Woman Sues Debt Collector, Wins $8.1 Million

At courthouses across the United States, it has become increasingly common during the economic downturn for lawsuits to be filed against consumers to collect old debts. Lawyers who specialize in the practice are filing thousands of suits on behalf of large firms that have acquired debts from other companies. Although most people don't fight the suits and lose them by default, a Dallas woman bucked the trend last October.

Chrystal A. Snow challenged the validity of a $9,000 debt in a Dallas County Court-at-Law and countersued the debt collector for making improper phone calls, her attorney Ross Teter said. In a case that has received no media attention, Snow won her suit against Midland Funding LLC and the jury hearing the case awarded her $8.1 million -- $250 for actual damages, $100,000 for mental anguish and $8 million in punitive damages, he said.

"The jury made a finding she did not owe the debt," Teter said in a phone interview. "We argued that they violated the Texas Fair Debt Collection Act by making harassing phone calls and the jury agreed."

Midland Funding is a subsidiary of Encore Capital Group, a company whose primary business is the acquisition and collection of "charged-off consumer receivable portfolios," according to its 2009 annual report filed with the Securites and Exchange Commission.

"We acquire receivable portfolios at deep discounts from their face values," the annual report states. "[W]e have invested approximately $1.4 billion to acquire 28.8 million consumer accounts with a face value of approximately $43.8 billion."

As the owner of millions of long-overdue accounts from credit card, auto, health care and phone companies, Encore has three call centers in the U.S. and one in India to make collection calls. When these efforts are unsuccessful, Encore has a nationwide network of attorneys to pursue legal action for the full amount of the debt. If a creditor wins a lawsuit, it can get a court order to seize bank accounts, garnish paychecks and claim other assets. Consumers can find themselves on the hook for the debt plus interest, penalties and legal fees.

"We generally refer accounts for legal action where it appears the debtor is able, but unwilling, to pay their obligations," the annual report states. "We pay the law firms a contingency fee based on amounts they collect on our behalf."

An April 1 New York Times story on the rising number of court-ordered garnishments told the story of Sidney Jones, a maintenance worker who took out a $4,097 personal loan in 2001 from the subprime lender Beneficial Virginia:

He fell behind, and Beneficial sued. Mr. Jones did not appear in court. "I just thought they were going to take what I owed," he said.

By default, Beneficial won a judgment of $4,750, plus $900 in lawyers' fees, with the debt accruing interest at 27.55 percent until paid in full. The bank started garnishing his wages in March 2003.

Over the next six years, the bank deducted more than $10,000 from Mr. Jones's paychecks, but he made little headway on his debt. According to a court order secured by Beneficial's lawyers last spring, he still owed the company $3,965, a sum nearly equal to the original loan amount.

Allen West, a Republican candidate running for Congress in Florida to unseat Rep. Ron Klein (D-Boca Raton), lost a $2,832 judgment to Midland in 2009 for credit card debt, the Palm Beach Post reported in March. He's "more than half way" to paying it off, he told the paper.

Kristy Welsh, the editor of the do-it-yourself credit repair site Credit Info Center, said the worst thing a person can do is ignore a lawsuit filed to collect one of these "zombie" debts. File a answer to the original suit, Welsh advised in a phone interview. "If you don't answer you lose automatically. You don't want a judgment against you. You have zero to lose [by fighting]."

She wrote a blog post Friday on the six steps to take if you've been sued to collect a debt, even if you can't afford an attorney and must defend yourself:

... by filing an answer, you greatly increase the chance the creditor will dismiss the lawsuit. In other cases the collection agency rent-a-lawyer won't bother to show up themselves -- giving you the automatic win. Some lawyers who work for big collection agencies file as many as 50 lawsuits a day. Why spend time on a consumer who fights back when there are plenty who won't resist?

In Snow's case, the attorney representing Midland Funding did not appear and the one-day trial was conducted without him, Teter said.

Welsh said that a creditor is required to prove in court that a debt is valid, a difficult task for debt-acquisition firms like Midland because they receive a limited amount of information on the debts they acquire -- sometimes as little as the debtor's name, Social Security Number, amount owed and original creditor. "They weren't around watching the original creditor. They weren't around to witness the processing of payment," she said. "The older a debt is, the less chance it has of having any kind of paperwork."

The debts pursued by these firms often are inaccurate or have passed the statute of limitations in a consumer's state and are no longer legally required to be paid, she said.

