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    Republican Senator Tells Hospitals to Stop Suing Poor People

    Friday, January 23rd, 2015

    Home > Debt Articles > Republican Senator Tells Hospitals to Stop Suing Poor People
    Republican Senator Tells Hospitals to Stop Suing Poor People
    It might not be right but it is what it is. Debt collectors and others know how to get you to do what they want by pushing your fear buttons. They do it because it works.

    Republican Senator Tells Hospitals to Stop Suing Poor People

    by Paul Kiel, ProPublica, and Chris Arnold, NPR, Jan. 22, 2015, 5 a.m.

    This story was co-published with NPR.

    Sen. Charles Grassley said nonprofit hospitals could be breaking the law when they sue poor patients over unpaid bills and issued a stern warning to one Missouri hospital that he hopes reverberates nationwide.

    Citing a ProPublica and NPR report, Grassley, R-Iowa, sent a letter Friday to Heartland Regional Medical Center, a nonprofit hospital in St. Joseph, Missouri, that has seized the wages of thousands of lower income workers who were unable to pay their medical bills.

    Under federal law, tax-exempt hospitals are supposed to provide care to those who can’t afford it, but the requirements are fairly vague. Even so, Grassley said the hospital, which recently rebranded as Mosaic Life Care, had, at a minimum, stretched the law to the breaking point. In his letter to Mosaic’s CEO, Grassley wrote that the hospital “may not be meeting the requirements to be a nonprofit, tax exempt hospital.” He also asked a battery of questions about the hospital’s treatment of lower-income patients, its debt collection practices, and how it administers financial assistance.

    “Reports detail a number of instances where Mosaic failed to identify patients who would qualify for financial assistance and who have since been subject to abusive billing and collection practices,” Grassley wrote. “The practices appear to be extremely punitive and unfair to both low incomepatients and taxpayers who subsidize charitable hospitals’ tax breaks.”

    As ProPublica and NPR reported, the hospital has its own for-profit debt collection subsidiary, Northwest Financial Services, which files thousands of lawsuits each year. From 2009 through 2013, the company garnished the pay of about 6,000 people and seized at least $12 million.

    In response to the story, the hospital announced a review of its debt collection practices. Tama Wagner, chief brand officer for Mosaic, said the hospital expected that new recommendations would be presented to the hospital’s board next month. “Our goal is to do the right thing,” she said.

    In an interview, Grassley said the issue of nonprofit hospitals dodging their charitable responsibilities is not a new one. About a decade ago, as the chair of the finance committee, he launched an investigation into just what these hospitals were doing to warrant their valuable tax exemptions.

    Grassley, now chair of the judiciary committee, said he was “astounded” that, years later, some hospitals continued to aggressively pursue the debts of poor patients who should have qualified for financial assistance. He’d hoped that Congressional focus on the issue would have persuaded hospitals to fulfill their mandate, he said, but “some hospitals, you hit them over the head with a two-by-four, and they still don’t get the message.”

    The 2010 Affordable Care Act contains a provision, co-authored by Grassley, which requires hospitals to make “reasonable efforts” to determine whether patients qualify for financial assistance before taking an aggressive step like filing a lawsuit. It didn’t appear that Mosaic had made such efforts, said Grassley. As ProPublica and NPR reported, the hospital said it had publicized its financial assistance policy in a number of ways. But Mosaic put the onus on patients to actively seek assistance and said those that didn’t, and had their wages garnished as a result, were truly at fault.

    “It seems like Mosaic turned [the law] on its head,” said Grassley. The primary responsibility for identifying patients who need assistance lies with the hospitals, he said.

    The IRS recently issued new rules for nonprofit hospitals. They provide more specific guidance on what steps hospitals must take, at a minimum, to evaluate patients for financial assistance. But like all laws and rules governing nonprofit hospitals, they provide hospitals wide latitude in how to interpret the law.

    Grassley acknowledged this, but said he hoped his focus on Mosaic’s debt collection practices would remind other hospitals of “their humanitarian responsibilities” and “the responsibilities they have as a nonprofit.”

