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I have been researching issues surrounding debt collection activity and fraud. Apparently, some debt collectors may be violating racketeering laws (RICO), as well. In a New York Federal Court case, the debt collection company Mel Harris and Associates, and its affiliates, have been accused of violations of the Fair Debt Collections Practices Act, the Racketeer Influence and Corruption Organization Act, and Fraud. The lawsuits stems from a scheme by the Defendants in which process servers fraudulently told the court they properly served debt collections lawsuits. Instead, they were routinely engaging in "sewer service" and never served the legal papers. Further, the Defendants are accused of falsifying Affidavits en masse in a wholesale fraud on the court. The lawsuit was approved as a class action on behalf of up to 100,000 consumers that were subject to default judgments, wage garnishments, and frozen bank accounts at the hands of Mel Harris and Associates, and its affiliates. The Consumer Financial Protection Bureau in conjunction with the Federal Trade Commission has presented an Amicus Brief in support of the Plaintiffs. The tide is turning against debt collectors. I don't believe this case is an anomaly, but points out what is occurring across the country as debt collectors' daily business practices. I've long believed the debt collection industry and their business practices were a massive fraud scheme. Here's one example where the accusation is not just fraud, but racketeering. Some great articles on the story: http://www.forbes.com/sites/danielfisher/2011/01/04/judge-allows-rico-suit-over-debt-collection-tactics-to-proceed/ http://blog.credit.com/2011/01/suit-debt-collectors-sewer-service-was-racketeering/ http://www.law360.com/articles/508148/2nd-circ-weighs-100-000-member-debt-collection-class CFPB & FTC Amicus Brief: http://www.ftc.gov/sites/default/files/documents/amicus_briefs/sykes-v.mel-s.harris-associates-llc/131113sykesharrisbrief.pdf 18 U.S. Code § 1962 - Prohibited activities: http://www.law.cornell.edu/uscode/text/18/1962
I have always worried about Identity thieves who had account info for Credit Cards from later failed banks attempting collections or selling "accounts" in the secondary collections markets. Has there ever been instances where this has happened? I am looking into it because with the unregulated mess debt collections are now that this possibly could happen. Scenario #1 Identity theft ring waits and has information of accounts. The bank which the accounts are from has failed. The Id Theft ring forms a collections LLC. They file lawsuits on the accounts they have already. The get answers in 1 of 100 cases they conduct discovery and get even more info and proceed to open accounts in defendants names. at trial they dismiss. Scenario #2 Id theft ring sells account data through an account trading portal such as C********XX as a hypothetical. Then the id theft ring dissolves the LLC. and slinks away Scenario #3 Id theft ring sells the info directly to JDB1, JDB1 groups the accounts in a portfolio of accounts for sale to JDB2, because the JDB1 has bills of sale minus the account numbers it all gets washed because the JDB's have id theft insurance, and OC's destroy records after they sell the accounts there is no way for a defendant to find out. That is what I am worried about. It may have happened to some of us already. How do we fight that. Most banks when they have fraudulent accounts just write it off Maybe because the deductible is high? and then the Id theft rings have the data for the account maybe just the 5 data cells for a spreadsheet.