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Tuesday, September 22, 2009

FTC settlement with payday lenders: fines and compliance - debts are erased?

What a strange settlement:

Internet Payday Lenders Will Pay $1 Million to Settle FTC and Nevada Charges; FTC Had Challenged Defendants’ Illegal Lending and Collection Tactics

An international Internet payday lending operation will pay $1 million to settle Federal Trade Commission and State of Nevada charges that it failed to disclose key loan terms and used unlawful debt collection tactics.

The defendants operated from the United Kingdom and targeted consumers in the United States, who were misled into believing that the defendants operated from Nevada. According to a complaint filed by the FTC and Nevada in 2008, the defendants told consumers that the loans had to be repaid by their next payday with a fee ranging from $35 to $80, or the loans would be extended automatically for an extra fee debited from consumers’ bank accounts until the loans were repaid.

The FTC charged the defendants with violating the FTC Act by using unfair and deceptive collection tactics. The Commission alleged that they falsely threatened consumers with arrest or imprisonment, falsely claimed that consumers were legally obligated to pay the debts, threatened to take legal action they could not take, repeatedly called consumers at work using abusive and profane language, and improperly disclosed consumers’ purported debts to third parties. They also allegedly failed to make required written disclosures to consumers before consummating a consumer credit transaction, such as the amount financed, the annual percentage rate, payment schedule, total number of payments, and any late payment fees, in violation of the Truth in Lending Act (TILA) and Regulation Z.

The settlement order requires the defendants to pay $970,125 to the FTC and $29,875 to the State of Nevada. The order prohibits them from falsely claiming that consumers may be arrested or imprisoned for failing to pay debts, that they are legally obligated to pay the full amount of a purported debt, and that for nonpayment they are subject to lawsuit, seizure of property, or garnishment of wages. The defendants also are barred from repeatedly calling consumers’ work places, using obscene or threatening language toward consumers and third parties, and disclosing the existence of consumers’ purported debts to third parties.

The order bars the defendants from violating the Truth in Lending Act and Regulation Z, including by requiring them to make the required TILA disclosures in extending closed-end credit. The defendants must disclose clearly, in writing, in a form consumers can keep and before a transaction is made, the interest rate and other key terms of their loans; a repayment schedule showing dates when consumers’ bank accounts will be debited for the loans; payments and fees for late or non-payment of the loans; and a statement that payday loans may be limited or prohibited in some states. In addition, the order requires them to obtain consumers’ written confirmation that they have received the required disclosures before making a transaction and, when collecting debts, the defendants must provide consumers, upon request, a written statement of amounts and fees paid and due. The order contains record-keeping and reporting provisions to allow the FTC to monitor compliance.

The order also includes provisions relating to alleged violations of Nevada law. The order prohibits the defendants from violating Nevada state consumer protection law when conducting business from the State of Nevada or when selling goods or services to Nevada residents, including failing to be properly licensed, failing to provide notice and disclosure of all material facts as state law requires, and failing to comply with any state or federal law in selling goods or services.

The settling corporate defendants are Cash Today, Ltd., and The Heathmill Village, Ltd. (both registered in the United Kingdom); The Harris Holdings, Ltd. (registered in Guernsey, an island between England and France); Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Rovinge International, Inc.; and Lotus Leads, Inc. and First4Leads, Inc. (both now dissolved); each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and Big-Int, Ltd. The settling individual defendants are Aaron Gershfield and Ivor Gershfield. The FTC dismissed from the case Jim Harris, who was named in the complaint; he has voluntarily entered into a separate agreement with the State of Nevada that governs his future conduct under state law and provides that he will pay the state a civil penalty.

The FTC appreciates the assistance of the United Kingdom’s consumer and competition authority, the Office of Fair Trading, in this matter.

NOTE: Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Frank Dorman
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Nadine Samter
FTC Northwest Region
206-220-4479
(FTC File No. X090012)
(Cash Today settlement)

What does THIS mean?

“The order prohibits them from falsely claiming that consumers may be arrested or imprisoned for failing to pay debts, that they are legally obligated to pay the full amount of a purported debt, and that for nonpayment they are subject to lawsuit, seizure of property, or garnishment of wages. The defendants also are barred from repeatedly calling consumers’ work places, using obscene or threatening language toward consumers and third parties, and disclosing the existence of consumers’ purported debts to third parties.”