Welsh runs an online forum where members share information with each other about their legal battles with debt collectors they call JDBs -- "junk debt buyers."

In the section of the annual report where Encore discloses the risks of running its business, the fact that consumers are banding together on the web is cited as a problem:

Consumers are exposed to information from a number of sources that may cause them to be more reluctant to pay their debts or to pursue legal actions against us. ... Various Internet sites are maintained where consumers can list their concerns about the activities of debt collectors and seek guidance from other website posters on how to handle the situation. And advertisements by debt relief attorneys and credit counseling centers are becoming more common, adding to the negative attention given to our industry. As a result of this negative publicity, debtors may be more reluctant to pay their debts or could pursue legal action against us regardless of whether those actions are warranted.

Snow, who did not return requests for comment, has reached a confidential settlement with Midland, her attorney Teter said.

Teter said that it's rare to achieve a result like hers in a debt collection lawsuit, but "I think it's not going to be so rare in the future. A lot of these debt collectors are making lots and lots of phone calls for no reason. The jurors are beginning to understand."

Credit · Business · Law · 2010/04/05 · 38 COMMENTS · Link

How to Stop Debt Collection Calls

I recently changed phone numbers when I got a Google Android phone. The last owner of my number was a guy with several bill collectors on his ass. I just got an intimidating robocall from one of his debt collectors, which left the following message:

This message is for [name removed]. You've been named as a person of interest in an important matter. You need to contact this office immediately or decisions will be made without your knowledge. Press 1 or call 888-772-4172, extension 1.

I hate it when decisions are made without my knowledge.

The call came from CCF Inc., according to 800 Notes, a site where users discuss harassing calls they've received from unknown numbers.

If you're being hassled by a debt collector, there are steps you can take to limit their calls. Under the Fair Debt Collection Act, if you notify them in writing never to contact you they are legally required to stop. They also cannot call you from 9 p.m. to 8 a.m. and cannot call you at work after you inform them this is not allowed.

Debts · Credit · Harassment · 2010/04/02 · 3 COMMENTS · Link

Teach Yourself Java While Still at the Bookstore

Out of thousands of comments made about the PAC expenditure story, this one on Balloon Juice is my favorite:

Roger Cadenhead, who posted this, is someone who has churned out a large number of computing books, many with titles like Sams Teach Yourself Java 2 in 24 Hours or Sams Teach Yourself Java 2 in 21 Days. As a software engineer, these titles make me doubt Cadenhead’s credibility. It might-just-be possible to learn a substantial amount of Java in 21 days (it is a very large language once one counts the libraries), but I don't know any non-trivial computer language in which most people can be fluent in less than six months.

As the author of more than a dozen Teach Yourself Subject in Refreshingly Short Time Period books, I occasionally get sent the link to Google director of research Peter Norvig's essay Teach Yourself Programming in 10 Years and Abstruse Goose's comic strip on the easiest way to teach yourself C++ in 21 Days.

I'm currently working on Sams Teach Yourself C++ in 24 Hours, so these guys are hitting me right in the meal ticket.

The official reason for the titles of these books is that each chapter is designed for readers to accomplish in that time period. So if you read Sams Teach Yourself Java in 24 Hours, and I strongly believe that you should, you can read each chapter and complete its projects in an hour. The same goes for Sams Teach Yourself Java 6 in 21 Days, but you get one day for each chapter because the material is harder. Whether you complete these books in 24 consecutive hours or 21 consecutive days -- or space it out and take breaks -- is up to you.

The unofficial reason for the titles? If I called my next book Teach Yourself C++ in 10 Years, it would sell as well as Lose Weight by Watching Your Diet and Exercising Regularly and Become a Millionaire by Working Hard for 40 Years and Saving Your Money.

The Norvig essay ends with a line that my publisher should use on the next edition: "[G]o ahead and buy that Java book." -- Peter Norvig, Google

Java · Publishing · Time · 2010/04/01 · 2 COMMENTS · Link

Hamsher and Greenwald Respond to PAC Story

The piece I wrote on Jane Hamsher's PAC expenditures has drawn responses from both Hamsher and Glenn Greenwald, the cofounder of the Accountability Now PAC. They claim that I am engaged in "an attack meant to shut down fundraising" and "standard political cult behavior of trying to smear those who oppose the Leader."

