Sallie Mae's Tax Collection Company Under Fire

The House Ways and Means Committee passed legislation Friday that would end the Internal Revenue Service's private debt collection program, which is mostly conducted by Pioneer Credit, one of the third party collection agencies owned and operated by student loan giant Sallie Mae.

Critics of the program have long objected to turning over taxpayer information to private companies and subjecting taxpayers to the abuse associated with third party collection agencies.

Critics are also now attacking the fact that only the private collection agencies and not the government benefit from the taxes collected. A new government report shows the IRS plans to spend $7.5 million on the program in fiscal 2008 and projects that it will bring in approximately $30 million in revenue. But if the IRS instead invested that $7.5 million in its automated collection system, it would collect more than $146 million. And it's worse than that because Sallie Mae, doing business as Pioneer Credit, takes 30% of the tax money collected, making their performance for taxpayers even worse.

The House vote will have to be duplicated in the Senate to get Sallie Mae out of tax payer's government files. Already this week Sens. Byron Dorgan, D-N.D., and Patty Murray, D-Wash., sent a letter this week to new IRS Commissioner Douglas Shulman, seeking a review of the private debt collection program. "There is compelling evidence that the ...private tax collector initiative is a dismal failure," the senators wrote. "We feel confident that once you take a close look at the program, you will determine it is a waste of taxpayer dollars and use your authority to terminate it."

Senate Passes Bill To Protect Home Owners After Removing Protections

The Senate on Thursday passed (84-12) HR 3221 giving tax breaks to builders and lenders while providing no help to struggling homeowners.

The so called housing crisis bill had already been stripped of actions that would help homeowners facing foreclosure. The provision that would have permitted bankruptcy judges to modify interest rates and reduce mortgage balances to the current value of a home was removed a week ago. Nothing in the bill facilitated refinancing or modification of mortgages to stem the continuing tidal wave of foreclosures. The only so called help for homeowners was money for "counselors".

Home builders and financial companies however, got billions. Money for buyers of foreclosed property and money for local governments to buy foreclosed homes is in the bill. Those actions would artificially inflate the value of the homes already foreclosed on by financial companies and remove the chief motivation for financial companies to work out loan modifications with homeowners.

While the problem of a large inventory of foreclosed homes is real, subsidizing their purchase reduces the pain felt by companies that choose to evict families and shifts the balance in favor of foreclosure.

Collection Agency Countdown For HRC

The Clinton campaign's 8.7 million dollar debt total at the end of March has been widely discussed.

The University of California in Davis, however, is through discussing it. UC Davis sent their final demand letter today for over five thousand dollars in unpaid invoices related to a Bill Clinton campaign stop.

If the demand letter doesn't work the Clinton campaign will be turned over to a collection agency within 30 days, at which time their slogan may or may not change to "ready to be garnished on day one."

Columbia Credit Services Collection Agency Sued By San Francisco

The city of San Francisco has sued the collection agency Columbia Credit Services Inc., the National Arbitration Forum, and FIA Card Services alleging unfair and unlawful business practices.

The filing charges that the National Arbitration Forum is an “arbitration mill, churning out arbitration awards in favor of debt collectors and against California consumers.”

FIA issues credit cards to California consumers and Columbia Credit is a debt purchaser and collection agency based in Sacramento, Calif. The suit charges FIA and Columbia with participating in NAF’s “sham by forcing consumers into the NAF forum which they know to be biased in their favor.” The suit also charges Columbia with seeking attorney fees from consumers that lose an NAF arbitrated suit, “an unlawful business practice” that abets NAF’s activities.

The law suit found there were 33,933 consumer arbitration hearings in California involving consumer collections from January 2003 though March 2007. Of these, only 30 resulted in favor of the consumer.

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Ellis Crosby & Associates Collection Agency Ordered To Pay $1.3 Million

Four years after Ted Ellis Crosby was court-martialed by the Navy for being a drug dealer, he founded the Ellis Crosby & Associates collection agency. Last year, Crosby spent six months in a Florida county jail for being a felon in possession of a firearm. And also last year the state of Florida obtained a court order banning Crosby from conducting debt collections in Florida and sued his collection agency for $1.3 million after hundreds of complaints about Ted's illegal practices. You would think that would be enough to discourage Ted.

But you would be wrong.

