The United States District Court for the Central District of California granted the Federal Trade Commission’s (“FTC”) request for a temporary injunction against seven companies who allegedly violated the Fair Debt Collection Practices Act.
If you are found this page because you are being threatened with service of process or a lawsuit, there is a substantial chance that these threats are false. This case illustrates not only how but why disreputable debt collectors often make false threats to bully consumers into paying.
The debt collectors allegedly called consumers’ and their families, friends, and neighbors while posing as “process servers” who were supposedly attempting to serve a collection lawsuit upon consumers.
According to the FTC’s complaint, the defendants’ violations of the FDCPA included other common illegal schemes.
The debt collectors allegedly often threatened to have the consumer arrested unless the consumer paid the debt.
The debt collectors allegedly also posed as lawyers or employees of a law office and even demanded that the consumers pay them “court costs” and “legal fees”.
As is often the case, these debt collectors were not actually process servers, lawyers, or employed by a law office.
Although debt collectors who falsely threaten to sue a consumer violate the Fair Debt Collection Practices Act, this violation is surprisingly common. (A threat to “serve process” is a false representation that a lawsuit is filed or will soon be filed.)
According to the FTC, the “key element of Defendants’ scheme is to make the consumer believe that a lawsuit has been filed, or will soon be filed against him.” Debt collectors impersonate a variety of officers of the courts in order to hoodwink consumers.
In this case, the debt collectors allegedly told third parties or the consumers that they were a process server, lawyer, or employee of a law office calling about a lawsuit against the consumer.
Debt collectors who disclose that they are “debt collectors” or are calling about a debt or discuss the debt almost during telephone conversations with anyone other than the consumer or his or her spouse almost always violate the Fair Debt Collection Practices Act when they do so.
The debt collectors allegedly followed a well worn playbook by telling the consumers that they could “settle” the case by immediately paying the debt collector.
The debt collectors allegedly often instructed their first-level collectors not to call the consumer directly but rather to call the consumer’s current employer or a family member in order to create a false sense of urgency so that the consumer will pay before thinking about his or her rights.
Other debt collectors have been known to initiate contact by calling a couple of neighbors in order to humiliate and intimidate the consumer. The tactic is so common that debt collectors have a name for it — “block parties”.
The debt collectors allegedly told the friends, neighbors, and employers that they were attempting to serve the consumer with “papers” or pleadings pertaining to a lawsuit.
Defendants collectors allegedly also left messages with third parties for them to pass along to the consumer. These messages included a “case number” and a callback number and often also included a threat that the consumer must call back that day or else the consumer would be personally served with process to appear in court.
The complaint alleged that, in some instances, the debt collectors even posed as being from the sheriff’s department and threatened to arrest the consumer unless the consumer called back promptly.
The debt collectors’ written scripts (“talk offs”) and policies instruct the first line collectors to say things which violate the Fair Debt Collection Practices Act.
For example, the “New Hire Pointers” instruct collectors to do the following :
“when first coming to an account it is always best to call the [place of employment] first.”
“contact relatives instead of the debtor on the initial phone call to create urgency”
“when doing a standard talk off and the person on the phone is prying … it is best to say you are a process server and due to the federal privacy act you are not given that information.”
The debt collectors’ standard “talk offs” illustrate how debt collectors often use false threats of immediate lawsuits to coerce payment :
“I am (Miguel Davis / Veronica Garcia) and am calling to see if there will be someone at home to receive legal documents to go to court.
Sir / Madam the service processors will try to serve these documents twice(2X).
Sir / Madam must respond or appear in court. If unable to do so, [they] should say so immediately. What I will do is give you the number of the legal office and the case number. Do you have pencil and paper?
The phone number is *** and the case number is ***
Now I’m going to write down now that I spoke to *** and if Sir / Madam do not say anything I will have the processor deliver these legal documents”.
Although this scheme is quite common, the debt collectors’ explanation to employees demonstrates why and how debt collectors make these false threats.
Leaving little to chance, the debt collectors also scripted “rebuttal answers” to help first line collectors convince the third party that the consumer was in serious legal trouble and they must relay the message to the consumer immediately. The rebuttal answers included :
“QUESTION : WE DON’T PASS INFORMATION TO THE EMPLOYEES
A. Look, I am trying to help your company. This matter is serious and will cause problems at the job. Grab a pen and get this redirected to the employees [sic] home.
B. Still no – (Strongly ask) What is your name and your position in the company? We will document for the record that you made the decision for the [debtor] to be served at his place of employment.”
At least some consumers apparently had the sense to call the debt collectors’ bluff because the debt collectors provided their collectors with a script which read :
“QUESTION : JUST GO AHEAD AND SERVE THE DOCUMENTS. WE WILL BRING UP [sic] THE DEBTOR THEN.
A. Look I see here that there is an opportunity for service at the home residence. My suggestion would be to grab a pen take down the case number and the [phone number] to the issuing agent handling the case and have the service redirected. This will help reduce any problems at the work place and save any possible embarrassment.”
First line debt collectors also had the option of falsely threatening to have the consumer served with the lawsuit at home when encountering less direct challenges :
“QUESTION : WE DON’T VERIFY EMPLOYMENT OR GIVE OUT PERSONAL INFORMATION”
A. I am not asking you to verify employment. I am telling you I have a court order here against one of your employees.
B. I am not asking you for any information. I am telling you we have a court order. I am trying to set up service. Grab a pen get [debtor] to reroute this case to his home. Help yourself and your employee.”
The debt collectors allegedly even bullied people who did not even live with the consumer. The Standard Talk Off instructed collectors to say :
“QUESTION : I HAVE NO CONTACT WITH [DEBTOR]
A. Why is he using your address? How long since you have had contact? Wow they are coming to your house after 2 attempts this court proceeding will go on without them they will get a failure to appear. Grab a pin. [sic].”
Debt collectors were also instructed to tell consumers who objected that the call was inconvenient because they were driving to say :
“I suggest that you pull over. This is time sensitive and since you are not at the service location it will be noted as a failure to serve.”
“Failure to serve” is either unimportant or something that the debt collector made up in order to intimidate naive consumers.
The Fair Debt Collection Practices Act prohibits debt collectors from calling consumers when they know that they are calling at an inconvenient time or place.
Debt collectors violate the FDCPA by doing this because it is profitable for them. Consumers do not need to succumb to these illegal threats and misrepresentations.
If collection agencies or other debt collectors are calling your neighbors, relatives, co-workers, friends, or other people about you, you are welcome to contact me by completing the Collection Harassment form on the right hand column of this page.
If you are a Florida resident, you are also invited to call my office so we can discuss your situation and how I might be able to help you. I offer Florida residents a free case evaluation.
If you live outside Florida, I will try to provide a resource of name of a debt harassment attorney who maintains an office in your state.
(C) 2011 Donald E. Petersen.
All rights reserved.