In the News 05/26/2015

In a recent case against three major credit reporting agencies, one Ohio woman may have changed the landscape for the thousands of consumers who are unable to correct problems with their credit reports each year.

For 12 years, Julie A. Sagstetter endured calls, letters and posted notices from collectors and the sheriff’s department for failing to pay her bills. However, the collectors had her confused with another woman, Julie V. Sagstetter. Although Julie A. consistently tried correcting the information, the agencies refused to admit their mistake and continued harassing her.

Julie A. finally contacted Ohio Attorney General Mike DeWine in a desperate attempt for help. DeWine launched a case against Experian, Equifax and TransUnion that led to a settlement that will hopefully change this type of behavior. A total of 31 states have announced a crackdown on some of the nation’s largest credit-reporting agencies this past week.

The agreement requires the agencies to launch investigations when consumers report mistakes and keep a list of credit companies that regularly provide inaccurate information on credit reports, among other things.

For more information, visit http://www.dispatch.com/content/stories/local/2015/05/20/mike-dewine-credit-scars.html.

5 Tips for College Grads

Congratulations! After four years (or maybe five) of midterms, finals, all-nighters, projects and presentations, you’re finally ready to take your first steps out into the “real world.” For some, this may mean starting a job you’ve already secured, moving out of the dorm and into your first apartment, moving away from your family or moving back in with your folks until you figure things out.

Just breathe—it’s going to be okay.

While post-graduation can be a stressful time if you’re on the hunt for a place to live, a place to work and a way to pay back those student loans, it is also an exciting time to start fresh. As you begin establishing yourself in the business world, check out these tips to help you transition from the classroom to the board room.

  1. Spend less, save more. You’ve probably seen those movies where 20-somethings sit on the floor eating Spaghetti-Os because they can’t afford furniture or actual food. While that may be a slight exaggeration, you will probably not be going out to eat as often or splurging on weekend getaways. While it might still be difficult to imagine yourself buying a new home, you’ll be happy you put your money toward sensible goals like paying off your loans, buying a reliable car or building a comfortable savings. Don’t fall victim to quick loans with high interest rates or “buy now, pay later” schemes—buy only what you can afford.
  1. Clean up your social media. College is usually a fun time for all, but in the world of job interviews, it is wise to clean up your social media pages. Now more than ever, employers are looking at the Facebook, Twitter and Instagram pages of potential hires, and provocative pictures and offensive language may be the difference between you and John Smith getting the job.
  1. Learn how to sell yourself. In a marketing-driven world, knowing how to sell yourself is key to landing a job. Whether it’s in-person in an interview, through your resume or on your LinkedIn profile, make sure you know how to put your best foot forward. Don’t be shy about talking yourself up, displaying your strengths and admitting your weaknesses (nobody wants to hire someone who cannot answer the question, “What are your weaknesses?”). Which brings us to our next tip …
  1. Practice humility in the workplace. It’s okay to be proud of the degree you worked so hard to earn, but make sure to remain humble. The truth is, you are fresh out of college, and the people interviewing or supervising you have likely been working for several years. So while your advanced degree and amazing computer skills will make you an asset to the company, you still have a lot to learn (and that’s okay!).
  1. Don’t get discouraged. In today’s economy and job market, getting hired is harder than ever. Remember that you might not land the dream job right out of the gate—but just give it time. You need experience, and it might take you several years to work your way up the chain. Don’t get discouraged, and never stop aiming to do what you love.

In the News 05/19/2015

We don’t often discuss debt collection outside of the United States, but collections news continues to rule headlines all over the world. In the news today, Frankfurt buyout group Permira entered into an agreement to buy large German debt collection firm GFKL from Advent.

The rise of e-commerce in Germany is driving the growth of the country’s debt collection industry, but just like the United States, Germany has felt the sting of economic hardship, especially in the area of energy.

According to Permira representatives, the business is taking advantage of the fragmented debt collection market in Germany to increase their size and consolidate other firms into their fold.

While the specific amount paid has not been released, GFKL’s net worth has risen in recent years from 196 million euros in 2013 to 244 million euros in 2014. Insiders say this deal was worth more than 600 million euros ($684 million).

Adapted from http://www.reuters.com/.

