Complaint Review: Fulton Friedman and Gulace

I am writing to file a complaint against Fulton Friedman & Gullace, LLP, P.O. Box 318050, Independence Ohio 44131, (877) 386-5396 and Asset Acceptance LLC P.O. Box 318037, Cleveland Ohio 44131, (800) 556-5510 in particular and the debt buying industry as a whole. These "companies" have won a judgment against me in court and have seized my bank account, despite my complaint filed with our local municipal court and the subsequent appeal.

The practice of debt buying and then litigation against poor people in this country is a scam and a rip-off and lacks any legal foundation.

If a debt buyer wins a judgment against you in court they then have the authority to garnish your wages, levy your bank account, put a lien on your property or even have you arrested for contempt of court if you fail to respond. This power comes from their ability to pursue civil litigation for which they have no legitimate authority to do.

To understand this you have to look at the practice of debt buying. What a buyer does is buy a “portfolio” of charged off debt from an original creditor or through a broker. When this account is purchased the buyer is not representing the party who is claiming to be harmed, but rather they are representing themselves. This fact alone means they should have no standing to bring a civil suit, as they have not been harmed.

Historically, since the beginning of the modern legal system, to prevail in a civil suit you must show, among other things, that you have suffered damages and you must show causation, meaning that the person you are suing is directly responsible for your loss.

The argument is made by debt buyers that contracts are assignable therefore that gives them standing to bring suit. However, when they purchase these account portfolios they are not buying a contract, they are buying the damages only! In contract law each party must bring a legitimate form of consideration to the table to support the note, meaning you must agree to do something in exchange for something else. In this case, a credit card company agrees to create a line of credit in exchange for your promise to pay. Debt buyers bring nothing to the table to support the note, they are only making a demand for payment, and therefore this is not a contract. Many credit card companies are also banks and offer services like checking and savings, certificates of deposit etc., debt buyers can’t even cash your check. They bring nothing to the table and just want money for doing nothing in return.

This brings us to the whole idea buying damages. Buying damages turns every concept of civil litigation on its head. Remember in a civil suit you must show that you have suffered damages and the person you are suing is responsible; therefore it is logically impossible to buy damages. If you look at what these debt portfolios are being sold for, you will find some being offered to small investors for as little as $5,000-$30,000, larger companies who buy from the original creditors can spend millions. Just because you spend $100,000 on a debt portfolio does not equal damages. Certainly the individual debtors on these nameless portfolios did not force the companies to buy them and cannot be held responsible for those decisions. The companies are buying these accounts on pure speculation.

Again, historically in civil litigation speculative damages are not allowed, meaning you can’t sue based on your assumption that you may have made more money if it were not for the actions of the defendant. You can only sue for monies that you can prove that you have lost. Buying debt portfolios is speculation pure and simple.

Consider the cost of these accounts. Currently the average cost of these accounts is about .07 cents on the dollar or, 7 dollars for every hundred. In my case, my credit card charge off amount was $840, which means the debt buyer suing me wound up spending about $60. However, when they purchase these accounts they are allowed to sue for the face value of the account, in my case this means they won about 13 times what they spent to purchase this account. Barring punitive damages, nowhere else in the law can you sue for more than you lost, especially not 13 times more, again, money for nothing and it is usury. In my case, my charge off date was in 2007, more than six years ago however, by keeping it in litigation and then handing it off to another company, there is no statute of limitations and these collections can go on for life.

The reason they keep getting away with these scams is the perception that people should have to be responsible for their debts. What a lot of people don’t realize is, the reason most people fall behind on their payments is because they don’t have any money. In this society, it is very easy to become overwhelmed by debt, even through no fault of your own, such as a situation where you have a collapsing economy or you suffer a job loss and unemployment. Often your situation changed dramatically from what it was when you signed up for these credit cards in the first place. So the question from a legal standpoint is bigger than whether or not a person should pay their debts rather, the question is, pay it to whom? Paying a debt buyer does nothing to satisfy your debt to the originator of the loan, your money only goes to the debt buyer who paid 60 bucks for the right to sue you. The precedential nature of this litigation is that harm and damages are something that you can purchase.   This is madness!

Which brings us to the question of the original creditor: What about the damages suffered by them? The short answer is there aren’t any damages to anybody. The banks have created a system where damages are impossible. When a credit card account becomes delinquent, the first thing the bank does is suspend the account. The account is still open but you can’t use it. However, the bank will keep it open so that they can continue to add charges to it. They will add over limit fees, late fees and interest for the next six months. It doesn’t matter how many times you call and write asking them to cancel this account, they will continue to keep it open just to pile on more charges that have nothing to do with your spending. At the end of the six months, they will charge it off. This means they will notify the credit agencies that they have charged off your account, and then they will write off that amount as bad debt and get a 100% tax credit for that amount.

Look at the anatomy of a credit card: Back in the mid 90’s when I got mine, it was customary to charge an initiation fee or monthly membership fees. These were pure profit for the companies. Every transaction makes money for the banks with fees charged to both the buyer and the seller. In my case, I used my card for years making money for the bank every step of the way. When the card went into default they loaded it up with $340 dollars that I didn’t spend, and took a tax credit based on that amount, 68% over the original $500 credit limit, clearly usurious. They made money when the account was open and cashed out big time when they charged it off and they didn’t suffer a nickel’s worth of damages and had no right to sell this account to any one else.

Consider how our financial system works: Banks are governed by the Federal Reserve, under current regulation they are required to maintain reserves amounting to 10% of their assets, meaning for every dollar that they lend they only have to keep a dime on reserve. However, when they create a transaction account for a credit card, they don’t lend you a dime from their reserves. Instead they create, for example, an account with a $500 credit limit that you agree to pay into and then they add $500 dollars to their assets. The merchants are then paid with money that the banks create out of thin air electronically. Of course if anybody else were to create money electronically it would be considered counterfeiting.

The Federal Reserve itself is a point of legitimate controversy, as the Constitution specifies that Congress shall coin the money and regulate its value. To pass the Federal Reserve Act without altering or amending the Constitution creates an inherent conflict in the law.

Let’s review: A highly controversial private banking system allows member banks to print their own money by creating transaction accounts and getting people to agree to pay back money that they were never lent in the first place. Any default in an agreement to pay into these transaction accounts allows the bank to create even more money in fees and charges on these accounts and take windfall profits when these accounts are charged off and a tax credit is taken, so the system doesn’t even allow for the possibility for the bank to take a loss or suffer damages. Nonetheless, these accounts are then bundled and sold blindly to the highest bidder, to someone who was never a party to the contract, who never offered any consideration to support the note, who has never suffered any harm or damages in any way, rather, is spending tens to hundreds of thousands of dollars to buy these portfolios, indicating that these companies are not operating from a position of poverty or need to recover this money that they never lent. And then, these companies are allowed to sue people in poverty for the full face value of the charged off debt even though they bought these accounts for pennies on the dollar. And then they use these judgments to attach liens to poor people’s property, freeze their bank accounts and even have them put jail.

This is a shameful system and there isn’t a single aspect of this system that is legal or proper. It is a system, which has no concept of right and wrong. It is this system of which Fulton Friedman and Gullace, and Asset Acceptance are a part. Their collection tactics are illegal and immoral. In fact both of these companies have had numerous complaints regarding their collection practices and Asset Acceptance was fined $2.5 million by the FTC.

For the good of the country, these companies and the system they serve need to be shut down.