ACORN Applauds Fed Proposal For Crackdown On Abusive Credit Card Companies

The Association of Community Organizations for Reform Now (ACORN) is the nation's largest community organization of low- and moderate-income families. ACORN President Maude Hurd released the following statement today on the announcement of proposed new regulations on credit cards from the Office of Thrift Supervision, National Credit Union Administration, and Federal Reserve:

ACORN members are encouraged by this step forward, especially as it represents a break from the traditional hands-off approach of federal regulators under the Bush Administration. Finally, there seems to be some recognition that mere disclosure and words of encouragement are not enough to protect consumers. Although today’s proposed regulations are far from perfect, they represent a stark break from the failed policies of the past, and that alone is worth celebrating. In the current foreclosure crisis, many banks have decided to squeeze their credit cardholders to get some black ink on the books, and abusive credit card practices and arbitrary rate hikes are spiraling out of control.

ACORN members are particularly excited by the provision that would not allow credit card companies to apply payments to the balance with the lowest interest rate first, although we would like the provision to go further and require payments be applied to balances with the highest interest rate. This stronger option and many other provisions can be found in a proposal from Senator Chris Dodd for a Credit Cardholders’ Bill of Rights, which ACORN endorses and hopes to see adopted. ACORN also supports proposed protections to declare unfair and deceptive the charging of interest on debt that has been repaid and assessing unreasonable late fees.

We hope that this new proposed regulation signals a sea-change in the federal government and Federal Reserve’s approach to handling the financial industry. For years, ACORN has pressed the federal government to issue regulations protecting homeowners from predatory lending and our calls have gone unheeded. Perhaps one silver lining from the eminently preventable subprime crisis that we face today is that regulators have realized that laissez-faire approaches to these issues set up the markets for failure. Now regulators must go further, and Congress must also act to reign in abusive credit card practices.

Aurora, Gold & Associates Collection Agency Fined By NY AG

Aurora, Gold & Associates, a Western New York collection agency that engages in deceptive and abusive acts will pay $35,000 in penalties and costs perunder an agreement with the state Attorney General’s office.

Aurora, Gold & Associates engaged in illegal practices including collectors pretending to be attorneys, threatening consumers with non existant lawsuits and discussing private customer information with unrelated parties. "It is not acceptable for debt collection companies to harass consumers to the point where they overstep legal boundaries,” said Attorney General Andrew Cuomo in a public statement.

Violations by Aurora Gold included repeatedly calling consumers' family, friends and neighbors despite requests to stop calling. The Attorney General also found that Aurora Gold’s Web site contained statements that created the false impression that it was a law firm and could sue debtors.

In one instance, a collector – pretending to be an attorney – left a message on a consumer’s answering machine in which he toldher there was a “pending civil suit” against her.

In addition to paying $35,000 in penalties and costs, the agreement requires Aurora Gold to immediately institute a number of reforms to correct its current practices and to ensure that it will deal with debtors and third parties fairly and according to the law.

Although complaints to a state attorney general or the FTC are generally useless compared to a FDCPA lawsuit, the case of Aurora, Gold & Associates shows they can be sometimes worthwhile.

What To Do When You Have Been Sued By A Debt Collector

Indiana consumer attorney Robert Duff has a good article on what to do when you learn you are being sued by a debt collector. The post examines the problems debt collectors have in proving their cases and why it is important to seek representation even if you are knowledgeable about consumer rights.

"I understand that debt collection is a business, but that doesn't mean you can cut whatever corners you like in search of the almighty dollar. I've seen too many people's lives and well-being injured by greedy debt collectors. I don't think there is much of a difference between a debt collector who sues the wrong person because their practice is to attempt to collect debts without the appropriate documentation and a bus company who injuries a customer because they neglected maintenance on their bus."

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Recording Industry Association of America and MediaSentry Picked On The Wrong Mom

The Recording Industry Association of America (RIAA) and their attack dog, MediaSentry, don't get the press they deserve. There are a few watchdogs such as the Recording Industry vs People blog, but overall there are too few people who fight back against the illegal debt collection tactics and intimidation used by the RIAA to create much press.

So it's nice to see a substantial expose by BusinessWeek magazine on the successful fight of Tanya Andersen, a single mom who fought the illegal tactics in civil court and who is on the verge of a major victory.

Wachovia Fined 144 Million In Consumer Ripp Off Investigation

Wachovia has agreed to pay $144 million to settle allegations that it did not take adequate measures to stop a telemarketing fraud that scammed thousands of mostly elderly consumers.

In February this year, the fourth largest bank in the US had been sued by customers for allowing fraudulent telemarketers to use its accounts to rip off millions of dollars from consumers.

The federal Office of the Comptroller of the Currency said Wachovia did not act quickly enough to block telemarketers and payment processors who had their accounts at the bank, and obtained customers' bank account numbers while selling products including vouchers for discount travel and groceries and medical discount plans.

Wachovia agreed to $125 million in claims, and $8.9 million toward consumer education programs. It will also pay a $10 million fine.

Wachovia executives, when quizzed about the lawsuits, pleaded ignorance about the thefts. However, newly released documents from the lawsuit have now established that Wachovia was quite aware about allegations of fraud, but had in effect, chosen to solicit business from companies it knew had been accused of telemarketing crimes.

Linda Pera, an executive who left Wachovia in 2006, while referring to a company that was later accused by federal prosecutors of abetting in stealing up to $142 million, wrote, "We are making a ton of money from them."