A Historic City News investigator looking into deceptive debt collection practices in St Augustine and St Johns County has found that as many as 37 residents have been hauled into court during the past 12 months to answer civil complaints for money — which may have been legally uncollectable.
In recent years, the practice of purchasing defaulted debt has become a popular haven for those who have cash to invest — but need more than the 1% interest many banks are paying for their deposits.
Credit grantors, themselves strapped for cash in an economy that has not cooperated, have traditionally looked to collection attorneys or collection agencies to contact their past due accounts for payment. Fees for those services range anywhere from 30% to 50% of the amount collected. The problem is that there is never a guarantee that any of those receivables will ever be collected and if a lawsuit is instigated, the creditor will likely have to advance court costs and attorney fees which can be substantial.
The business of buying debt that has already been reduced to judgment has been popular for investors for some time. They like the fact that the legal costs have already been advanced, any disputed accounts have already been dismissed by a court, and all that is left is to contact the debtor at the address where they received their summons and determine what assets are available to attach or what wages are available to garnish. In reality, it is not that easy.
Companies with access to large amounts of capital liked buying judgments at 60% to 70% discounts so much that it was not long before they were in the market to buy entire defaulted loan portfolios. Since these debts were not secured by judgment, and a greater effort had to be put into locating the delinquent debtor, they were not as collectable and commanded a higher purchase discount — some as much as 80% or more off the face value of the account. Buying a $100 unpaid charge account balance for $20 is tempting.
One such company, Asset Acceptance LLC, a Michigan-based debt buyer, held more than 34 million individual accounts with an original value of more than $42 billion in September 2010.
According to records obtained from the St Johns County Clerk of Court, the following lawsuits or garnishments were filed, dismissed, settled or satisfied by Asset Acceptance LLC or its representatives since January of last year:
21st Mortgage Corporation , Asset Acceptance LLC , 7/14/2011 , Judgment Of Foreclosure , 3454 , 1367 ,
Acosta Amanda , Asset Acceptance LLC , 3/21/2011 , Jdgmt-Sat/Rel , 3420 , 228 ,
Aguilar Jeannettenina , Asset Acceptance LLC , 12/14/2011 , Dismissal , 3504 , 1957 ,
Anderson Barbara , Asset Acceptance LLC , 9/19/2011 , Final Jdgmt , 3474 , 1595 ,
Arnold Kent J , Asset Acceptance LLC , 2/8/2011 , Jdgmt-Sat/Rel , 3407 , 48 ,
Beavers Vernon F Jr , Asset Acceptance LLC , 4/7/2011 , Final Jdgmt , 3425 , 1384 ,
Bingman Brandon , Asset Acceptance LLC , 10/25/2011 , Jdgmt-Sat/Rel , 3486 , 1085 ,
Blalock Cheryl , Asset Acceptance LLC , 10/11/2011 , Final Jdgmt , 3482 , 896 ,
Bosch Vivian L , Asset Acceptance LLC , 9/14/2011 , Jdgmt-Sat/Rel , 3473 , 1718 ,
Burkett Cynthia C , Asset Acceptance LLC , 7/12/2011 , Jdgmt-Sat/Rel , 3453 , 1698 ,
Carson Carol A , Asset Acceptance LLC , 11/28/2011 , Dismissal , 3497 , 1109 ,
Chatila Ghada , Asset Acceptance LLC , 3/7/2011 , Final Jdgmt , 3415 , 1038 ,
Cook Nicola K , Asset Acceptance LLC , 1/24/2012 , Dismissal , 3518 , 326 ,
Deegan Kim E , Asset Acceptance LLC , 11/9/2011 , Final Jdgmt , 3493 , 46 ,
Dudeck Phillip D , Asset Acceptance LLC , 4/11/2011 , Civil Court Paper , 3426 , 1261 , Dismissal
Goff Walter Craig , Asset Acceptance LLC , 1/21/2011 , Final Jdgmt , 3400 , 1711 ,
Grietens Kory , Asset Acceptance LLC , 9/20/2011 , Final Jdgmt , 3475 , 686 ,
Holloway Rhonda L , Asset Acceptance LLC , 8/26/2011 , Jdgmt-Sat/Rel , 3468 , 1020 ,
Justiniano Angela N , Asset Acceptance LLC , 9/20/2011 , Final Jdgmt , 3475 , 1022 ,
Kesterson Judith A , Asset Acceptance LLC , 5/4/2011 , Jdgmt-Sat/Rel , 3433 , 989 ,
Lefco Julie , Asset Acceptance LLC , 6/14/2011 , Jdgmt-Sat/Rel , 3445 , 1656 ,
Murray Rosa L , Asset Acceptance Corp , 1/4/2011 , Jdgmt-Sat/Rel , 3394 , 941 ,
Oakbrook Property Owners Association Inc , Asset Acceptance LLC , 3/22/2011 , Lis Pendens , 3420 , 1125 ,
Oakbrook Property Owners Association Inc , Asset Acceptance LLC , 6/20/2011 , Civil Court Paper , 3446 , 1762 , Corrective/Lis Pendens Or 3420/1125
