Re: Suit alleges debt collector misfeasance Part 2

Posted by Tim (68.190.163.28) on February 02, 2004 at 16:00:50:

In Reply to: Suit alleges debt collector misfeasance Part 1 posted by Tim on February 02, 2004 at 16:00:22:

A search of civil records at U.S. District Court in Philadelphia found that since 2002, NCO has been the defendant in at least a dozen lawsuits alleging violations of the debt collection act. Most ended in out-of-court settlements or were dismissed. There is no indication that NCO has ever admitted wrongdoing in its debt collection procedures.

Although the number of complaints over debt collections registered with the FTC are up nearly 45 percent over two years, the commission said that doesn't necessarily mean that collectors are getting more aggressive. Thomas Kane, an FTC attorney, said the drastic rise in complaints about third-party debt collectors mirrors a drastic rise in overall complaints to the FTC.

"We're doing a much better job of getting consumers to complain to us," Kane said. "We're doing a better job of that across the board. It's hard to tell whether collectors are getting worse or not."

Mailman said the rise in complaints is probably caused by the rise in consumer debt, which has turned debt collection into big business.

"There's more debt than ever," Mailman said. "As a rule, debt collection agencies are very profitable."

NCO, which employs 9,300 people at 76 locations, is profitable as well. The company had net income of $42 million in 2002, and it had earnings of $32.2 million through the first three quarters of last year.

The Better Business Bureau of Metro Washington, D.C. and Eastern Pennsylvania, which has 7,000 members and includes Philadelphia, revoked NCO's membership in April 2002, contending that NCO didn't live up to the group's voluntary standards. NCO also has an "unsatisfactory record" with the BBB because of unanswered customer complaints, according to a BBB spokesman.

It only takes a single unanswered complaint to receive an "unsatisfactory" rating. Andrew Goode, a vice president in the BBB's Philadelphia office, said that NCO answered an "overwhelming majority of complaints."

"They're a pretty big company," Goode said. "Sometimes they don't realize when something slips through the cracks."

Goode said the BBB revoked NCO's membership because the company did not provide information to the BBB upon request. He added, however, that the company provided the information to the BBB after the revocation but never filled out the paperwork to become a member again. NCO also would have to clear up its unanswered complaints to regain its membership, which was revoked prior to the BBB issuing the rating on complaint dispositions, he said.

"They could be eligible for membership," Goode said. "But they weren't interested at the time."

One of the recent settlements between NCO and a debtor occurred in November. Mark J. Shumbris of New Tripoli, Lehigh County, sued NCO in federal court alleging violations of the Debt collection act stemming from attempts by NCO to collect on a credit card. Shumbris said in the suit that NCO initially wrote him a letter about the account and then followed up with a message on his answering machine at home, saying he had 15 minutes to call the company or NCO would call the Lehigh County Sheriff's Department and have it "pick up" Shumbris for credit card fraud.

"Defendant also suggested that plaintiffs contact an attorney and expect a knock at the door," the lawsuit states.

Shumbris and NCO settled the matter out of court, and the suit was dismissed by the court Nov. 18. In its response to the complaint before the suit was dismissed, NCO denied the claims. However, the company did say in its answer that if Shumbris was able to establish his claims, "the collector acted outside the course and scope of his employment, contrary to training and instruction, without authority and in violation of company policy."

Mailman, who did not represent Shumbris, said that industry-wide, some companies will have quotas in place for debt collectors tied to bonuses that encourage aggressive collecting. In other cases, he said, there are "bad apples" at companies that violate company policies.

"It's a big group," Mailman said about NCO. "I'm not going to say the company is evil because it's not."

He added that companies are responsible for supervising their employees to make sure they are following the debt collection act and individual company policies.

"It's going to be harder and harder to do that," Mailman said.

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