothing to help you in your individual complaint.
Filing an FTC complaint is only a waste of time if you are trying to get a refund or other monetary compensation for a deceptive sales practice. In that case, the far better approach is to hire an experienced consumer protection attorney. A lawyer with experience in consumer complaints will be able to obtain results where filing an FTC complaint will lead nowhere.
The bottom line is that if you are a victim of a deceptive sales practice and you are considering filing an FTC complaint because you think it will help you get a refund, think again. If you want a refund hire a consumer protection attorney or file a consumer complaint in small claims court. You are your own best advocate. Filing an FTC complaint will not help you get a refund or other compensation you deserve.
Consumer Watchdogs are the Best Form of Consumer Protection
Consumer watchdogs fight for everyone’s consumer rights. Consumer protection legislation has been passed in every state to allow consumers to act as these watchdogs, legally known as private attorneys general, to protect and enforce their consumer rights when those rights are threatened by abusive or deceptive companies. In Utah, for example, the Utah Consumer Sales Practices Act (UCSPA) allows consumers to sue companies that act in a deceptive, fraudulent, or abusive manner. Most states have similar consumer rights laws.
Without these laws consumers would find themselves venerable to abusive and deceptive sales practices with little recourse. Consumer watchdog complaints would go largely unresolved. For example, in door-to-door sales the Utah Consumer Sales Practices Act allows a three day right to cancel the agreement whereas without the Act no such right would exist. Other consumer rights are also protected under the Act. For example, companies cannot lie about the benefits, uses, sponsorships, or performance characteristics of a product or service nor can they falsely claim a used item is new.
The Utah Consumer Sales Practices Act also allows consumer watchdogs to recover a minimum award of $2000 even if actual damages are less. This is great news because many consumer disputes involve damages that are substantially lower than $2000. This minimum award greatly increases the risk to a deceptive company if the case winds up in court which encourages them to seek settlements for more reasonable resolutions without the need for judicial intervention.
In complicated cases, consumer protection lawyers can help you, the consumer watchdog, enforce consumer rights laws but some consumers can do so on their own without legal assistance. For them, small claims courts are the best way to recover money from a company that has harmed you and refuses to issue a refund. Small claims courts use simplified rules of evidence and procedure to allow consumers their day in court without the expense of hiring a consumer attorney. Many consumer protection attorneys, however, offer services on a contingency basis allowing consumers to hire an attorney essentially for free since the attorney only gets paid from the proceeds of a settlement or verdict is the consumer’s favor.
When consumers sue a company for deceptive sales practices they are consumer watchdogs for everyone whether they hire an attorney or handle the case themselves. Lawsuits often awaken the company owners to the consequences of their wrongful behavior though unfortunately some abusive companies are already aware they are abusing consumers since doing so is profitable. For them, ignoring consumer complaints is standard procedure since many consumers do not understand their rights or how to enforce those rights. In those cases, the best consumer protection possible is for consumer watchdogs to act as private attorneys general and hold abusive and deceptive companies accountable.
How to Spot a Telephone Scam
Americans lose an estimated $40 billion each year to telephone scams. The simple fact is that if something sounds too good to be true, it probably is a scam. There are many forms of telephone fraud but here are a few of the most common.
Travel Offers
Travel offers by telephone are a major area for consumer telephone scams. It involves a company calling consumers and falsely informing them they have been personally selected to receive a special offer. In reality, the consumer hasn’t won anything but was randomly called by an autodialing system in most cases. The so-called offer is usually a discount travel package, travel club membership, or timeshare. These offers are not prizes but are actually solicitations. Additionally, these telephone scam travel offers are never actually a good value. They include exorbitant hidden fees and costs and often require you to sit through long-winded sales presentations for over-priced and under-valued travel packages.
Free Prize Notifications
Telephone scams often involve fake prize notifications to obtain money and information from consumers. The telephone scam works like this. The company calls consumers randomly to inform the consumer they have won a prize. They then require a payment of fees from the consumer for shipping, handling, membership, or some other nonsense. Some of these con artists are stealing the fees outright while others use the credit card or banking information fraudulently to steal even larger amounts. Many of these prize notification scams are also framed as travel offers as discussed above.
Charities
It is unconscionable that anyone would steal money from consumers under the guise of soliciting charitable donations but the simple fact is that it happens every day. Many calls you receive are actually from charities with legitimate needs but never pay them by telephone unless you know exactly who they are through some independent means. For example, Friends of MS calls my home four or five times every year but we know exactly with whom we are dealing. The same caller, whom we now know by name, calls us each time and never even asks for money by telephone. Instead, they want clothing donations left on our doorstep. In contrast, the people committing telephone scams won’t want clothing, they will want cash or credit card information by telephone and they will want it right now.