    If they don’t change their behavior voluntarily, Grassley said, their responsibilities may have to be spelled out in law.

    “If they don’t get the message now,” he said, “we’ll have to work towards getting the ideal language in the legislation.”

    Save Phone Messages from Debt Collectors

    Thursday, January 22nd, 2015

    Here is a great article on why you should save all phone messages from debt collectors.   We also recommend saving all correspondence to and from the debt collectors, and all evidence you have on the status of the debt and any dispute you have about the debt.    Give us a call if you need help dealing with debt collection abuse.

    Zombie Debt Stalks Consumers

    Thursday, January 22nd, 2015

    Great link below to an article on the impact of Zombie Debt on consumers:

    If you are being sued or harassed by a debt buyer, give us a call and we’ll see if we can help.


    Banks Stop Selling Account Data to Payday Lenders Amid Pressure

    Thursday, January 22nd, 2015

    American Banker, an industry publication, reports that U.S. banks are cutting off payday lenders’ access to a database of account information used to evaluate potential borrowers because  regulators are seeking  to rein in abusive practices.

    About half the people with bank accounts in the U.S. are tracked by a specialized  consumer reporting agency known as Early Warning Services LLC, owned by five of the nation’s biggest banks. Hundreds of banks use Early Warning to prevent fraud by sharing their customer data, Thomas said. The company is owned by Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., BB&T Corp. and Capital One Financial Corp.

    Early Warning has been cutting them off.  The company said in a letter that regulations are too complex, and it’s difficult to tell if short-term lenders are following the law.  It did not want to facilitate illegal activity.


    The Federal Deposit Insurance Corp. and other regulators have pressured banks to stop dealing with payday lenders in a drive called “Operation Choke Point.”


    Federal Trade Commission: Online Payday Lending Companies to Pay $21 Million to Settle Federal Trade Commission Charges that They Deceived Consumers Nationwide Lender Will Waive $285 Million in Other Charges

    Saturday, January 17th, 2015

    Online Payday Lending Companies to Pay $21 Million to Settle Federal Trade Commission Charges that They Deceived Consumers Nationwide

    Lender Will Waive $285 Million in Other Charges


    Two payday lending companies have settled Federal Trade Commission charges that they violated the law by charging consumers undisclosed and inflated fees. Under the proposed settlement, AMG Services, Inc. and MNE Services, Inc. will pay $21 million – the largest FTC recovery in a payday lending case – and will waive another $285 million in charges that were assessed but not collected.

    “The settlement requires these companies to turn over millions of dollars that they took from financially-distressed consumers, and waive hundreds of millions in other charges,” said Jessica Rich, Director of the Bureau of Consumer Protection. “It should be self-evident that payday lenders may not describe their loans as having a certain cost and then turn around and charge consumers substantially more.”

    The FTC filed its complaint in federal district court in Nevada against AMG and MNE Services and several other co-defendants, in April 2012, alleging that the defendants violated the FTC Act by misrepresenting to consumers how much loans would cost them. For example, the defendants’ contract stated that a $300 loan would cost $390 to repay, but the defendants then charged consumers $975 to repay the loan.

    The FTC also charged the defendants with violating the Truth in Lending Act (TILA) by failing to accurately disclose the annual percentage rate and other loan terms and making preauthorized debits from consumers’ bank accounts a condition of the loans, in violation of the Electronic Funds Transfer Act (EFTA). MNE Services lent to consumers under the trade names Ameriloan, United Cash Loans, US Fast Cash, Advantage Cash Services, and Star Cash Processing. AMG serviced the loans.

    In May 2014, a U.S. district court judge held that the defendants’ loan documents were deceptive and violated TILA, as the FTC had charged in its complaint.

    In addition to the $21 million payment and estimated $285 million in waived charges, the settlement also contains broad prohibitions barring the defendants from misrepresenting the terms of any loan product, including the loan’s payment schedule, the total amount the consumer will owe, the interest rate, annual percentage rates or finance charges, and any other material facts. The settlement order prohibits the defendants from violating TILA and EFTA.