Odom Roberta A , Asset Acceptance LLC , 12/30/2011 , Jdgmt-Sat/Rel , 3510 , 1557 ,
Oster Werner A , Asset Acceptance LLC , 2/8/2011 , Jdgmt-Sat/Rel , 3407 , 47 ,
Patrick T Serra , Asset Acceptance LLC , 7/12/2011 , Jdgmt-Sat/Rel , 3453 , 1697 ,
Rake Carol M Abbott , Asset Acceptance LLC , 10/7/2011 , Jdgmt-Sat/Rel , 3481 , 630 ,
Rose Christopher A , Asset Acceptance LLC , 8/9/2011 , Jdgmt-Sat/Rel , 3462 , 1895 ,
Smith Charles , Asset Acceptance LLC , 11/2/2011 , Jdgmt-Sat/Rel , 3490 , 145 ,
Stehr Karen M , Asset Acceptance LLC , 2/8/2011 , Jdgmt-Sat/Rel , 3407 , 49 ,
Thurman Gary B , Asset Acceptance LLC , 11/22/2011 , Final Jdgmt , 3496 , 1163 ,
Vecchione Jeanne , Asset Acceptance LLC , 4/20/2011 , Civil Court Paper , 3429 , 745 , Stipulation For Settlement & Order Dismissing Cause
Wells Kenneth L , Asset Acceptance LLC , 10/4/2011 , Dismissal , 3479 , 1021 ,
Whitty Joan T , Asset Acceptance LLC , 1/24/2011 , Final Jdgmt , 3401 , 354 ,
Woodard Bonnie , Asset Acceptance LLC , 12/21/2011 , Final Jdgmt , 3506 , 1685 ,
Wrisley Paul L , Asset Acceptance LLC , 12/12/2011 , Final Jdgmt , 3503 , 992 ,
If you look back to 2000, add another 367 transactions in the local court.
Historic City News learned that earlier today, the Justice Department filed a civil complaint in the US District Court for the Middle District of Florida in Tampa, alleging that Asset Acceptance LLC violated the Federal Trade Commission Act, the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.
Also submitted for the court’s approval was a proposed consent decree; which, if accepted, will settle those charges after the company agrees to implement a range of new practices to protect consumers and to pay a $2.5 million civil penalty.
According to the complaint, many of the debts Asset Acceptance LLC purchased are outside of the statute of limitations and consumers have no enforceable legal obligation to pay that debt. In some states, consumers can reset the statute of limitations if they promise to pay the debt or make a partial payment on the debt. Asset Acceptance LLC is alleged to have collected on this so-called “zombie” debt without informing consumers that these debts were not legally enforceable, or that in making a partial payment or promise to pay, they may have unwittingly breathed life back into these debts.
The complaint also charges additional violations of federal consumer protection laws, including that Asset Acceptance LLC systematically failed to conduct a reasonable investigation when a consumer told the company that a debt Asset Acceptance LLC called about was not the consumer’s debt, that the debt had already been paid or that the consumer had been the victim of identity theft.
Similarly, when learning of a consumer dispute from a consumer reporting agency, the company is alleged to have systematically failed to conduct a reasonable investigation of the dispute. Asset Acceptance LLC also allegedly reported negative information about consumers to credit bureaus, even when the company was aware that a consumer had not received a written notice of that fact because the notice was returned as undelivered mail.
According to the complaint, some of these consumers would only learn that Asset Acceptance LLC had reported them to a credit bureau when applying for a mortgage or auto loan. Even if they believed the debt was invalid, some consumers would pay Asset Acceptance LLC to avoid missing a new loan they needed to get quickly.
“We are proud to announce this landmark consumer protection settlement in an area that is of great concern to our residents and to this office,” stated Robert E. O’Neill, US Attorney for the Middle District of Florida. “We hope that this consent decree will have the added benefit of deterring other debt collectors from engaging in the sharp practices that we are addressing here.”
Rion B. Needs, President & CEO, stated “Asset Acceptance is an industry leader in the amount of information we give consumers. This agreement gives consumers even more visibility into how we will work with them and sets new standards for the industry. We are pleased to have this matter behind us, and to have clarity on the FTC’s policies and expectations of the debt collection industry. As we have already implemented many of the requirements of the consent decree, we now welcome the opportunity to work with the FTC to make these measures the new standards in debt collection.”