Under Utah Law legitimate charities are required to obtain registration from the state and provide you with their permit number and what percentage of your donation will go toward the charitable purpose. You can check these permits at the Utah Division of Consumer Protection website.
Fraudulent Debt Collections
Some telephone scam artists will call you to collect a debt you do not owe. Venerable consumers sometimes make a payment over the telephone just to escape the uncomfortable pressure exerted by these crooks. If a company calls to collect a debt always ask for written validation of the debt but do not provide them with your address. If the debt is actually yours they already have your contact information. If they then fail to send written proof of the debt and their identity and you don’t recognize the debt as yours they are probably scamming you.
Advance Fee Loans
Some telephone scam companies will call to offer you a loan. To do so they will require a payment from you in advance. These companies are either stealing from you outright by using the information for that advance fee to access and drain your account or they are planning to deny your loan while keeping the non-refundable advance fee. Either way, it is a scam. Use banks or credit unions if you need a legitimate loan.
Investment Fraud
Investment advice is never reliable when obtained through a telephone call you did not initiate. Nonetheless, many consumers fall victim to investment telephone scams when they think they are privy to inside information about an investment. These con artists will use every high-pressure sales technique in the book and even instruct you to keep your involvement secret as if you are somehow invited into an inner circle of investment gurus. The truth is that actual investment advisors never cold call potential investors and request money over the phone.
Conclusion
The best advice to avoid being ripped off by a telephone scam artist is to never buy anything from a company or person calling you cold. If they won’t provide you with written notification of a prize, travel offer, debt collection, or other solicitation then they are scamming you. Legitimate companies will always openly and willingly provide you with written information about themselves and their services and products and a telephone scam company usually won’t.
Identity Theft Targeting Younger Victims
Identity theft is targeting younger victims and still a growing crime according to the Consumer Sentinel Network Data Book, recently released by the Federal Trade Commission. Not surprisingly, the age of the victims is dropping each year as younger consumers increasingly shop online without properly protecting their personal information. It seems the younger generation, though raised on personal computers, lacks the street smarts needed to match the identity thieves’ techniques.
Most surprising are the FTC’s recommended solutions for restoring your identity after a theft occurs. With two million victims every year – and growing – you would think the FTC would advise consumers to do more than merely report identity thefts and place initial fraud alerts. Yes, a fraud alert is an important step in the process but much more needs to be done. Reporting the crime to the FTC as they recommend is just an exercise in futility, doing nothing to actually help the victim restore their stolen identity.
Most important in reporting identity theft is the method by which the identity restoration is approached. There are several critical legal issues involved with reporting identity theft that if done improperly can have disastrous results for the consumer. For example, if consumers fail to include certain documentation or use the correct language in their communications with creditors and debt collectors they can be held liable for identity theft debt. The same problem arises when consumers try to remove identity theft debt from credit reports. Using the wrong language or taking the wrong approach in dispute or challenge letters will result in denials to investigate or delete the information. At a minimum the process of identity restoration will be delayed by failing to take the proper steps.
In addition to the financial ramifications, identity theft can also be emotionally devastating to the victims. Many victims of identity theft report symptoms of emotional distress similar to victims of violent crime. Restoring the consumer’s identity after a theft occurs simply adds to the stress these victims face.
The best advice to consumers is to report identity theft correctly and carefully. If consumers are unsure how to do so or if they are a victim of criminal identity theft they should contact an experienced consumer protection attorney who can walk them through the process.
How to Report Identity Theft
How to report identity theft.
It only takes a few simple steps to report identity theft and clear up your good name and end the devastating financial and emotional harm caused by identity theft.
Step One
Set an initial fraud alert with at least one of the three major credit bureaus. Only one is needed because the credit bureaus are required to alert each other when a fraud alert is placed. If you want to be sure fraud alerts are placed on all three then feel free to contact all three. It doesn’t take much time to take this first step to report identity theft and doing so will give you a little additional peace of mind.
Step Two
Obtain your free annual credit report and review it closely to identify which accounts are the result of identity theft.
Step Three
Complete an identity theft affidavit. Be sure to fill it out accurately and completely. You can be criminally prosecuted for lying in an identity theft affidavit.
Step Four
File a police report of the identity theft. No, the police probably won’t do anything to actually help; however, the police identity theft report itself is an invaluable and often required part of clearing up your credit information resulting from identity theft.
Step Five
Contact the three major credit bureaus in writing and request they delete the information that is the result of identity theft. Identify the information clearly and include a copy of the police report and identity theft affidavit to prove your request is valid.
Step Six
Contact each creditor involved and close all accounts that are the result of identity theft. As you did earlier, include a copy of the police report and identity theft affidavit. When you close the accounts also ask the lender to send you all the documentation it has about the account. This will later help with the investigation of the identity theft.
Step Seven
The final step to correctly report identity theft is to set an extended fraud alert on your credit reports. This alert is valid for seven years and works well to prevent future theft of your identity from occurring during that time.
