Posted by: Adrienne Carter on May 29
This from a finance colleague, Jessica Silver-Greenberg, who will soon be joining the Unstructured Finance blog:
Rising unemployment, surging gas prices and a prolonged recession have created the perfect storm for American families, pushing consumer debt levels to record highs. With more consumers facing the menacing knock from waiting debt collectors, New York Attorney General Andrew Cuomo wants to ensure that when the bell tolls or phone rings, the collection tactics fall within the confines of the law. He announced this week that he had shuttered one debt firm, and expanded his probe into twenty other debt collection firms, alleging unfair practices and deceptive ways of wrangling money from customers.
The first target of Cuomo’s probe is Lamont Cooper, an owner and operator of several firms within the state. Cuomo’s office shut down two of Cooper’s firm called Emanee Development, Inc., and Dial Tech LLC. Cuomo alleges that the firms violated the Fair Debt Collection Practices Act, the law which governs debt collectors’ behavior, when they threatened to arrest consumers, and harangued people by calling them criminals.
Cuomo’s investigation unfolds against a rising tide of consumer backlash. Last month, President Barack Obama hauled credit card company executives to Washington, and decried certain billing practices as outright unfair. Then Congress quickly passed a law reining in unfair credit card billing practices, after the bill had languished in Congress without the necessary support for over a year. It looks like debt collectors could be the next business forced to reform their ways or suffer public lashings and investigations. “At a time when New York families are already struggling with unprecedented levels of debt, unscrupulous collection agencies add salt to an open wound,” Cuomo said in a press release.
Probes into collection practices will continue, Cuomo says. His office plans to scrutinize collection practices, collector compensation and how debt firms deal with complaints. Cuomo has said he wants to halt harassing phone calls, frivolous lawsuit threats from collectors, and other practices which violate the law.
BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.