They can NOT sue for the debts? 

The borrowers are NOT legally obligated to pay those debts?

Can they report the debts on the credit?

And what is the FTC doing with the $1 million?

Why are they NOT barring the scum from operating in the US?

Why are they ORDERING the defendants to comply with the law?  Isn’t that a given?

When PEOPLE steal from a bunch of corporations and PEOPLE get caught 3 times, they’re looking at LIFE IN JAIL in same states. 

Incorporate and you can steal all you want.  You may have to hand over some of your profits to the FTC and you may be ordered to stop stealing.  If necessary, you can always start a new corporation.

This is one of so many settlements designed to protect the criminals.  Truly incredible.

Friday, September 18, 2009

Cal. Court of Appeals reduces jury punitive damages award against Wells Fargo

September 7, 2009
Fisher v. Wells Fargo: $750k Punitive Damages Award is Excessive

The California Court of Appeal (Fourth District, Division Two) issued this unpublished opinion last week, reducing a punitive damages award from $750,000 to $150,000 in a case involving $15,000 in compensatory damages.

The opinion is not particularly noteworthy, although it does illustrate that in cases involving small compensatory damages, California appellate courts will often allow a higher than normal ratio of punitive damages to compensatory damages, but not as high as 50 to 1.

This case involves the Fair Credit Reporting Act, which authorizes punitive damages for willful violations of the act. The jury found that the defendant, Wells Fargo, willfully violated the act by providing false information to TransUnion about plaintiff’s credit and failing to conduct a complete investigation when plaintiff complained.

Wells Fargo appealed and the Court of Appeal rejected its argument that the record contained no evidence of a willful violation. But the court agreed with Wells Fargo that punitive damages award was excessive. The court said the defendant’s conduct was low on the “hierarchy of reprehensibleness” because it involved purely economic harm, did not reflect an indifference to health or safety, did not involve repeat offenses, and did not involve intentional malice, trickery, or deceit. The court also noted that the plaintiff failed to present evidence that it was financially vulnerable. I can’t think of any other opinions off the top of my head which have squarely held that plaintiffs have the burden of establishing their financial vulnerability for purposes of analyzing the reprehensibility of the defendant’s conduct.

Discussing the issue of ratio, the court held that the 50-to-1 ratio in this case, like any ratio in excess of single digits, is presumptively suspect. The court stated that ratios in excess of single digits are sometimes permissible when the compensatory damages are unusually small, but the court did not view the $15,000 award in this case as small enough to warrant a larger ratio. The court nevertheless concluded that a 10-to-1 ratio would be permissible. Ordinarily such a high ratio would be reserved for only the most extremely reprehensible conduct, but the court allowed the high ratio presumably because of the relatively small amount of punitive damages.

And that shows EXACTLY what’s wrong with the American judicial system.  The jury understood how devastating false credit reporting is.  The judges are clueless idiots who never have to worry about how to pay their bills—WE pay their bills.

The judges are set for LIFE. 

And THAT needs to change.  The judges should be people who WORK for a living and who know what it means to have your electricity shut off.  But of course that IS why we have a jury of our peers and not a bunch of scummy executives and judges.

Wells Fargo is once again laughing all the way to the bank.

Wells Fargo Home Mortgage, Inc. and the Buckley Firm conspired to defraud Lynette and her family out of her home.

Monday, September 14, 2009

National Enterprise Systems (NES) accused of duress and intimidation in Illinois lawsuit

Collection Agency Accused of Duress and Intimidation

A McHenry couple and their son are suing a debt collector for what they describe as fraudulently inducing them to pay the son’s almost $10,000 credit card bill.

According to the complaint, on May 5, 2008, plaintiff Kevin Maser was contacted by a representative from defendant National Enterprise Systems, who told him, among other things, that if he didn’t pay the over $9K debt he would be sued the next day and would incur an additional $5K, plus his wages would be garnished and his job would be in jeopardy as would his credit.

Frantic, Kevin Maser called his mother plaintiff Susan Maser, and after two hours of phone calls between Kevin, Susan, Robert and two representatives from NES, Susan and Robert Maser paid the amount, the complaint states.

The complaint further states (read after jump)

The complaint further states that NES has been sued by consumers more than 200 times since January 2007 based on allegations of similar misconduct.