Conclusion
Not all identity theft can be corrected in this way but the more simple case can be. If the above steps to report identity theft fail or if more complicated issues arise, such as criminal identity theft or mortgage identity theft, you should contact an attorney to assist you.
How to Prevent Identity Theft
Identity theft is one of the fastest growing crimes in history but it is relatively easy to prevent identity theft in most cases. Millions of consumers fall victim to it every year and regrettably, the effects of identity theft are significant. Many victims of identity theft are so traumatized they often report symptoms of mental and emotional distress similar to victims of violent crime.
The good news is that it is easy to prevent identity theft from happening to you. Here are a few tips to stop identity theft before it ever occurs:
- Use only secure Internet connections, websites, and browsers
- Never open an email originating from an unknown source
- Never click a link or open an attachment send to you by email
- Use different passwords for different websites and make sure the passwords are too long and complicated to guess or decipher
- Use security questions and answers for online websites to which you enroll
- For online purchases use a credit card rather than a debit card
- Always use software such as virus protection, firewalls, malware protection, and spam filters; even on smartphones and tablet computers
- When possible use cash to pay for purchases
- Never give out personal information over the telephone unless you initiated the call and are 100% certain you are giving it to a trusted company
- Never carry you social security card in your wallet
- Don’t disclose your social security number to anyone unless absolutely required
- Carefully review all your financial records and billing statements every month to watch for unauthorized charges
- Obtain your free Annual Credit Report once a year to check for unauthorized accounts opened in your name
Taking all of the above steps will prevent identity theft most of the time though it won’t prevent it all. Even so, use caution in disclosing your personal information and you will be far less likely to become a victim than someone who is less guarded. The simple fact is that you are your own best defense to prevent identity theft. If your identity does get stolen there are several steps you can take to restore your identity though it is better to avoid identity theft in the first place.
Credit Repair Scams: Part Two
We previously discussed a few common credit repair scams but believe it or not, there are additional deceptive or fraudulent acts in the credit repair world to be cautious about.
Purposely Delaying the Credit Repair Process
Most credit repair companies charge monthly fees which encourages them to work slowly or inefficiently. The simple fact is that the longer you stay enrolled the more money they make. Credit repair does take time but if the company has already disputed every disputable item twice and tells you the third time is a charm, they are probably lying. The truth is that disputing an item three or more times without any additional justification is highly unlikely to result in a deletion. The only certainty in this situation is that sending the additional disputes will cost you additional monthly fees.
Contractual Waivers of Consumer Rights
Though not strictly considered a credit repair scam, almost all credit repair companies put a waiver of your consumer rights clause in your contract. Arbitration clauses or waivers of your right to participate in a class action are the most common waivers used but others occur as well. In certain situations, such waivers are void and considered to be deceptive sales practices under the Credit Repair Organizations Act (CROA) and also under many state unfair practices acts. In some situations these waivers are actually legal, however, so consult a consumer rights attorney to find out whether this is a violation in your state. Frankly, however, even if these waivers were not unlawful or deceptive you should ask yourself if you really want to do business with a company that proclaims to be a champion of consumer rights yet is so willing to trample yours.
Taking Credit for False Deletions
Credit trade lines naturally fall off your reports after a certain amount of time. The period varies but is generally seven years. Some credit report repair organizations take credit for these natural fall-offs even when the company made no contribution whatsoever to that deletion. They will even take credit for items removed as a result of the client’s self-help efforts. Taking credit for the work of others or for the mere passage of time is a shameful practice but is rampant among credit report repair companies.
Misstating or Falsifying Results
Most credit repair organizations brag about their results. Testimonials are most common but numerous websites purporting to be unbiased reviews are also typical. Though it is difficult to detect which ones, many of those website reviews and testimonials are outright fakes. In many circumstances, the company will use commissioned agents or affiliates to enroll clients. Because the paychecks of these salesmen are tied directly to enrolling clients, they have ample incentive to falsify or exaggerate past results. Be cautious of any company who brags about past results that cannot be independently verified.
Conclusion
These and other credit repair rip-offs are shockingly common in the credit repair industry. Your best method of avoiding these scams is to completely ignore mainstream credit repair companies. Instead, do your own credit repair or find a licensed consumer law attorney who takes his oaths of integrity, diligence, and confidentiality seriously. Either way, it is always good practice to use your best judgment and never rely solely on the words of easily faked testimonials or commissioned sales persons.
Credit Repair Scams
You may be surprised to know that there are many common types of scams in the credit repair industry. Under federal law any deceptive or fraudulent act by a credit repair organization is considered a credit repair scam but other acts can also be unlawful. Many states also have similar prohibitions.