Hamsher submitted her comment to Mediaite:

Glenn runs Accountability Now, which is a non-partisan organization, and I run FDL PAC, which is a progressive organization. FDL PAC went well beyond the level of disclosure required by the FEC, and I'm extraordinarily proud of what we managed to accomplish on a shoestring budget. There wasn't one meal, entertainment expense or travel receipt in the report. Not that there would have been anything wrong if there had been, but between FEC compliance and program costs, there wasn't a penny to spare. This was an attack meant to shut down fundraising, no different from the attacks on ACORN or the labor unions by the right. There are many ways to engage in a political disagreement that don't involve trying to destroy an organization's ability to pay its staff a living wage for the work that they do. This wasn't one of them.

Greenwald made his in response to a blogger on Balloon Juice who called Accountability Now a failure. Some of his points address that blogger, who retracted his post, but the rest appears to be a response to my story. Greenwald claims that he's being attacked for being a tough critic of Obama:

This smear comes from one place: blogs that are devoted to revering Barack Obama and despising anyone who speaks ill of him. Just like Bush followers invariably tried to slime the personal credibility of anyone who dissented from their movement (Richard Clarke, Joe Wilson, Paul O'Neill, David Frum), the real purpose of this is to try to smear Jane Hamsher (and, much more distantly, me) for the Crime of Speaking Ill of the Leader. If enough money signs are thrown around enough times with her name, Obama cultists who view her as a Traitor will declare that some great impropriety has taken place. But the smear lacks even a single concrete accusation, let alone a true one.

That's why it's all coming from Obama-revering circles. It has nothing to do with the issues raised and everything to do with the standard political cult behavior of trying to smear those who oppose the Leader.

In this case, it backfired. What you said was blatantly false. You were so reckless in what you said that you had to retract it. Every actual fact that you cited was disclosed long ago by Accountability Now as clearly and publicly as possible.

Being able to accomplish what we accomplished with AN, with a tiny budget of small donors who were never asked again to donate, is one of the things about which I'm most proud in terms of the work I've done in the past 18 months. What is missing more than anything from Washington is a credible infrastructure to recruit and support primary challengers against unaccountable incumbents, and from scratch, we created that. Every last aspect of the group's activities and finances were publicly disclosed way beyond what the law requires. The ones who have been exposed and whose credibility has been damaged are people (like you) willing to spout false and baseless accusations without bothering to do the slightest work to first find out if what you're saying is true, all because the people you’re smearing don't sufficiently revere your Leader.

Neither Hamsher nor Greenwald point out any specific errors of fact in the story, which reported what the FEC filings reveal about their PAC expenditures.

Greenwald's wrong when he states that I used figures from the Accountability Now year-end expense report in my story. I added up the numbers myself from the FEC filings because there were some minor differences.

Contrary to his claim that it would be "impossible to have greater disclosure of expenses than what we provided," his PAC could have answered questions about its FEC filings sent to its treasurer. They had four days. I even told Hamsher in advance that the story was being published Monday and told her everything it would cover. That's how she was able to prepare an expense report that came out around the same time I published my story.

I'm catching hell in a 1,100-comment Daily Kos post about Greenwald's response. One commenter asked, "who are you that a blogger should give you an interview?"

I find that question ironic, given the fact that we're talking about grass-roots PACs like the one Firedoglake operates. Am I important enough to deserve an answer to my questions? It's not for me to decide. My mother says I'm plenty important.

On a site like Daily Kos, any user can publish a diary that gets a great deal of attention. My story has drawn 1,400 comments and was promoted by users to the front page, despite the fact that site publisher Markos Moulitsas disliked it. So if anybody is declining to answer questions on the grounds that the blogger isn't important enough for their time, that seems like a bad policy to me.

The suggestion that I'm doing all of this because I love Obama and I hate his critics is completely false.

I love Joe Biden.

I gave him $250 minutes before he dropped out of the presidential race. He sent me a nice letter in response.

Politics · Pacs · Campaign Finance · 2010/03/31 · 24 COMMENTS · Link

Who the Hell is Rogers Cadenhead?

There's a new story on Firedoglake this morning titled Who the Hell is Rogers Cadenhead? The author goes through my background and describes me as a "semi-deranged" former journalist. That's disappointing. Not fully deranged?

