Debt collector settles charges for $1.3 million-LTD COLLECTIONS- POSTED BY Robert Paisola

Robert Paisola, CEO, Western Capital

We Did it Again! LTD Financial Services Pays 1.3 Million to client!

By BARRY SHLACHTER

Star-Telegram Staff Writer

A Texas debt collector agreed to pay $1.3 million in civil penalties to settle charges by the Federal Trade Commission that it misled, threatened and harassed consumers nationwide, sometimes using racial slurs and profanity, the FTC said Tuesday.

Houston-based LTD Financial Services, which worked with major credit-card companies and retail chains, admitted no wrongdoing and settled only to avoid a costly legal battle, said Leonard Pruzansky, LTD's chairman, who was named in the settlement along with Chief Executive Timothy Feldman and two top collection managers.

"We believe it's a fairly precedent-setting case," said Tom Carter, an FTC attorney in Dallas. It was the commission's largest cash settlement in a debt-collection action that did not involve more serious charges and the first to name key company officials instead of just the corporation, he said.

Using both English and Spanish, LTD collectors threatened to have a consumer's pay garnisheed, which can't be done without a trial, Carter said. When managers did uncover illegal practices, like informing relatives and co-workers of debts, they either participated or failed to discipline employees.

The case was helped by consumers who taped calls and by LTD's recordings, some of which revealed racial slurs, Carter said.

Pruzansky said, "We monitor our calls, and I can't imagine that instances of racial slurs were valid."

The case stemmed from thousands of complaints filed by consumers with the FTC, the Houston Better Business Bureau and state attorneys general, the FTC said.

But Carol Ritter, the Houston BBB's vice president of operations, said LTD either resolved complaints or sent the problem back to creditors. LTD joined the BBB in 1995, a year after the company was founded.

"I would say we are surprised," Ritter said. The BBB did not count LTD among the industry's worst offenders. "They appeared to be doing everything correctly," Ritter said. "We've seen some agencies in town that were just horrendous."

Nonetheless, the Houston BBB will consider whether LTD should be expelled in light of the federal action, Ritter said.

LTD questioned why the case was pursued even though consumer complaints dropped 33 percent last year from 2005. And its rate of complaint per consumer contact was lower than most of its competitors', the company said, citing FTC data received through a Freedom of Information Act request.

"We continue to be puzzled about why we were chosen for investigation," a company statement said. But LTD took the federal action seriously enough to enhance training. "One complaint is one too many," it said.

Local Collection Agency Accused of Stealing Money

Watch the Video Here

Office Manager Jean Wilkes prepares this letter to send out to hundreds of patients of local Ophthalmologist Dr. Emanuel Wilkes.

It says not to forward any more payments to Cobra Collection Agency.

Wilkes and Billing Clerk Debra Pearce say the agency has indeed been collecting funds from patients, but they haven't seen any of it in months.

"If they're collecting them from the patients, every month at the end of each month, they're supposed to forward the percentage to us after their percentage is taken out," says Pearce.
Carrie Ryan, a bookkeeper for the property management division of Kennon and Parker has a similar story.

"The tenants would call us and say they'd satisfied their debt and wanted to know if they could rent from us again and I said well we don't have a record of you paying off the collection agency and they provided us with a receipt that they had paid them off," says Ryan.

We catch up with Cobra Collection Agency Owner Janice Ledden.

She tells us her firm has collected that money, but it's gone.

Ledden says she's the victim of embezzlement, but plans to repay all of the money.

Meanwhile, another businessman who claims he was scammed by Cobra has started a web page to alert and educate other businesses.

"And I was thinking, wow, if she can't make good on with me and I'm a pretty assertive person as well, the people who are passive and don't know as much about this they're being walked on and I just felt that was really wrong," says Matthew Chan of Intrepid Management.

The debt collectors won't stop

The debt collectors won't stop

David Lazarus

Wednesday, March 21, 2007

Genevieve Duboscq and her partner bought a house in Richmond in February 2006. They received a new phone number when they moved in.

And that's when things turned ugly.

According to Duboscq, calls started flooding in almost immediately from a host of creditors and debt-collection agencies, all of which were seeking a pair of people neither Duboscq nor her partner had ever heard of.

"It quickly became clear that the phone number we'd been given by the phone company used to belong to some people who couldn't pay their debts," Duboscq told me.