    The Commission vote approving the proposed stipulated final order was 5-0. It was filed in the U.S. Court for the District of Nevada on January 15, 2015. The FTC’s action remains in litigation as to defendants SFS, Inc., Red Cedar Services, Inc., AMG Capital Management, LLC, Level 5 Motorsports, LLC, LeadFlash Consulting, LLC, Black Creek Capital Corporation, Broadmoor Capital Partners, LLC, Scott A. Tucker, the estate of Blaine A. Tucker, Don E. Brady, and Robert D. Campbell, and relief defendants Park 269, LLC and Kim C. Tucker.

    NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.


    Letter to Federal Communications Commission

    Friday, January 16th, 2015

    January 15, 2015
    Chairman Tom Wheeler
    Commissioner Mignon Clyburn
    Commissioner Michael O’Rielly
    Commissioner Ajit Pai
    Commissioner Jessica Rosenworcel
    Federal Communications Commission
    445 12th Street, SW
    Washington DC 20554

    Re: CG Docket No. 02-278

    Dear Commissioners Wheeler, Clyburn, O’Rielly, Pai and Rosenworcel:

    The undersigned national, state and community groups write this letter to request that
    consumer protections for the Telephone Consumer Protection Act (TCPA) be maintained.
    Congress passed the TCPA more than two decades ago to protect consumers from receiving
    annoying robocalls to cell phones, calls which invade privacy and disrupt lives. The TCPA requires
    that the owner of a cell phone provide consent to a business to call – or text – when using an
    autodialer (except for emergency purposes). Currently, robocalls (or texts) to cell phones are illegal
    unless the cell phone owner has provided consent. This basic protection remains essential at a time
    when so many people, particularly low-income people, rely on their cell phones as their primary –
    and sole – means of communications. Many of these low-income cell phone users cannot afford to
    waste valuable minutes on their cell phones to field unwanted robocalls and texts for which they
    have not given prior consent.

    We understand that the FCC is currently considering issuing new rules that would provide
    exemptions and safe harbors for businesses that use autodialers to call or text cell phones. For
    example, the debt collection and banking industries want the FCC to allow “wrong party” robocalls
    to cell phones without liability. If these exemptions were permitted, then it would not be the person
    who had provided consent who would receive the intrusive calls or texts on their cell phone.
    Instead, it would be the innocent bystander who may have obtained a new telephone number and
    never gave consent for these calls, or who has no relationship whatsoever to either the caller or the
    party who provided consent.

    Maintaining strong protections against these calls creates incentives for the industry to
    develop methods to avoid harassing people who have not agreed to be called on their cell phones.
    Companies can use available technology to determine whether cell phone numbers were transferred
    to new users. Businesses could use these technologies before calling new cell phone numbers.
    Instead, they want the right to continue robocalling wrong numbers, without liability.
    The proposed changes that the FCC is considering will open the floodgates for “wrong
    number” calls to cell phones. This would not only be an improper interpretation of the TCPA, but it
    would gut essential privacy rights of cell phone users. Only with strong remedies imposed on2
    industry for calling or texting wrong numbers (even when they have been reassigned to new users),
    will the industry be incentivized to create and use technologies and methodologies to ensure they are
    calling the person who actually gave consent to receiving autodialer calls and texts on their cell

    The fact remains, consumers hate unwanted calls and texts. Since 2003, over 223 million
    Americans have attempted to preserve their privacy by putting their phone numbers on the National
    Do Not Call Registry.

    1 Despite having this program in place, the FTC reported 3,748,655
    telemarketing complaints in 2013, of which at least 2,182,161 were reported as including a recorded
    message.2 The FCC similarly reports a dramatic increase in complaints with the number of robocall
    complaints doubling in the past two years to over 100,000 filed in 2012.3

    Given the fact that these
    alleged violations have increased exponentially since the TCPA was enacted, the FCC should not be
    attempting to weaken the current protections.

