Debt collection, like payday lending is a legitimate business that provides a needed service to a certain segment of the economy. While the two enterprises serve different constituencies, when they go bad, they seem to prey upon the same pool of victims. Accordingly, we were heartened to learn of the recent settlement reached by 18 states in their action against NCO Financial Systems Inc., a company accused of misleading and abusive debt collection practices.
It should be noted that we staunchly support the idea that people should pay what they owe and do so on time and in accordance with whatever agreement they have entered with a creditor. As the Good Book says, “… render unto Caesar…”
That said, we are emerging from an era of dubious lending by financial titans that represents the greatest short-sell of the American dream in national history. Big banks made suspect loans to those with shaky credit, real estate speculators and pretty much anybody with the ability to mark their “X” on a credit application. Yes, there’s plenty of blame to spread across the financially pock-marked landscape. Even so, kicking a person when they’re down is anathema to the American way (We could digress into the specter of rocketing health care costs, but that is a sermon for another day). We might not always root for the little guy, but we don’t like to see him get trounced just because the bully is able.
This settlement doesn’t level the metaphorical playing field, but it assesses a few yards of penalty. According to an Arkansas News Bureau report, State Attorney General Dustin McDaniel announced that NCO Financial Systems Inc. has agreed to pay $950,000 for consumer claims, $50,000 of which will go to Arkansas consumers. NCO Financial also will pay the states $575,000, $26,562 of which will go to Arkansas.
We all know that $76,562 doesn’t right a lot of wrongs, but it’s a start. As McDaniel detailed, consumers who think they may have a claim must meet certain criteria: A consumer paid NCOF a third-party debt the consumer did not owe; a consumer overpaid interest on a third party debt that was not supported by the underlying agreement between the debtor and original debt holder; or a consumer paid more on a debt than the amount NCOF had agreed to collect to settle the account. McDaniel further clarified the state’s position on excessive debt collection practices: “Federal and state law protects Arkansas consumers from misleading or harassing debt collection practices, and I encourage consumers who are subject to this type of activity to call our office… As this settlement indicates, we are willing to take action against debt collectors who attempt to take advantage of consumers, especially during these difficult economic times.”
While this is hardly in the category as the settlement against tobacco companies, it provides a glimmer of hope that someone out there is watching over our legal interests. To be sure, this is a piecemeal, day-late, dollar-short remedy, but at least it’s something. It sends a message that debt collectors must operate within limits. While we’re confident that most do, this settlement should serve as a reminder to all.
Arkansas consumers who believe they have a valid claim should contact the Attorney General’s Office at (501) 682-2341 or (800) 482-8982. Valid claims will be submitted to NCOF and NCOF will provide payments to eligible consumers.