Complaint Review: Allied Interstate Verizon Wireless

Hi Petmommy,

Regarding the information that must be sent out within five days of the first phone call, it looks like we're on the same page now. In your original report, you stated that they have to send the "validation" (in other words, proof of the debt) information in that first letter. As you can see from the portion of the Act you showed us, this is not required. What is required is a letter identifying the original creditor, the amount of the debt, and the statutorily required notices. One of these notices regards your right to request validation.

Regarding the issue of not having a contract between you and a "junk debt buyer," here's how it works: when a debt buyer "buys" your debt, what it is actually buying, in a legal sense, is the right to stand in the shoes of the original creditor. There is no need for a new contract for the debt buyer to have a valid and enforceable right to the debt. The reason why is complex and involved, but I'll give it a shot anyways.

In any contract, there are benefits and detriments flowing both ways. The benefits are "assets" and the detriments are "liabilities." For example, let's consider that I'm having surgery. I enter into a contract for services with the physician. The asset I have gained is the right to demand a surgical procedure that will be performed in accordance with certain standards, the liability I have incurred is the obligation to pay for the operation. The asset the physician has gained is the right to collect money from me, the liability he has incurrred is the obligation to perform a surgical operation.

Absent a clause stating otherwise, each party to the contract is free to sell their "assets" and to outsource the liability. The big limitation on this is that, if the transfer of the benefit or detriment materially alters the original contract, the original contract may be voided, which is part of a novation. So, in my example, the surgeon wouldn't be able to transfer his obligation to a firefighter because this would be a material alteration of the agreement.

However, the transfer of the right to collect on the debt is rarely, if ever, seen as a material alteration of the original contract. So no new contract is needed - the debt buyer just replaces the original creditor in the original contract.

NOW, here is why, despite all this, junk debt buyers try to trick you into entering into a new contract (i.e. via a payment arrangement). Most of the debt purchased by these outfits is either past, or very close to past the statute of limitations for legal collections. If a new contract can be created, the legal effect is to create an entirely new debt with an entirely new statute of limitations.

You mentioned that you were considering a class action against one or more collectors. Class actions are, by far, the optimal way for the FDCPA and other consumer protection laws to be put to good use. But they are far beyond the scope of my capabilities, and they aren't always (or even usually) in the best interest of the individual consumer.

The great thing about FDCPA cases is that the Act provides for attorney fee awards, so if you are successful your opponent gets to pay for your lawyer. This makes FDCPA class actions very attractive to a handful of law firms that engage primarily in such cases. With a little online research, you should be able to find one fairly close to you. They should offer a free initial consultation to see if you have a viable case.

Best regards!

Hi Tim:

I do appreciate your comments, and am always willing and wanting to learn.  However you stated a debt collector is NOT required to furnish validation/verification of the debt, that one has to ask for it.   The words SHALL and SEND tells me that one doesn't have to ask for verification. 

I am copying and pasting a part of the FDCPA in regards to that section.

Section 809(a) requires a collector, within 5 days of the first communication, to provide the consumer a written notice (if not provided in that communication) containing

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing

(1) the amount of the debt; and

(2) the name of the creditor to whom the debt is owed; along with a statement that he will

(3) assume the debt's validity unless the consumer disputes it within 30 days, -

a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) send a verification or copy of the judgment if the consumer timely disputes the debt, and -

 a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) identify the original creditor upon written request -  a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

As to the obligation, I am aware that this is and can be a gray area.  I know of people who have lost in Court against a Debt Collector.  But, I was also referring more to the debt buyers, who purchase debts for pennies on the dollar; where the debt was not assigned per another original contract; which a majority of the time is the case.

In this situation no contract /agreement exists between Debt Collector and Consumer.  The Debt collector boldly calls and harrasses the consumer to create a contract / agreement where one apparently doesn't exist between them; as the original creditor is no longer in this case.

I will definitely agree I misread the Civil Actions and violation limits in the FDCPA.  Thank you for clearing that up.  I will have to change my information on my posts. 

And if you are an Attorney, or knows of one, who'd like to take a case; which has the potential for a Class Action Lawsuit, I'm looking to be represented, against a couple of Collection Agencies for various documented violations.   And I'm sure there strategies are also used the same way on other consumers, as other posts under phone # look ups indicate. 

I admire your intentions and your efforts. Kudos on boning up on the laws and using them to your advantage.

However, there are several mis-statements of the law in your report.

1) "Federal Law says you don't have an obligation to Collection Agencies or Debt Collectors."

This is not correct. There are certainly cases out there where individuals are being hounded by collection agencies for debts that are not theirs, but there is no federal (or state for that matter) law that says, in cut-and-dry terms, that consumers have no obligation to collection agencies.

2) "Once a debt collector makes contact with you, they also have to contact you within 5 days after the first phone call, letter etc., and give you validation/proof or judgment of the debt."

This is an inaccurate meshing of a few different portions of the FDCPA. Here's how it really works: within five days of making an initial telephone contact with you, and assuming that they have your address, a collection agency must send you a written notification stating that they are attempting to collect on this debt. The letter must contain certain notifications required per the FDCPA. One such notification is your right to demand validation of the debt. Absent a written validation request, the collection agency is under no obligation to provide proof that you owe the debt. You ARE required to ask for it.

3) "Most collection agencies, purchase your delinquent debt for pennies on the dollar.   Guess what? It is no longer your debt!!!"

Yes it is. But I fully understand the reporter's confusion over this. Yes, the only agreement you entered into was that with the original creditor. However, in the VAST majority of cases, this agreement will contain a clause allowing the creditor to transfer its rights in the debt, or to hire an outside agency to collect on the debt.

And such clauses aren't actually necessary, so even if they aren't there, the debt can still be transferred and/or collected by an outside agency. I'll explain this further in the next section . . .

4) "In the Law of Novation: if a debt is purchased by another, for that to be a legal owed obligation, a new contract / agreement has to be written and signed by all parties."

"Novation" is a term of art in contract law. Novation consists of an act that nullifies an existing contract or a term therein. It's a well settled principle of contract law that the transfer of someone's rights to the benefits of a contract does not amount to a novation unless the contract specifically states otherwise or the act materially alters one side's duties under the original agreement. Selling the debt, or having an outside agency collect it, does not materially alter the debtor's duty to pay. It just requires the debtor to pay someone else.

In other words, it is perfectly acceptable, legal, and effective for a creditor to sell its right to collect your money. No new contract is needed.

5) "if a Debt Collector violates any one harrassment or other law in there; Federal Laws says you can sue them for $1,000.00 per violation."

Not entirely correct. This is a mistake that many people make in reviewing the FDCPA. In a successful FDCPA lawsuit, a plaintiff can be awarded actual damages (money actually lost due to the activities of the collector) or "statutory" damages of no less than $100 and no more than $1000. And this is NOT per violation - it is per collector account. So even if a collector is found to have committed five separate FDCPA violations, the maximum statutory damages are still $1000, not $5000.

The author's sentiments regarding avoiding communications with debt collectors, steering clear of payment arrangements, and the use of cease and desist letters are absolutely correct. Unless you are ready to make a lump-sum payment, either to settle the account in full or for a negotiated amount, it is virtually NEVER in your best interest to communicate with a collection agency.

Again, I applaud the author's intent and effort. Just keep in mind that the law is a VERY complex animal. The law regarding a specific area, such as debt collection, will invariably be composed of many different pieces. To fully understand the law, you must be able to look at all of the pieces and see how they fit together. Otherwise you will invariably end up misinterpreting the meaning of individual pieces.

Best regards!