Winning the 1.3 million (that Ted and his bill collectors will never pay) was a moral victory of sorts over Ted and his collectors for their:

1) Claiming or implying to be attorneys or government agents and threatening arrest or other legal action against consumers.
2) Claiming or collecting non existent or exorbitant debt amounts.
3) The use of harassing or intimidating techniques such as repeated phone calls or calls to neighbors, relatives and employers.

In one phone call taped by a consumer who was falsely accused of owing Ted money, one of Ted's bill collectors pretended to be talking on a walkie talkie coordinating a police raid on the consumer's home so he could take the single mom away from her two young children if she didn't pay $1000 by credit card right then.

However, since bill collectors are charged in civil court for their mail and wire fraud and police impersonations, instead of criminal court where they belong, Ted and his collectors were out and available during this suit by the state A.G. to set up another company, Bass Prelitigation Services, and go on about their organized crime business.

Now the Florida Attorney General is also pursuing a separate $1.3 million civil suit against Bass Prelitigation Services.

Meanwhile, if the past is a guide to the future, as he gets closer to losing the next million dollar suit, Ted Ellis Crosby will be inventing a new collection agency name and printing new letterhead for his next criminal operation.

CreditAssist Financial Offers Collections Disguised As Debt Settlement

CreditAssist Financial Services markets itself as a debt settlement company to consumers on sites such as this one and this one. They advertise themselves as "America's Number One Discount Debt Settlement Firm."

They collect the consumer's state of residence, email, and phone in advance just so they reduce debt more efficiently. Not because they are really a collection agency skip tracing for debt buyers. Right? You be the judge.

CreditAssists' consumer websites explain what their experience means to the consumer:
"CreditAssist's founders were former collection executives with some of the largest Credit Card Companies in the nation (Citibank, American Express, Bank of America, and Washington Mutual). This means that they know the inner workings of credit card companies, debt buyers and collection agencies, what they will agree to in terms of debt settlement and what they won't."

But CreditAssist is sending this press release to collection agency news sites like InsideARM (accounts receivables management) pitching a different service called DebtBuyerAssist.

The press release puts a different spin on what their experience means to bill collectors:
" CreditAssist was founded by collection industry veterans Rick Wittwer and Carmine Dorio. Our experience managing collection activities at most the major credit card issuers including Citi, American Express, BofA, and WAMU puts us in an enviable situation. We know the effectiveness and ineffectiveness of mail, collection call, and legal collection strategies. We also understand the costs associated with each of these strategies. No matter how much effort or expense is placed against the majority of accounts, debtors just won't respond, says Mr. Dorio."

"CreditAssist works with Debt Buyers to identify their unreachable populations and helps them develop both print and voice customized referral strategies. The debtors are offered an alternative to resolving the debt through one of their collectors by referring them to CreditAssist, an independent debt settlement company that represents the debtor to the debt buyer and offers similar settlement rates."

The consumer is charged a fee by CreditAssist to negotiate on their behalf. But if CreditAssist has sold the consumer's information to a debt buyer as DebtBuyerAssist and is also collecting a fee from the debt buyer that would be acting as a third party debt collector without disclosing it to the consumer they are supposedly representing. It would violate the FDCPA and every related civil or criminal statute ever enacted past present or future.

Anyone who has paid CreditAssist or even provided their contact information to http://www.debtsettlement4less.com or http://www.creditassistfs.com needs to contact a consumer attorney immediately.

AAFES Bill Collectors Ripping Off Soldiers And Veterans

Public Citizen, and California consumer lawyers Chandler Visher and Marie Appel, filed suit last year on behalf of Operation Desert Storm, veteran, Julius Briggs, and a class of soldiers and veterans nationwide because millions of dollars have been illegally taken from them by Pentagon bill collectors over military credit cards.

The Army and Air Force Exchange Services (AAFES) took money from military credit card users for expired debt and illegally inflated penalties and fees by deducting the money directly from service members' government benefits.

The government has moved to have the suit dismissed on sovereign immunity grounds, but at the U.S. District Court in San Francisco last week, plaintiffs' attorneys argued the case should go forward.

The AAFES illegally withheld more than $2,300 from the disability payments of lead plaintiff Julius Briggs and also hit him up with inflated interest rates and penalty fees. The withheld money caused Briggs to miss his housing payments and left him temporarily homeless.

The lawsuit seeks an injunction against further illegal bill collecting by AAFES and restitution of all funds illegally taken from soldiers and veterans.