Debt collectors who fail to follow the rules when dealing with consumers will run afoul of the law. In New York, Lewis Hastie Receivables (LHR), Inc., in the Buffalo area, has just settled charges brought by New York Attorney General Andrew Cuomo.
According to Cuomo's investigation, LHGR violated state and federal debt collection laws and, under the agreement, must immediately reform its business practices and pay $125,000 in penalties and costs. The action is the latest in the state's continuing probe of illegal practices in the debt collection industry.
"This company's business model was to harass consumers by calling them multiple times a day, continuously calling them at work after being told not to, and repeatedly calling even after the alleged debt was disputed," Cuomo said. "It is unacceptable for debt collection companies to use illegal tactics for their own profit and we will continue to put a stop to the practice."
Massive violations
Here are some of the actions that Cuomo says violated the law:
• An LHR collector called an Oswego resident up to 16 times in one day in an attempt to collect a 10-year old debt that belonged to her husband. When she questioned the debt to LHR, the collector said, "You must not know your husband that well then." The collector illegally told her she would be arrested, have a lien put on her house, her vehicle confiscated and wages garnished.
• LHR wrongly targeted a Lackawanna man for a debt he did not owe.
• LHR collectors called a Georgia resident 10 times per day in an attempt to collect a debt that was allegedly inflated to more than triple the original amount owed.
• LHR tried to recover a debt from a Mississippi man that was actually owed by his ex-wife. After explaining this and telling LHR to stop calling him, the collector told the man he would call every day at 8 a.m. until the bill was paid.
• LHR repeatedly called a California-based Iraq war veteran over a $2,500 cell phone contract from a company he never signed up with. Despite being provided proof that the debt was not his and that he was serving overseas at the time the company claimed he signed the contract, LHR collectors continued to call him.
According to the federal Fair Debt Collection Practices Act and the New York State debt collection and consumer protection laws, a debt collector cannot pose as an attorney, threaten lawsuits or other legal action which cannot be taken, tell a consumer they have committed a crime or will be arrested, or talk with third parties except to get location information.
The law further requires collection agencies to send a written notice within five days of initial communication with the consumer explaining how he or she can dispute the debt. If properly disputed, the collection agency must stop all collection attempts and send verification.