Deceptive Representations
The most common credit repair rip-offs occur when the credit repair organization falsely promises or implies that it can achieve specific, improbable, or illegal results or that it has some special authority that other companies lack. Under the Credit Repair Organizations Act (CROA) such implications are prohibited. Numerous credit repair organizations commit this violation; however, it occurs most often with credit repair companies who use commissioned salesman to enroll clients. Because sales are driven by commissions, the truth is often obscured by false promises and outright deceptions.
Failure to Adhere to State Registration Requirements
In most states, credit repair organizations are required to register with the state as a credit repair organization. Many companies ignore this requirement and choose instead to operate unlawfully without the registration. Doing so violates not only many state deceptive sales practices acts but also violates CROA. A lack of the required registration is a credit repair scam because it constitutes an untrue or misleading representation of the credit repair organizations services and also constitutes a fraud or deception that the company is operating lawfully when it is not. This violation is surprisingly common.
Charging Fees before the Work is Fully Performed
Another commonly used tactic is to charge the consumer fees before the credit repair firm has fully completed the promised work. This ordinarily occurs when the firm charges a fee to setup the case without performing any substantive work or charges a monthly fee without performing any work the previous month. Indeed, such billing practices are fairly common in the industry.
Failure to Provide Required Disclosures
A less prevalent though still significant credit repair scam arises when the credit repair company fails to provide the consumer with the federally required disclosures. Under federal law, these companies are required to provide certain disclosures to the consumer to instruct the consumer of their legal rights. Some companies fail to provide the disclosures in any form while others provide only partial disclosures. Either way is unlawful.
Conclusion
There are numerous other scams or rip-offs related to credit repair but the few discussed above are the most common. To avoid these swindles you should only hire a credit repair company who takes its ethical and legal obligations seriously and specifically charges you only for actual work performed rather than charging you junk fees to merely start your case. Use diligence and don’t rely solely on website reviews or a high volume of advertised clients to choose a credit repair partner. In most cases, your best partner in credit repair is going to be a local consumer law attorney who will work with you personally and in strict adherence to CROA and his state bar requirements.
How to Get a Refund
It can be hard to get a refund for something you bought that doesn’t work or doesn’t do what the salesman said it would do. The good news is that it is often easier than you might think to get a refund. Here are step-by-step instructions that will work in many situations. In more complicated situations you may need to contact an experienced consumer rights attorney for assistance.
Step One:
Call and ask about getting a refund. Explain the problem and be as nice as possible. Many companies pride themselves on good customer service and are more than happy to help you get a refund. Being nice is the key here. Don’t yell, swear, or threaten anyone. Be nice even if they turn down your refund request.
Step Two:
If the company refuses your first refund request give the matter a day or two and then call back and speak with a supervisor or manager. Many companies will either refuse to escalate the call or even put a low-level customer service agent on the phone pretending to be a manager but ask anyway. Proceed as you did in Step One and simply and nicely ask for a refund. Don’t get angry no matter what response you get. You can get a refund if you don’t give up. It just might take a little more effort.
Step Three:
If the company rejects or ignores both of your verbal refund requests it is time to write a letter to the company requesting a refund. Again, be nice. Simply explain the issue without making any threats and send the letter to the company’s billing dispute department if it has one. If not, send it to their customer service address. Send the letter by certified mail and allow the company 30 days to investigate your complaint. It may call, so be prepared to calmly discuss the issue.
Step Four:
If the company doesn’t respond and fails to issue the refund after 30 days, it is time to escalate your complaint. Write a second letter and this time send it to an executive such as the company president or vice president. Use the Internet to find the correct name and address. Stay nice and calmly explain your complaint and why you want to get a refund. Do not threaten them in any way. Send the letter certified mail. If after 30 days they still fail to respond or issue a refund, proceed to Step Five.
Step Five:
If you are sure you have a legal basis to get a refund your next step is to advise the company of your intention to sue. Have an attorney review your complaint to be sure you are justified in requesting a refund. An official opinion about the merits of your case from a consumer law attorney will help you avoid wasting any time or money pursuing a losing issue. Frankly, if you are not absolutely certain you have a legal justification, you should have stopped trying to get a refund at Step Two. Furthermore, do not threaten to sue unless you absolutely WILL sue. Empty threats make you a jerk, not an informed consumer. In the letter you still need to be nice even though you are advising the company you plan to sue. Respect goes a long way here and if you show anger or frustration the company is less likely to take you seriously. Again, send this letter by certified mail.
Step Six:
If, after 30 more days, the company still has not issued a refund or contacted you to discuss the matter it is time to sue. Typically, suing in small claims court is your best option but, in many cases, hiring an attorney and proceeding in a higher court is more likely to succeed in getting you a refund. It really depends on how much money is at issue. Either way, going to court is a drastic and sometimes stressful occasion so don’t do it alone if you aren’t sure of your ability to handle it properly.
If needed, feel free to review our previous article for more information about the process of suing a company in small claims court.