No matter how many times Duboscq tried to explain the situation to the debt collectors, they continued calling -- again and again -- at least once a day, every weekday, for the past year.
"It's pretty scary," Duboscq said. "These people assume that my partner and I are somehow related to whoever owes them money. I tell them to please stop calling, but they keep calling."
What's happening to Duboscq illustrates how tenacious debt collectors can be in pursuing cash -- whether or not they have the right person. It also highlights the challenges consumers face in getting debt collectors off their backs.

"These people are relentless," said Steve Blackledge, legislative director of the California Public Interest Research Group in Sacramento.

"Their persistence can be very intimidating," he said. "So is their aggressiveness when they get someone on the phone. They'll talk about lawsuits and court orders, and bully the person until they get some money out of them."

Many creditors will send out a letter or two seeking payment of outstanding funds from customers, but that's often as far as they'll go.

The creditor's next step frequently is to sell the debt to a professional debt-collection firm, which will purchase the obligation for pennies on the dollar in hopes of making an easy score by spooking people into coughing up at least a little cash.

Kaulkin Ginsberg, a Maryland consulting firm that specializes in the accounts-receivable business, estimates that there are about 6,500 U.S. companies engaged in one way or another in debt collection.

In 2005, the latest year for which figures are available, collectors purchased more than $115 billion in outstanding debt, the firm estimates. At least that was the face value of the total amount owed.

In reality, the collectors might spend as little as 3 cents on the dollar for each debt purchased. A collector typically would hope to earn back two to three times that amount from consumers.
"Debt collection in the United States is a growth industry," observed Paul Legrady, director of Kaulkin Ginsberg.

So what recourse does a consumer have?

If you really do owe some money and a debt collector is breathing down your neck, you'll probably have to pay something. But you do have rights.

According to the Fair Trade Commission, debt collectors are allowed to contact you in person or by phone, fax or mail, but not at inconvenient times. Specifically, that means they're not supposed to call before 8 a.m. or after 9 p.m.

They're also not supposed to bother you at work, but only if they know that your employer frowns on that sort of thing.

If you send a letter to a debt collector requesting that they stop bugging you, the Fair Debt Collection Practices Act says they have to leave you alone. But that could just prompt the collector to escalate to the next level and file a lawsuit.

In any case, the FTC says that debt collectors "may not harass, oppress or abuse you." Presumably, consumers can complain to federal authorities if they feel oppressed or abused by debt collectors.

But what if you don't owe any money? The law says that debt collectors must stop badgering you if you send them a letter stating that you don't owe any money within 30 days of receiving a written notice from the collection firm.

But this is often no help to people like Duboscq because the collectors aren't sending any notices. In Duboscq's case, they don't know where she lives. All they know is that she's at a Bay Area phone number that some database somewhere associates with a known deadbeat.

"I've never received any mail from any of these people," Duboscq said. "Everything is by phone. I wouldn't know where to send a letter, and I wouldn't want to anyway. I don't want to give them my address and be a part of their world."

This is probably a mistake. Because Duboscq is perhaps the closest thing all these debt collectors have to a warm body, they have little incentive to stop bothering her, particularly if the amount if money owed is significant.

Experts say that at some point, people in Duboscq's position will have to bite the bullet and send letters to each collection firm detailing the situation and formally requesting that the phone calls stop.

If the calls persist after this point, a complaint should be lodged with the FTC.

"The way the law is structured, debt collectors will presume you owe the debt until you explain in writing why you don't," said Gail Hillebrand, a senior attorney at Consumers Union.

Is that fair?

"No. But debt can be sold and resold for a long time. So if you don't do something, this could just keep happening."

At this point, more than a few readers are probably wondering why Duboscq doesn't just change her phone number. I wondered the same.

"Why should I have to?" she retorted. "It's our number. My partner and I have moved many times in the last 16 years. We don't want to change our number again."

Duboscq has a point. She also has a problem.

Her best bet now is either to break out the stationery or get another number. It's a lousy choice. But sometimes that's all we get.

David Lazarus' column appears Wednesdays, Fridays and Sundays. He also can be heard Saturdays, 4 to 7 p.m., on KGO Radio. Send tips or feedback to dlazarus@sfchronicle.com.