A lot of people on Firedoglake and Daily Kos are questioning my motives and accusing me of writing a "hit piece" against Hamsher. I do not regard it as a personal attack to investigate how a PAC spends its money and ask the founders about specific expenditures. A PAC is answerable to the public, which is why the Federal Election Commission requires it to file reports. If Hamsher and FDL Action PAC treasurer DeVeria Flowers refuse to answer questions that's their prerogative, but it does not engender much confidence in the operation of their PACs.

One of the commenters on Firedoglake claims that by asking questions about these expenditures I am JAQing off:

JAQing off is the act of spouting accusations while cowardly hiding behind the claim of "Just Asking Questions".[1] The strategy is to keep asking leading questions in an attempt to influence listeners' views; the term is derived from the frequent claim by the denialist that they are "just asking questions", albeit in a manner much the same as political push polls. It is often associated with denialism in general.

The Internet is a weird place.

Politics · Firedoglake · Jargon · 2010/03/30 · 10 COMMENTS · Link

A Daily Kos User By Any Other Name

I posted the story about Jane Hamsher's PAC expenditures on Daily Kos, where it has attracted more than 1,100 comments in six hours. It also earned me a warning from a site administrator because I referred to the real names of two members who post there as Nyceve and Slickerwink:

The publication of DKos users' real names here -- if they have not revealed them on this site -- is forbidden. Your use of nyceve's and slinkerwink's real names violated that prohibition. Don't do it again.

I wasn't able to comment until I agreed to never ever never do it again.

I can understand why that rule is in place, since there's a rule on the Drudge Retort against posting personally identifiable information about another member of the site. Most of the time that junk is part of an effort to intimidate someone.

In this case, though, it was a surprise to get in trouble for it. Noelle Cigaroa Bell identifies herself by both her real name and Slickerwink in her Huffington Post columns, and Eve "Nyceve" Gittelson does the same on the FDL Action PAC blog and elsewhere. They want people to know their real names and their pen names.

If it ever comes up again that I'm writing about a Kos user, I'll make sure they are OK being identified.

Publishing · Etiquette · Daily Kos · 2010/03/29 · 3 COMMENTS · Link

How Jane Hamsher Spends Her PAC Money

Firedoglake publisher Jane Hamsher has become one of the most polarizing figures in the liberal blogosphere, moving people sharply to the pro or con column with her outspoken opposition to the health care reform bill, appearances on Fox News bashing the Obama administration and the letter she sent with conservative activist Grover Norquist demanding the resignation of White House Chief of Staff Rahm Emanuel.

Hamsher wields a lot of influence by operating two Democratic political action committees, FDL Action PAC and Accountability Now PAC. By the end of 2009 these PACs had accumulated $454,000 from thousands of individual donors. Because all PACs are required by law to report their donors and expenditures with the Federal Election Commission, I thought the FEC disclosure database would provide a revealing glimpse of how money is moving through the netroots.

PACs have different policies regarding whether they compensate the people who run the committees. Some don't accept one cent of donor money and devote it all to their cause, while others pay themselves salaries, travel expenses and office rent. I interviewed Darcy Burner, a former Democratic Congressional candidate from Washington state who runs the not-for-profit Progressive Congress Action Fund, to learn whether it's common for left-wing PACs to pay themselves. "The bigger PACs require full-time staff to operate -- to raise money, to vet candidates [and] to file reports," she said. "I think the key question would be more one of whether people giving the money understand what it will be used for. ... There's a trust relationship with donors that requires some truth and transparency about how money is going to be used."

The FEC reports show that Hamsher's PACs are a significant source of income for Firedoglake, but my experience trying to question her about them suggests that she's not big on transparency.

FDL Action PAC supports liberal causes and candidates, often with targeted campaigns such as "Tell Blanche Lincoln and Mike Ross to Act Like Democrats." Accountability Now's stated goal is to recruit primary challengers against members of Congress who "sell out the interests of their constituents in favor of corporations," according to its site.

Accountability Now collected $113,695 in donations during 2009, as it reported to the FEC, and spent $169,992 that year on nine consultants. Six of those people managed the committee: The PAC paid Hamsher $24,000, another $24,000 to PAC cofounder Glenn Greenwald of Salon.Com, $65,710 to two executive directors and $38,047 to two management consultants.

