Debt collection

A Georgia man believed responsible for a debt relief scheme that defrauded consumers out of more than $25 million was arrested yesterday by federal agents.

West Virginia Attorney General Darrell McGraw's office announced today it has reached settlements with two collection agencies, Allied Interstate of Minneapolis and Jefferson Capital Systems of St. Cloud, Minn., and one debt buyer, Wilhelm, West, Kacey & Associates (WWKA), of Canton, Ga. - all of which were being investigated for wrongful collection practices. The companies agreed to pay restitution and cancel debts totaling $404,091 to 446 West Virginia residents.

The average credit score for U.S. consumers dropped two points to 669 at the end of January from 671 at the start of the year, according to a report released today by Credit Karma Inc., a San Francisco-based company that tracks national credit scores. The average score is down eight points from just two months ago. Credit Karma pulled its new data from 100,500 users.

With chargeoffs historically high, debt volumes up and liquidation rates down, choosing whether to invest in technology or stand pat has taken on grave importance.

Asset Acquisition Group LLC, a debt buyer in Denver, purchased a $240 million loan portfolio from a large national bank. It is one of the largest purchases for the company since it opened in 1992, according to Donna J. Meier, president and chief executive, who added that the deal is part of an "amplified acquisition plan for 2010."

Portfolio Recovery Associates Inc., a Norfolk, Va. debt buyer, today reported cash collections rose 20% to a record $95.3 million in the fourth quarter ended Dec. 31, up from $79.2 million in the year-ago period.

The credit crisis is creating new opportunities for collection shops to play a larger role in the success of a company. It also creates an imperative for management to foster excellence.

For the third consecutive month, the Credit Manager's Index is signaling that the recession is over and the economy is expanding, according to a report by the National Association of Credit Management (NACM).

Illinois Attorney General Lisa Madigan today filed four lawsuits against seven debt settlement firms, alleging they are misrepresenting the services they provide to consumers and the impact those services will have on credit ratings. Six executives with the companies also are named as defendants.

Legislation set to be introduced in Minnesota later this month would ban the practice known as "re-aging" delinquent accounts, making it more difficult for debt buyers to collect debts - particularly in cases where the amounts owed cannot be verified.

The Federal Trade Commission has proposed a rule that would ban companies that promote foreclosure and mortgage modification programs from charging upfront fees. Instead, such companies would only collect payments after providing services.

Debt buyer Asta Funding Inc. today reported a net income of $2.5 million for its fiscal first quarter ended Dec. 31, compared to a net loss of $7.8 million in the same period a year earlier. The company, based in Englewood Cliffs, N.J., buys unpaid consumer and credit card loans and tries to collect them.

Three leaders of a Western New York collections operation under investigation for illegal collection practices, including impersonating law enforcement, have been banned from future involvement in the industry, New York Attorney General Andrew Cuomo's office said today.

Encore Capital Group Inc. today reported fourth-quarter net income of $8.4 million compared to a net loss of $2.1 million in the same period a year ago. For the full year 2009, the company reported net income of $33 million, up from $13.8 million in 2008.

An estimated 712 different collection agencies and creditors are named in 851 consumer statute lawsuits filed nationwide in January, according to data from U.S. District Court complaint dockets. The monthly total includes 716 cases citing violations of the Fair Debt Collection Practices Act (FDCPA), up from 551 in January 2009. The number of Fair Credit Reporting Act lawsuits actually dropped last month, to 77 from 109 cases in January 2009.

Debt buying and collection industry leaders have aggressively lobbied lawmakers to nix - or at least revamp - the Consumer Financial Protection Agency blueprint, which would consolidate financial industry oversight.

Nearly 25,000 consumers deceived in a collections scam operated by three companies, using the name National Check Control, will receive $1.6 million, Federal Trade Commission spokesperson Claudia Bourne Farrell tells Collections & Credit Risk.

Traumatized by shrinking retirement assets and home values - job losses, too - consumers continue to dramatically cut spending while juggling their monthly bills to stay afloat.

CompuCredit Corp., an Atlanta financial services company, confirmed it will lay off more than 300 collection agents and supervisors in two Atlanta area collection call centers that will be closed by March 31, a spokesperson said late today.

Portfolio Recovery Associates Inc., a Norfolk, Va. debt buyer, announced this afternoon a "mutually agreeable resolution" to a racial discrimination lawsuit filed by a former executive.