    We understand that there will be meetings this week between some groups and the staff of
    the Commissioners, and while most of us are unable to attend these meetings, we write to endorse
    the messages to be conveyed in these meetings:

    On behalf of consumers throughout the United States, please –
    • Do not reduce the consumer protections of the Telephone Consumer Protection Act.
    • Ensure that industry callers using autodialers to make calls or send texts to cell phones are
    fully liable when they call wrong numbers and reach consumers who have not provided
    consent for those calls.
    • Maintain the current system of liability for wrong number calls to create incentives for these
    industry callers to create reliable technologies to enable them to avoid wrong number calls.
    We hope that the FCC will resist the pressure from business and industry trade groups to
    weaken rules that require accuracy when sending robocalls to cell phones. Repeated unauthorized
    calls and texts to consumers’ cell phones invade privacy and cost money by using their precious
    minutes or limited text allowances.

    Thank you for your consideration of our views. If you have any questions, please contact
    Margot Saunders at the National Consumer Law Center, (202 452-6252,
    extension 104) or Ellen Taverna at that the National Association of Consumer Advocates, (202 452-1989, extension 109).

    1 Federal Trade Commission, Nat’l Do Not Call Registry Data Book FY 2013, at 4 (Dec. 4, 2013) (available at
    2 Id. at 5. 3 Statement of Eric J. Bash, FCC Enforcement Bureau Associate Chief, at Hearing Before the Senate Committee
    on Commerce, Science, and Transportation’s Subcommittee on Consumer Protection, Product Safety, and Insurance,
    Stopping Fraudulent Robocall Scams: Can More Be Done?3

    National Advocacy Organizations
    Americans for Financial Reform (AFR)
    Center for Digital Democracy
    Common Cause
    Consumer Action
    Consumer Federation of America
    Economic Opportunity Studies
    Free Press
    National Association for State Utility Consumer Advocates (NASUCA)
    National Association of Consumer Bankruptcy Attorneys
    National Association of Consumer Advocates
    National Consumer Law Center on behalf of its low-income clients
    National Consumers League
    National Housing Law Project
    National Legal Aid & Defender Association
    National Senior Citizens Law Center
    New America’s Open Technology Institute
    Privacy Rights Clearinghouse
    Public Citizen
    Public Justice
    Public Knowledge
    The Institute for College Access & Success4
    U.S. PIRG
    Woodstock Institute
    State and Community Advocacy Organizations
    Consumer Federation of California
    Sacramento, CA
    Consumer Watchdog
    Santa Monica, CA
    Housing and Economic Rights Advocates
    Oakland, CA
    Sacramento Employment and Training Agency
    Sacramento, CA
    San Diego Volunteer Lawyer Program, Inc.
    San Diego, CA
    TURN-The Utility Reform Network
    San Francisco, CA
    Florida Alliance for Consumer Protection
    Florida Legal Services
    Tallahassee, FL
    HOPE Outreach Center, Inc.
    Davie, FL
    Jacksonville Area Legal Aid, Inc.
    Jacksonville, FL
    Legal Aid Service of Broward County, Inc.
    Plantation, FL
    Legal Aid Society of the Orange County Bar Association, Inc.
    Orlando, FL
    Chinese American Service League
    Chicago, IL
    Chinese Mutual Aid Association
    Chicago, IL5
    LAF (formerly the Legal Assistance Foundation of Metropolitan Chicago)
    Chicago, IL
    Rural Broadband Policy Group
    Whitesburg, KY
    Better Business Bureau of Northeast Louisiana,
    Monroe, LA
    Massachusetts Consumer Coalition
    Boston, MA
    Consumer Assistance Council, Inc.
    Hyannis, MA
    Disability Law Center,
    Boston, MA
    Medical-Legal Partnership
    Boston, MA
    Metrowest Legal Services
    Framingham, MA
    Maryland CASH
    Baltimore, MD
    Maryland Office of People’s Counsel
    Baltimore, MD
    Public Justice Center
    Baltimore, MD
    Mid Minnesota Legal Assistance
    Minneapolis, MN
    Open Access Connections
    St. Paul, MN
    Graceful Seniors LLC
    Toms River, NJ
    Legal Services of New Jersey
    Edison, NJ
    Long Term Care Community Coalition
    New York, NY6
    MFY Legal Services, Inc.
    New York, NY
    Financial Guidance Center
    Las Vegas, NV
    Legal Aid Center of Southern Nevada, Inc.
    Las Vegas, NV
    Legal Services of Southern Piedmont
    Charlotte, NC
    North Carolina Justice Center
    Raleigh, NC
    Pisgah Legal Services
    Ashville, NC
    Reinvestment Partners
    Durham, NC
    Citizens Coalition
    Cleveland, OH
    Consumer Protection Association
    Cleveland, OH
    Friendship Foundation
    Cleveland, OH
    Ohio Partners for Affordable Energy
    Findlay, OH
    Pro Seniors, Inc.
    Cincinnati, OH
    Legal Aid Services of Oklahoma
    Oklahoma City, OK
    Philadelphia, PA
    South Carolina Appleseed Legal Justice Center
    Columbia, SC
    Fleet & Family Support Center
    Millington, TN7
    Tennessee Commission on Aging and Disability
    Nashville, TN
    Texas Legal Services Center
    Austin, TX
    Tidewater Community College’s Center for Military and Veteran Education
    Virginia Beach,VA
    Virginia Citizens Consumer Council
    Richmond, VA
    Virginia Poverty Law Center
    Richmond, VA
    Alliance for a Just Society
    Seattle, WA
    Northwest Consumer Law Center
    Seattle, WA
    Fairmont-Morgantown Housing Authority (FMHA)
    Fairmont, WV
    Mountain State Justice
    Charleston, WV