The PAC also paid $4,000 to Firedoglake for "rent," according to its FEC filings. This expenditure is difficult to understand. Hamsher has operated her web site out of post office boxes at UPS Stores in Los Angeles and Falls Church, Va., and the Accountability Now web site states that "we have purposely avoided hiring a large staff or incurring the type of unnecessary expenses typically incurred by PACs (including even office rentals) in order to make our donors' contributions last as long as possible."

Out of the $234,920 raised by FDL Action PAC in 2009, $44,192 was paid to Firedoglake and other business entities affiliated with Hamsher, according to FEC filings. The PAC paid $16,411 to Firedoglake for "shared general administrative expenses," $14,111 to the site for "list purchase," $9,920 to CommonSense Media for "online advertising" and $3,750 to KMP Research for "strategic consulting."

The reasons for the expenditures are provided on the filings by PAC treasurer DeVeria Flowers. The list purchase is presumably the sale of a mailing list from the Firedoglake web site to its own PAC. CommonSense Media is a liberal ad network run by Hamsher and KMP Research is a business entity that Hamsher uses in both PACs to pay herself. It has the same post office box as Firedoglake in Falls Church.

Two people who Firedoglake paid to work towards passage of health care reform in 2009 don't show up in FDL Action's FEC filings for the year. FDL raised funds in July 2009 for Eve Gittelson and Noelle Cigarroa Bell to "work full time on this until a bill passes." Gittelson and Bell, who write online as Nyceve and Slinkerwink, announced six months later that they "no longer work with, or receive funds" from Firedoglake. None of their political activity is reflected in the PAC's filings, which raises the question of where donations were sent and how the women were paid.

Trying to understand how the PACs operate, I interviewed several former Firedoglake employees and tried unsuccessfully for the last five days to get Hamsher or Flowers to answer questions about specific expenditures. Flowers did not respond to emails. In an email exchange Sunday, Hamsher refused to answer any questions about how her PACs spend their money.

Instead, Hamsher questioned me repeatedly to see if I'd tell her which employees talked to me and what allegations they might have made. "I'm assuming from your answer that no former FDL employees have made statements or provided any information that will be used in the article," she wrote in an email, "since you have not informed me of nor allowed me to respond to any."

With one exception, the employees spoke to me off the record so I'm not passing along what they said. They were asked the same questions posed to her. PACs are accountable to the public for where their donations are spent. The only person who had trouble giving me an answer was Hamsher.

In December, Hamsher used FDL Action to urge the Susan G. Komen for the Cure Foundation to fire Sen. Joe Lieberman's wife Hadassah Lieberman as a consultant because of her work for a health industry lobbying firm. Hamsher wrote, "Each year they take in hundreds of millions of dollars from people who want to end the suffering of those who are fighting breast cancer. How these donations are channeled, therefore, is of great concern to those those who have invested untold amounts of money and support in its work."

The same principle is true here. As of this morning, FDL Action PAC has collected more than $270,000 from around 9,100 individual donors.

In the six years since she founded Firedoglake and named it after her fireplace, dog and the Los Angeles Lakers, Hamsher has built a well-oiled outrage machine that's now firmly pointed at the White House and its Democratic allies in Congress. These headlines from Hamsher's blog posts show that she's mad as hell and she's not going to take it anymore:

• White House Executive Order: ---- --- to Planned Parenthood
• Do Conrad and Durbin Just Love Banks, Or Really Hate Students?
• Ha Ha. ---- You, Harry Reid. Kicking Your Ass is Going To Be Fun

Hamsher's exceptionally good at getting people to put their money where her mouth is. But because Firedoglake is a blog that's dependent on financial support from PACs, it makes me wonder how much of her outrage is real and how much is driven by the constant need to fire up donors.

I posed that question to David Ferguson, who used to be in charge of Firedoglake's "Late Night FDL" feature under his pseudonym TRex. He replied, "I would hope that Jane wouldn't be so cynical as to exploit her readers in any way. I do know that working for her, there was a constant sense of crisis. Everything was always a blazing, four-alarm emergency, and I think some of that is what comes through on her blog. I don't know whether that's something she's working for effect or if that's just the way she is. Some of her alliances over the last year have genuinely surprised me, though, particularly with regard to the flap over the health care bill."

2009 Accountability Now expenditures to managers and consultants:

The photo of Hamsher was taken by Neeta Lind and is available for reuse under a Creative Commons license.

Politics · Pacs · Firedoglake · 2010/03/29 · 7 COMMENTS · Link

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