Debt Collection Law Ranks High in Safety and Security

Debt collection law gets a bad rep. Just Google “debt collection,” and you’ll stumble across a thousand stories about crooked collectors, deceptive ruses and stringent regulations to maintain the climate of lending, borrowing and repayment.

If you’ve been following our blog, you likely already know that debt collectors must follow specific federal guidelines to avoid violating consumer rights and maintain their own responsibilities. Well-known laws that we’ve discussed include the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA) and the Gramm-Leach-Bliley Act (GLBA).

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However, what you might not know is that in the entire field of law, the legal debt collection industry is in the top 10 percent for IT security, data security, physical security and third party vendor management.

Because of the nature of the practice, collections tops all other areas of law in disaster preparedness, disaster recovery plans and employee training and conduct.

The industry as a whole is more likely to have superior call recording capabilities that record 100 percent of incoming and outgoing calls, email encryption and email programs that recognize and restrict the sending of a 16-digit sequential number (ie—credit card numbers).

The licensed and recognized creditors bar is the least likely to be hacked among all law firms nationwide, and although there have been attempted website hacks, there are no known data breaches in the entire industry of legal collections.

While the stringent standards placed on collectors are to protect the consumers, they make the practice of debt collection very expensive. Collectors rank high in the areas of safety and security, and that is a positive thing, but they pay handsomely to do so.

The bottom line after paying out for security systems and other third party vendors depends entirely on a collectors’ ability to connect with debtors and work toward a payment plan that benefits both parties.

Despite the horror stories, these statistics shine a positive light on the field of legal debt collection. Collectors are doing their best to ensure a safe and secure relationship with debtors, protect important and private information and collect money in order to regain economic balance in the area of lending.

In the News 05/12/2015

The U.S. Supreme Court (SCOTUS) recently granted a petition seeking the review of what may be a historic standing case. SCOTUS will hear this case against the Fair Credit Reporting Act (FCRA) during the October 2015 term.

The case involves a plaintiff claiming that he suffered actual harm when an online search engine acting as a credit reporting agency (CRA) published inaccurate information about his character and background, a violation of the FCRA. The act requires CRAs to maintain accuracy and provide notice of published information.

SCOTUS’ decision to hear the case has gained national attention. Various briefs have been written highlighting the affects a ruling on this issue could have.

Widely considered the most talked about privacy class action law suit of the year, Robins v. Spokeo, Inc. (No. 13-1339) was originally heard before a federal district court. The court ruled that the plaintiff failed to demonstrate the “injury-in-fact” standard. Also called “standing,” “injury-in-fact” is a term used for the ability to demonstrate sufficient harm. The Ninth Circuit Court reversed this ruling, suggesting that the plaintiff does not need to demonstrate actual damages to file suit.

SCOTUS’ final decision will affect the degree to which consumers can utilize federal statutes to recover without proving additional causal injury, and an affirmation of the Ninth Circuit Court’s decision could open the courts up to a flood of “no-injury” lawsuits that force defendants to pay millions of dollars in damages without plaintiff’s proving any actual harm.

For more information, visit http://www.jdsupra.com/legalnews/supreme-court-to-hear-historic-fcra-stan-39074/ or http://www.mondaq.com/unitedstates/x/393448/trials+appeals+compensation/US+Supreme+Court+Accepts+Review+Of+Robins+v+Spokeo+Inc.

Escaping Debt: Consumers Considering Moving Abroad

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Debt can be overwhelming. While most people don’t intend to enter into a debt that they cannot repay, life gets in the way, and things happen that are outside of our control.

For some with a very large debt, it may be tempting to escape it; some people even take extreme measures by moving to another state or country. Here we’ve broken down some of the most common questions about the collection of debts in the United States and abroad.

What happens to my debt when I move to another state?

Assuming you have been found liable for your debt and there is a valid “judgment” for it recorded in the state in which you live, the collections company will get a triple sealed authenticated copy of that judgment and mail it to a collections company in the new state. The company will file a new action called a filing for a foreign judgment. Even if you have not yet been found liable for your debt, these proceedings can occur at a later date, even after you have moved to another state.

What happens to my debt when I leave the country?

