09 July 2005
I haven’t mentioned much about the credit industry in my blog. I can’t pass up this opportunity, though.
A few years ago, my husband and I both paid the same bill, though our payments were only credited once. When the company refused to correct their payment crediting error, I cancelled their services, only to find out that they sent me to a collection agency even though they owed me $ (yes, I’d gone through all the written disputes promptly, meeting all the legal requirements for disputing bills).
Well, it was worse than that — they didn’t send the debt to be collected, they sold it to a third party.
Recently, there’s been a spree of junk debt buyers who have been doing the IPO thing. It’s been touted as “the next big thing,” but it suffers from all the downside (and then some) that junk bonds suffered from. Frankly, the risk quality overall is way way worse than junk bonds — while some of the debt is legitimate, a significant percentage is simple billing errors that weren’t sorted out.
Anyhow, knowing the Fair Debt Collection Practices Act, I wrote the company, asking for validation of the debt as well as the address, etc. I received back a letter that said, not kidding, “our client says that you owe this.” That’s verbatim.
Now, the law requires the following (emphasis added):
(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
In short, they didn’t obtain nothing, but they did dun me at the bottom of the letter and insert an item onto my credit reports after receiving my letter — both in blatant violation of the Fair Debt Collection Practices Act (and the Fair Credit Reporting Act).
Certain that I did not in fact owe the amount in question, I wrote their general counsel a snarky note. The account was closed and the items removed from my credit report pretty promptly.
Really, think about it — they figured that ALL the FTC and private lawsuit settlements was worth the business risk of not even trying to compete with the law. Such arrogance! It also says to me that the FTC is perceived as having no teeth at all when it comes to matters of consumer credit and debt collection. It’s pretty obscene how bad the situation has to be before the FTC steps in.
Others, however, were not so lucky — I know several people who’ve had to sue RMA. Given their business practices, I’m delighted to hear that they filed for bankruptcy and are being bought by one of their competitors.
So, given that RMA’s revenue in 2002 was $295 million, I’m finding it highly amusing that they were just sold for 119 million. How the mighty have fallen.