Case alleges foul debt collection practices

St. Louis Daily Record & St. Louis Countian, Oct 3, 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 Inc., said she has 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 'til 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, to make repeated harassing phone calls to debtors and to talk with third parties about debtors.

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

Cessna's case isn't the worst of these cases by a long shot, Lumpkins said.

It may, however, be indicative of the practice.

The FDCPA 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, noting that there are "millions and billions of dollars" to be made in debt collection.

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

Patrice told McKinnis the credit card was last used in September 2005, which was the month before Cessna filed for bankruptcy under Chapter 13.

The lawsuit, noting that Patrice left a return number for PCA, alleges the caller was not a Chase representative but rather a PCA employee or agent. According to the plaintiff, this is a violation of Section 1692d(e) of the FDCPA, which prohibits phone calls without "meaningful disclosure of the caller's identity," and of Section 1692e(14), which bars callers from using anything other than the "true name of the debt collector's business, company, or organization."

When Cessna was able to return the call, she was connected to an assistant that the lawsuit describes as rude and obnoxious. The assistant, who isn't identified by any name in the lawsuit, told Cessna her case was a criminal matter and that 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 violate parts of Sections 1692e and 1692f, according to the suit. The statutes prohibit representation that a consumer could be arrested or that the consumer's exempt property could be seized for nonpayment; making false or misleading threats of action that couldn't legally be taken; and making false representations or implications that a consumer committed a crime in order to disgrace that consumer.

The debt-collection company then contacted McKinnis, leaving two messages on her home telephone, without the permission of either Cessna or McKinnis, a violation of Section 1692b, according to the complaint.

Robert Obringer, director of compliance for PCA, 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 a lawsuit or some 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; another 7,337, or 11 percent, of consumers alleged repeated contacts to third parties to obtain information about where the consumers could be reached.