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NEW DEVELOPMENTS
Debt Collection
USA vs. Asset Acceptance- FTC News Release
January 30, 2012
A
Consent Decree was entered into between
the government and debt buyer, Asset Acceptance, resolving the
complaint brought against Asset by the FTC for Asset's unlawful debt
collection and credit reporting activity. The activity
complained of, among others, involved its collection of
time-barred debts as well as its reporting to the credit
reporting agencies of credit information it knew or
should have known was inaccurate
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It also failed to
conduct reasonable investigations of consumer disputes when
transmitted to it by the credit bureaus. Asset agreed to pay
$2,500.000.00 in civil damages and to cease such activities. |
Arbitration
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CompuCredit Corp. vs. Greenwood
January 10, 2012
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In a further erosion of consumer rights, the U.S. Supreme Court
issued a decision that makes it easier for predatory lenders to hide
their fraudulent and abusive practices. Consumers who were sold
predatory fee-harvester cards by CompuCredit must give-up their
rights to pursue their claims within the judicial system and,
instead, submit all their legal claims to forced arbitration.
CompuCredit is a lender which has been investigated by state and
federal regulators as having engaged in deceptive practices of
marketing an "Aspire Visa" credit card with a $300 line of
credit to consumers with weak credit. Only it charged holders as
much as $257 in fees against that $300 line of credit. CompuCredit
includes a binding arbitration provision in its contract.
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Wanda Greenwood and fellow plaintiffs brought suit alleging
violations of the Credit Repair Organizations Act (CROA). These
plaintiffs relied on the provisions of the CROA which expressly
provides that they had the right to sue any credit repair
organization which violated the Act and that this overrode the
arbitration provision. Unfortunately, the Court disagreed and ruled
that since the CROA was silent as to whether claims of consumers
under the Act could be submitted to arbitration, the FAA requires
the enforcement of any arbitration provision. |
Arbitration
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| AT&T
Mobility, LLC. vs. Concepcion
April 27, 2011
| The United States Supreme Court by a
5-4 vote delivered another blow to consumer rights by
deciding that the Federal Arbitration Act ("FAA") pre-empts
California state law which prohibited arbitration waivers of
class actions as unconscionable in consumer contracts. The
consumer filed a class action suit against AT&T in federal
court in connection with a cell phone contract alleging a
fraudulent charge of sales tax on cell phones which were
advertised as free. AT&T moved to compel arbitration and to
enforce the contractual arbitration provision which further
required all such claims to be arbitrated individually and
not as a class action. |
The trial court
denied the motion which was affirmed by the Ninth Circuit Court of
Appeals. The Supreme Court granted Certiorari and in the majority
opinion written by Justice Scalia reversed and ruled that "requiring
the availability of classwide arbitration interferes with the
fundamental attributes of arbitration and this creates a scheme
inconsistent with the FAA." |
Debt Collection
Jerman vs. Carlisle, McNellie, Rini,
Kramer & Ulrich, LPA
April 21, 2010
| A major victory for consumers.
The United States Supreme Court reversed the decision of the
lower court which previously ruled that a debt collection
lawfirm was entitled to assert the bona fide error defense.
Justice Sotomayor delivered the opinion of Court. Prior to
this decision there existed a divergence of opinion among
the Circuits as to whether the defense of bona fide error
should include, not only clerical errors, but errors of law
based upon on mistakes of law resulting from a debt
collector's mistaken interpretation of the requirements of
the FDCPA. The case arose out of the debt collector's notice
to the debtor that in order to dispute the debt it had to be
in writing. The trial court initially found for the debt
collector ruling that, while this was a mistake of law, the
defendant lawfirm was entitled to assert it as part of the
defense of bona fide error provided for under the FDCPA
which, if proven, allows the debt collector to escape
liability. This decision was affirmed by the Sixth Cicuit
but, ultimately, reversed by this case. |
The undersigned attorney found this to be some vindication for a
case lost some years ago where the trial court found that the
Columbus, Ohio collection lawfirm of Luper, Sheriff & Neidenthal was
entitled to assert the bona fide error defense for filing numerous
lawsuits in which it unlawfully sought reimbursement for attorney
fees from consumers. Ohio law prohibits the collection of attorney
fees in connection with consumer contracts. The trial judge found
this, a far more serious error than in Jerman, to be a bona fide
error.
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Arbitration
Minnesota vs. NAF
July 20, 2009
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The Minnesota AG, Lori Swanson, and the National Arbitration
Forum have entered into a consent decree whereby NAF has agreed to
no longer arbitrate credit card and other consumer collection
disputes. The Minnesota AG had filed suit only a short time earlier
alleging that NAF was engaging in corrupt practices through its
close association and financial
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support from credit card companies which
routinely designated the NAF as the forum to arbitrate in
millions of credit card agreements.
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