The complaint also adds that Kevin Maser has not received any correspondence from NES to date.

Read the full complaint below.

It’s very nice that they posted the entire complaint online and this should be most helpful for ILLINOIS consumers who want to sue a collector. 

Thursday, August 27, 2009

Chase forgives defrauded consumers’ debts and deletes charge-offs (FDRS)

I just posted an extensive update on the Chase v. Hess Kennedy et al suit along with key documents at the FDRS scam blog:

7/09: Chase forgives the debts of account holders defrauded by Hess Kennedy debt elimination scam

While the Florida AG sued Hess Kennedy to have a receiver appointed and get Chase $4.4 million, the California AG has apparently done NOTHING despite FULL KNOWLEDGE of the FDRS fraud and illegal practice of law. My call to Gayle Weller who has supposedly been investigating since last year has not yet been returned.

I’m about ready for an open letter to Cal AG Jerry Brown.

Are they on the FDRS payroll or “only” extraordinarily incompetent? 

The FL AGs filings explain in detail how they audited the bank accounts and determined that funds had been sent to the Cayman islands.  The California AG does NOTHING?

Tuesday, August 25, 2009

California AG Brown $1,000,000 judgment against Cashcall

Unlike most of America, California has STATE law protecting consumers from abusive debt collection practices INCLUDING original creditors.  The federal Fair Debt Collection Practices Act (FDCPA) ONLY applies to collectors.

You can’t imagine how abusive they are unless you’ve answered their daily harassment calls.

Brown Forces Predatory Lender to End Illegal and Abusive Debt Collection Practices
Los Angeles - Attorney General Edmund G. Brown Jr. today forced CashCall, Inc., an Anaheim-based fast-money lender, to stop using “loan shark tactics” in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action.

The court-ordered judgment also forces CashCall to stop misleading consumers with deceptive advertising and pay $1 million in civil penalties and legal expenses. CashCall used former child actor Gary Coleman as its television spokesman.

“CashCall preyed on consumers desperate for cash, charging triple digit interest rates and using loan shark tactics to collect on their debts,” Brown said. “This judgment forces CashCall to stop harassing its customers and should serve as a warning to consumers to be wary of fast-money lenders.”

CashCall, owned by Paul Reddam, founder and former owner of DiTech mortgage company, currently charges 139.34% annual interest on the $2,600 loan it offers to consumers. This means that consumers who make the required $298.94 monthly payment over 36 months pay $10,761.84 over the life of the loan. That adds more than $8,000 in interest to the loan.

Brown contends that CashCall used illegal and abusive debt collection practices when customers were unable to make on-time payments, in violation of California Business and Professions Code Section 17200. These practices included:

- Making excessive and verbally abusive telephone calls at all hours of the day and night;
- Causing borrowers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds in the borrowers’ accounts;
- Threatening to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so;
- Improperly discussing private financial information with borrowers’ friends, colleagues and neighbors;
- Failing to honor borrowers’ requests to cancel automatic withdrawals from checking accounts; and
- Continuing to contact borrowers by phone after receiving requests to only contact them in writing.

Brown also contends that CashCall misled customers with deceptive television, radio and online advertising in violation of Business and Professions Code Section 17500.

CashCall’s advertisements falsely suggested that low interest rate loans were available to all borrowers, when in reality, the rates advertised were only offered to some borrowers, usually members of the military. CashCall offered lower interest rates because Federal law limits the interest it can charge on loans to active duty servicemembers and their families.

- Stop making excessive and verbally abusive telephone collectionll hours of the day and night;
- Pay $1 million in civil penalties and expenses related to the investking excand resolution of this case;
-
Train its employees within 30 days and not fewer than four times per year thereafter to ensure compliance with the judgment;
- Terminate any officer, director or employee who violates the terms of the judgment;
- Record all telephone calls made to, or received from, prospective and current borrowers; and
- Maintain a detailed log of all consumer complaints.

A copy of the complaint and final judgment, filed in Los Angeles County Superior Court, is attached.

I don’t really see why Cashcall is allowed to continue to operate.  If you get caught speeding in your car you can lose your license.  These lenders DELIBERATELY inflict so much mental anguish and they don’t care how many human beings die—all in the name of profits.

Why don’t they just shut them down?