Debt collection

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.

A former clerk at Pioneer Collection Agency received three years probation today for stealing a $20,000 check intended for the New Jersey Division of Taxation.

CompuCredit Corp., an Atlanta financial services company, will close four collection call centers by March 31. An estimated 740 employees - mostly collectors - will lose their jobs as a result.

A home mortgage lender that previously settled Federal Trade Commission charges of discriminatory lending will have to hire an outside consultant to make sure it does not illegally charge higher prices to African-American and Hispanic consumers, according to the FTC's Bureau of Consumer Protection.

The general public has long held a belief that the collection industry is recession-proof. In 2009, if not before, that belief may have been proven wrong once and for all as most industry leading companies reported declining profits and liquidations and rising impairment charges.

Veterans whose tax refunds and benefits were withheld by the U.S. government will be repaid $7.4 million under settlement terms of a class-action lawsuit that questioned the government’s collection tactics. A total of 6,715 veterans will receive approximately $10,000 each. A federal judge in San Francisco approved the settlement.

The U.S. economy grew at the fastest pace in more than six years during the fourth quarter as businesses made less-aggressive cuts to inventories and stepped up spending, according to a report today by the Commerce Department.

As economists and government officials declare the recession over because of an artificially funded rise in GDP, the orphaned byproduct of the downturn - high unemployment - remains alive and well and will extend its tentacle of impact on consumer collections for many months.

The Conference Board's Consumer Confidence Index, which increased in November and December, improved again in January. The index stands at 55.9, up from 53.6 last month. The baseline for the index, set in 1985, is 100.

The Commercial Collection Agency Association (CCAA) reports that its members received a record volume of business-to-business accounts for collection in 2009.

As the frontrunners in Florida's gubernatorial race debate who should regulate rogue collection agencies - each arguing the other failed to police the industry as required by their current political roles - the collection industry will closely track developments in the race leading up to the November election.