Beginning of a Disturbing Trend?

I have received two calls in the last two weeks from people who were improperly served in connection with a debt collection. The first is a college student who has never lived with his mother. The law firm’s process server, however, turned up at his mother’s house with a summons and complaint. She refused to accept service, telling the process server that her son has never lived at that address. The process server told her to take it anyway, that he just needed a signature. And so the lawsuit begins.

In the second case, the summons and complaint just showed up on the porch of the debtor’s father’s house. It was dated some twenty days before it was found, and none of the family ever saw a process server. Plus, the debtor has not lived with her father in nearly a year.

Service was improper in both cases, of course, but under Minnesota’s ridiculous laws, the first debtor’s bank account has been garnished even though he was never properly served and the debt collecting law firm never filed the lawsuit. I’m sure the same fate is in store for the second debtor unless we can move quickly enough to get the case thrown out.
I hope these are isolated incidents, but I am concerned they demonstrate the willingness of debt collectors to shirk the rules in order to increase their financial gain.

The Benefits (?) of Tort Reform

Following up yesterday’s post about tort reform in Texas, TortDeform posted a letter to the editor of the Bluefield Daily Telegraph (WV). West Virginian Gilbert Bailey says “So much for the promise of less expensive insurance premiums . . . .”

Keep reading

Tort Reform in, Doctors Out

From Tortdeform comes the news that, following the Texas legislature’s 2003 sweeping tort reforms “designed to greatly reduce the frequency of medical malpractice lawsuits, the size of malpractice payments, and physicians’ insurance premiums,” the number of Texas physicians applications granted has actually decreased.

I’m not sure this is a news piece worthy of crowing about, but if it shows anything, it is that tort reform really doesn’t have much to do with the quality of healthcare. If anything, it looks like the quality of physicians applying for licenses in Texas has actually decreased. Or else Texas licensing requirements skyrocketed (unlikely).

New Twist on the Old Scam

Consumer attorney Sonya Smith-Valentine brings a new phone-based credit card scam to light. In this one, the caller behaves like a representative from a credit card company investigating credit card fraud. “We need to verify you are in possession of your card,” the caller will eventually ask, and request your three-digit CVV code from the back of your card.

Of course, the caller already has everything else they need, and can make all the online purchases they want now that they have that crucial last piece of information. Stay on your toes!

Credit Card Payments Rising, but Consumers Clueless as to How Those Payments Are Calculated, Anyway

A University of Illinois at Urbana-Champaign law professor says “A lot of credit-card users don’t have a clue as to how the monthly minimum payment is calculated.” Count me in. I don’t have a clue, but I have a pretty good guess. I think it involves a dartboard.

To solve this problem, California is trying to force credit card companies to include charts in billing statements that tell the cardholder exactly how long it will take to pay off their credit card based on their current payment. This is something Hawaiian U.S. Senator Daniel Kahikina Akaka tried to do on a federal level back in 2004, but I guess it didn’t go anywhere.

At the same time, minimum payments are rising under federal pressure. The goal appears to be a minimum payment that would close out the debt in ten years, rather than twenty or thirty, as has been the case. This is a mixed blessing, of course. If you are deep in debt already, you may find it nearly impossible to climb out if your payment goes up. But it may have been nearly impossible already, and you just didn’t realize it.

West Va. Attorney General Reaches Settlement with Minnesota Debt Buyer

According to the NY Bankruptcy & Consumer Law Blog, the West Virginia AG’s office decided to investigate Pinnacle Credit Services after a consumer complained that she did not owe a debt Pinnacle was trying to collect. The AG’s office discovered Pinnacle was not licensed in West Virginia, and the settlement agreement followed.

Under the agreement, Pinnacle will erase all West Virginia consumers from its records, and will notify the three major credit reporting agencies that they should delete all references to those consumers, as well.

This is a small victory for West Virginia consumers, but a victory nonetheless.

Amendments to the FDCPA

As my friend, Pete Barry, often says, all consumer problems eventually end up being debt-collection problems. Early in October, Congress made some key changes to the Fair Debt Collection Practices Act, which regulates the consumer debt collection industry. The main change is to the “mini-Miranda” warning that must accompany the debt collector’s first communication in writing. First, legal pleadings (but what about a summons?) will no longer be treated as an initial pleading requiring the mini-Miranda warning. Second, a debt collector may continue to collect during the initial 30-day validation period. Finally, the amendments except certain communications from being considered initial communications.

Unfortunately, the amendments also exempt certain bad-check enforcement firms from the FDCPA. With good intentions, I am sure, but the change has “loophole” written all over it.

See the Consumer Law & Policy Blog’s more timely post for some interesting commentary on the amendments.

US PIRG Files Complaint with the FTC Regarding Online Privacy

I think we often conceptualize the internet like a busy street, full of things to see, do, and learn. But unlike a busy street, your very presence on the internet leaves lasting impressions and information about you and your browsing habits. The U.S. Public Interest Research Group is filing a complaint with the Federal Trade Commission “urging greater scrutiny and possibile regulatory action of online advertising and consumer tracking.”

While “regulatory action” is pretty much anathema to the internet, just stop for a moment and consider what Google, Yahoo, and Microsoft know about you. Do you use Gmail? If you do, Google knows your likes and dislikes, who you are dating, who you are sleeping with (most likely), where you shop, what kind of videos you like (if you also use an online movie rental service), etc. What if you also use Google Calendar, Google Reader, or Blogger?

Your life is out there. I actually think some regulation might be a nice thing, especially with the government gobbling up civil liberties like trick-or-treaters with bags full of candy.

Edit: U.S. Pirg just posted its press release (PDF link) as well as its complaint (PDF link).

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Punitive Damages on Review at USSC

Yesterday, the U.S. Supreme Court heard oral argument in Phillip Morris v. Williams, a tobacco case from Oregon where a jury awarded $79 million to the plaintiff. The issue on appeal is whether juries can award punitive damages for harm to third parties not involved in the lawsuit, and places the Rehnquist Court’s BMW v. Gore analysis in the crosshairs (partially, at least).
The Rehnquist Court frequently slashed punitive damages awards based on a three-pronged analysis: (1) the degree of reprehensibility of the conduct; (2) the ratio between punitive and compensatory damages; and (3) a comparison of the amount of punitive damages to any civil or criminal penalties that could be imposed for comparable misconduct.

Deepak Gupta at the Consumer Law & Policy Blog has more, along with links to the oral argument transcript and reactions from media and the blogosphere. “Hotel Key Cards: Identity Theft Risk or Not?”

Hotel key cards are a bit of an enigma, it seems. Though and Computerworld both put considerable effort into debunking the idea that hotel key cards hold more than just innocuous information about hotel guests, the idea persists. And, potentially, with good reason.

At least one California detective found a veritable treature trove of personal information on a card from a major hotel, including name, length of stay, and credit card number. In other words, more than enough to make it easy for someone to steal your identity.So it isn’t clear whether or not hotel cards do or do not hold risky personal information, but it does seem worthwhile to take some basic precautions. For starters, keep careful track of your key card during your stay, and take it with you when you leave the hotel, then shred it.