Debt remains outstanding until it is paid, and interest and penalties continue to accrue. While it is technically illegal for a creditor to sue you in a country or state in which you no longer reside, sometimes this issue rests on the language of the contract or the sentiment of the court. Most contracts and loan agreements specify in which states legal arguments and court cases must be settled.

If a lawsuit against you does go uncontested while you’re away, the collections process will continue as it would if you were stateside. Leaving the country can cause serious problems with your credit rating if you do decide to return. Creditors can begin the judgment process on your last known address (despite legality), and your debt will be waiting for you if and when you return.

If you still have assets in the country, the creditor can secure these as partial payment. You could return to a judgment against you or the repossession of your belongings. The IRS expects U.S. citizens to file tax returns and pay what is owed. If you leave the country with unpaid debts, eventually those balances will be written off and your creditor may file a 1099-C form with the IRS reporting these unpaid amounts as “income.” The IRS will expect payment of this phantom income.

Another consequence of leaving the country could be causing the burden of your debt to fall on your family or co-signer(s). In addition, a collector could sell your debt to an agency in another country, and foreign creditors can order a copy of your United States credit report.

Are contracts for debt enforceable outside of the United States?

Contracts for debt are not enforceable outside the United States. So essentially, it is true that leaving the country is a way to leave your debts behind. While foreign countries will not seek to extradite you for debt, there are other actions that may be taken.

Some debt collection agencies operate in multiple countries, expanding their reach. However, that is not typically the case. You may find that the country you’ve chosen has a reciprocal agreement when it comes to tracing debtors, like Germany, Canada and the UK. HM Revenue & Customs, the UK’s tax and customs authority, has a long reach. HM has a mutual assistance agreement with several countries to recover money owed.

While relocating may help you outrun your debt, it is not as simple as it sounds. Not only will you have to come up with the money to purchase a plane ticket, invest in housing and sustain yourself, but if you plan to stay in a foreign country for a long period of time, you will have to secure residency, which requires income. You have to prove that you have a reliable source of monthly income to meet the country’s minimum requirements.

Also, lenders are not as generous and quick to extend credit in other countries as they are in the United States. If you have become accustomed to using your credit card when money gets tight, building a new and better credit history elsewhere may prove difficult.

In the News 05/05/2015

While the debt collection climate may be changing in West Virginia, nationally, lawsuits and sanctions abound in order to punish abusive collectors and protect consumers.

As the Consumer Financial Protection Bureau (CFPB) continues to sanction and regulate the industry, Ohad Samet, co-founder and CEO of the debt recovery company TrueAccord, recently made headlines for speaking out in defense of the CFPB. His message: regulations are good for everyone.

Samet believes that the CFPB’s rules will lead to invested infrastructure and automation to fulfill expected data consistency and disclosure requirements. He goes on to say that the debt collection industry has suffered from under-investment for years and that in the long term, both consumers and collectors will benefit from more regulation.

Other voices counter Samet’s statements by pointing out that legitimate collections’ companies are penalized by being forced to spend millions of dollars each year on compliance.

Read more here: http://www.americanbanker.com/bankthink/no-really-regulations-good-for-you-debt-collector-edition-weekly-wrap-1074128-1.html

What do you think? Do you think the debt collection industry is over- or under-regulated? Share your thoughts in the comment section.

Spring Cleaning Tips for Your Small Business

While debt collection is certainly a niche industry, it still operates within the business realm. Especially when it comes to small businesses, keeping your environment, procedures and employees fresh and renewed is important to prevent becoming bogged down and burned out.

Since spring has arrived, why not take this opportunity to spring clean your office—and we don’t just mean finding hidden dust bunnies. Check out these spring cleaning tips for small businesses.

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  1. Clean up your web presence

There’s no doubt that Internet presence is more important than ever—no matter the industry. Your website should be user-friendly, clean and accessible. If you’re feeling good about your website, consider reaching out to potential clients or consumers in other ways, such as social media, blogging or advertisements.

Another refreshing way to clean up online is to encourage your employees to give their e-mail inboxes a good scrub. If you start every morning by logging into an inbox that is bombarded with unread, un-replied or old e-mails, it can really take a bite out of your productivity. Delete the old ones, sort the important ones into folders and try to respond as quickly and efficiently as possible so you don’t get behind.

