Court of Appeals Spanks Misbehaving Debt Collectors to the Tune of $10.2 Million

In a staggering decision that should have some rogue debt collectors in New Jersey quaking in their millionaire boots, on September 6, 2007, the Federal Court of Appeals for the Third Circuit upheld a district court's award of $10.2 million. The award was obtained in a class action lawsuit brought by the Federal Trade Commission on behalf of all consumers from whom Check Investors and its principals had collected on checks that had been returned for non-sufficient funds over a three-year period of time.

According to the opinion written by Fedral Circuit Court Judge McKeee, Barry Sussman was the Vice-President and Charles Hutchins was the general counsel of Check Investors, Inc., which purchased over 2.2 million NSF checks having an estimated face value of $348 million from companies such as Telecheck, Inc, Cetergy, and Cross Check, Inc. Then, over a three-year period of time, Check Investors collected over $10.2 million by strongarming and browbeating people who had written the checks for retail purchases.

This is apparently not Sussman's first brush with the law as a bad boy debt collector. Judge McKee noted that Sussman had served time in prison for attempting to collect debts by posing as an FBI agent. Check Investors primary collection method was to accuse consumers of being criminals or crooks and threaten them with arrest and criminal prosecution if they did not pay up.

One telephone call from Check Investors was recorded by a consumer and admitted in district court trial.

This message is for the criminal check writer, Stephanie . If you think that you could rip these merchants off with your hot checks and hide behind your telephone, I guess you'll just have to explain to the judge why you stole from this merchant, from [name of merchant], with your fraudulent check. At this moment, we do nothave any intentions of working this matter out with you voluntarily. You may need to turn yourself in to the local county sheriff's office.

Another consumer was told that if she did not pay, her children would "watch their mother being taken away in handcuffs," and they would "be bringing their mommy care packages in prison."

The court of appeals was apparently appalled that Check Investors' tactic knew no limits. It routinely contacted family members of people who had NSF checks they had bought. In one case, Check Investors' repeatedly called a 64-year old mother regarding her son's debt. Afraid that her son would be arrested and hauled off to prison, she coughed up the amount of the demand.

Another technique Check Investors employed was referred to by Judge McKee as "saturation phoning." One consumer stated that Check Investors' collectors called him 17 times in 10 minutes. Collectors also used abusive language, referring to consumers as "deadbeats," "retards," "thieves," and "idiots." The tactics often yielded results.

Between January 1, 2000, and January 6, 2003, Check Investor's collection efforts netted $10.2 million from more than 42,000 consumers. Taking every dollar of their ill-gotten gains, the court of appeals affirmed the district courts decision that yes, these bad men were rogue debt collectors, and its order for Check Investors, Sussman, and Hutchins to pay the $10.2 million as a fine to the FTC.

Several other high profile cases against wild-haired debt collectors continue to be prosecuted by the FTC, states attorneys generals, and private pro-consumer plaintiffs' lawyers across the United States. Nonetheless, most of the 100,000 debt collectors who work for the 6,000 debt collection agencies in America operate well within the Fair Debt Collections Practices Act, according to Kenneth R. Besser, an attorney who is a national speaker and trainer on fair debt collection compliance.

"By no means," explains Besser, "should the outrageous actions of this company and its principals be considered to be even close to the standard operating procedures for legitimate debt collection agencies in America today." Besser teaches debt collectors regularly on the subject of consumer collections compliance and, "the yahoos were collecting like they were living not only in another time, but also on another planet."

In its unbelievably abusive tactics, Check Investors violated almost every provision contained in the FDCPA. Says Besser, who operates a website called www.The FDCPA.com, "Check Investors was breaking darn near every rule in the book.

This is exactly the type of bad actions and bad actors the FDCPA was enacted in 1977 to prevent. "The FDCPA was passed three decades ago to protect consumers from a host of abusive, fraudulent, and unfair practices and to protect the supermajority of debt collectors and debt collection agencies who abide by it every day of their professional lives."

Most of those who abide by the FDCPA are also members of ACA International, The Association of Credit and Collections Professionals, which has been protecting legitimate members of the industry for more than twice as long as the FDCPA has. At the ACA's July 25^th, 2007 Annual Convention, its board of directors unanimously passed an update association Code of Ethics, which goes even farther than any existing federal or state laws to protect America's consumers while it self-regulates the legitimate debt collectors who are its members.

Besser, who is a member of the ACA's Members Attorneys Program, explained the way the ACA requires its members to treat consumers. "The first two ethical conduct requirements in the ACA's Code of Ethics are literally (1) to treat consumers with consideration and respect and (2) to communicate with consumers with honesty and integrity and Rozanne Andersen, the General Counsel and Senior VP for Legal and Governmental Affairs and everyone else in the ACA work diligently every day to make sure those to ethical requirements are met."

Mr. Besser maintains two group discussing business and personal legal issues on Gather. Feel free to join and comment on this development at Business Law or Personal Legal Affairs.