Case highlights flaws in debt collector law

Daily Record and the Kansas City Daily News-Press, Oct 4, 2006 by Donna Walter

"Every minute of every day" is how often one attorney says illegal debt-collection practices are used against consumers.

Debra K. Lumpkins, managing attorney of the consumer unit for Gateway Legal Services, said she had heard some horrendous stories about collection activities - including one about a collector who claimed to be holding the consumer's daughter hostage and threatened to harm her if the consumer didn't pay.

"I've had attorneys tell me the debt collector said they don't even care whether they're violating the FDCPA; they're going to harass her till she pays or dies," Lumpkins said.

The Fair Debt Collection Practices Act makes it illegal for debt collectors to make false or misleading representations to debtors, make repeated harassing phone calls to debtors and talk with third parties about debtors.

Lumpkins represents Mary Kay Cessna, a North County woman, who alleges harassing debt-collection practices on the part of a national collection agency. Cessna filed suit against Phillips & Cohen Associates on Thursday in federal court in St. Louis.

The Fair Debt Collection Practices Act is ineffective in two ways, according to Lumpkins. The statutory penalty of $1,000 hasn't been increased for 30 years or more. There are no provisions for punitive damages, she said.

"We see the same offenders over and over and over, and they make so much money, and all they're going to be out is whatever the actual damages are," she said.

According to the complaint, Cessna was out of town when a woman called about a $25,000 debt on a Chase credit card. Cessna's daughter, Cindy McKinnis, answered the phone call. The caller identified herself as Patrice, a Chase representative, and told McKinnis that Cessna had committed identity theft by using her late husband's credit card.

Patrice told McKinnis the credit card was last used in September 2005, the month before Cessna filed for bankruptcy.

The lawsuit alleges the caller was not a Chase representative but rather a Phillips & Cohen employee or agent. According to the plaintiff, this violates the debt collection act, which prohibits phone calls without "meaningful disclosure of the caller's identity" and bars callers from using anything other than the "true name of the debt collector's business, company or organization."

When Cessna returned the call, she was connected to an assistant. The assistant told Cessna her case was a criminal matter, and he was turning it over to the bank's "investigation department," according to Cessna's allegations. The plaintiff also alleges the assistant implied she could lose her home and everything else if she didn't pay the debt.

Such implications also violate the debt collection act, according to the suit.

The debt-collection company then called McKinnis, leaving two messages without the permission of either Cessna or McKinnis, also a violation, according to the complaint.

Robert Obringer, director of compliance for Phillips & Cohen Associates, said he hadn't seen a copy of the suit. After being faxed a copy, he didn't return a call for comment.

The Federal Trade Commission in its 2006 annual report to Congress measured the number and type of complaints it received from consumers during 2005. A total of 6,410 consumers, or 9.6 percent, complained to the FTC last year that third-party collectors threatened them with lawsuits or other action they could not take or did not intend to take. In addition, 2,122 consumers, or 3.3 percent, complained that third-party collectors threatened arrest or seizure of property, according to the report.

The FTC received more complaints about harassment. A total of 14,352 consumer complaints, 21.5 percent, alleged repeat phone calls; 8,018, or 12 percent, alleged obscene or abusive language; 1,715, or 2.6 percent, alleged receiving phone calls before 8 a.m., after 9 p.m. or at other inconvenient times; and 284, or 0.4 percent, alleged threats of violence, according to the report.

The FTC received 3,028 consumer complaints, 4.5 percent, alleging third-party collectors disclosed consumer debt to third parties; an additional 7,337, or 11 percent, of consumers alleged repeated contacts to third parties to obtain information about where the consumers could be reached.

This article was originally

published in the St. Louis Daily Record, another Dolan Media publication