  1. Offer praise

It is refreshing for your employees to hear about what they’ve accomplished so far this year. Since we’re almost at the halfway mark, consider having an office meeting or luncheon to discuss what your business has accomplished since the New Year and what you could be doing better. Taking time to recognize and appreciate your employees renews motivation.

  1. Clean up your processes

If your processes and procedures are outdated or need some revamping, what better time than spring to update? This is also a great time to make sure your company is taking advantage of any tools designed to increase efficiency in areas like banking, bookkeeping, recording, etc.

  1. Room for growth

You know what they say—April showers bring May flowers. Spring is all about growth, so this spring, consider assessing or reassessing whether your company needs to grow for improved performance. Maybe you’ve taken on more clients and need to hire more employees, or maybe you need to go out looking for those new clients. Either way, expansion is an exciting way to breathe new life into your company.

  1. Go green

Create a cleaner business environment by going paperless if possible. While some degree of paperwork is always necessary, try going digital where applicable. This is another area where online tools may come in handy!

In the News 04/28/2015

The Federal Trade Commission is planning to hold various dialogues around the country to discuss consumer protection issues with the debt collection industry.

The first event will be held on June 15, 2015 in Buffalo, New York and will be hosted by the Office of the New York Attorney General.

The Association of Credit and Collection Professionals International (ACA) will attend the discussion and provide input on behalf of the industry to make sure that its voice is heard. The agenda will include recent enforcement actions, consumer complaints about debt collection practices and compliance issues.

Other participants will include a representative from the CFPB and local collections professionals. Future discussions are scheduled to be held in Dallas and Atlanta and are free and open to the public.

For more information, check out the FTC website: https://www.ftc.gov/news-events/events-calendar/2015/06/debt-collection-dialogue-conversation-between-government.

Senate Bill No. 542 Important for WV Debt Collectors

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The West Virginia Consumers Credit and Protection Act (WVCCPA) was originally passed in 1974 as a measure against abusive and deceptive debt collection practices. It has since been amended several times, most recently in the 2015 first session of the 82nd West Virginia Legislature.

Senate Bill No. 542 is an amendment that made significant changes to several sections of the WVCCPA. The bill, which was signed into law by Governor Tomblin on March 31, will go into effect on June 12; however, certain provisions of the bill will not become applicable until September. The bill seems to focus on issues that are frequent claims litigated in West Virginia courts, such as how many phone calls per week constitutes a violation and appropriate times for communicating with consumers.

There are two major changes that will be particularly significant to day-to-day debt collection operations. The first is that the bill states that notifications of attorney representation must be made in writing (either on paper or electronically) and sent to either the West Virginia Secretary of State or the collector’s place of business.

Section 46A-2-128 formerly stated that collectors should cease communication with a consumer “whenever it appears” they are represented by an attorney. This was often ambiguous and could constitute anything from a brief phone call or voice mail to an e-mail. However, the amendment sets a more specific procedure and timeline and offers a 72 hour grace period after the collector receives the written notice from the consumer or his or her attorney. This will help collectors avoid unnecessary fines for violating the WVCCPA and federal standards.

For example, let’s say a collections firm or agency had an automated outgoing call set up to contact a consumer on Saturday morning, and the firm received notice that the consumer had obtained an attorney on Friday afternoon. In the past, if the automated call was not canceled, the firm would be fined for violating the consumer’s rights. However, with the recent amendment, the firm has 72 hours to comply after receiving the written notice.

In addition, Senate Bill No. 542 revised Section 46A-5-106, which previously allowed statutory penalties to be adjusted for inflation. Per the amendment, the penalty will be reset as of September 1, 2015. The new fixed penalty of $1,000 per violation will no longer be subject to the inflationary standards originally imposed in 1974; however, a new inflationary standard may be imposed after September 1. An across-the-board four-year statute of limitations will be imposed on WVCCPA penalties as well.

These changes signify a significant change in the nature of debt collection legislation. Up until this point, most regulations have been made with the objective of protecting consumers, but recent changes demonstrate a shift toward assisting the collections industry, which over time will benefit the state and its economy.