    Sixth Circuit Rules Against Collection Agency in FDCPA Out-of-Statute Debt Collection Case

    Wednesday, January 14th, 2015

    Sixth Circuit Rules Against Collection Agency in FDCPA Out-of-Statute Debt Collection Case

    Jan 13, 2015


    From ACA International

    Court reverses district court decision in Buchanan holding that an offer to settle a stale debt may misleadingly imply a threat of litigation in violation of the FDCPA.


    The Sixth Circuit Court of Appeals issued a 2-1 ruling in Buchanan v. Northland Group, Inc., No. 13-2523 (6th Cir., Jan. 13, 2015), on Jan. 13, 2015. The ruling reversed the trial court’s dismissal of a Fair Debt Collection Practices Act (FDCPA) action that challenged a dunning (collection) letter offering to settle a debt subject to the statute of limitations.

    At issue in the Buchanan appeal was the district court’s decision that a debt collector does not mislead a consumer and therefore does not violate the FDCPA by making a settlement offer to collect a debt without disclosing that the statute of limitations for filing a collection lawsuit has expired.

    Contrary to the district court’s decision, the Sixth Circuit ruled that a settlement offer to resolve an unpaid debt at a discount without disclosing that the statute of limitations had run on the debt could possibly mislead a “reasonable unsophisticated consumer” into thinking her debt is enforceable in court.

    In so ruling, the court remarked that “when a dunning letter creates confusion about a creditor’s right to sue, that is illegal,” under the FDCPA. The court also noted that “[a] misrepresentation about the limitations period amounts to a ’straightforward’ violation of [the FDCPA],” citing the Seventh Circuit Court of Appeals decision in McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1020 (7thCir.2014).

    Since the Sixth Circuit found that the question of whether a letter is deceptive and misleading is a question of fact that should be determined by a jury, the court remanded the Buchanan case back to the trial court for further proceedings to allow the consumer to present evidence that she was misled, confused and deceived by the collection agency’s letter.


    Daniel A. Edelman argued the case for the consumer

    Hospital Collection Cases

    Monday, January 12th, 2015

     The Obama administration has adopted sweeping new rules to discourage nonprofit hospitals from using aggressive tactics to collect payments from low-income patients.

    Under the rules, nonprofit hospitals must now offer discounts, free care or other financial assistance to certain needy patients. Additionally, hospitals must try to determine whether a patient is eligible for assistance before they refer a case to a debt collector, send negative information to a credit agency, place a lien on a patient’s home, file a lawsuit or seek a court order to seize a patient’s earnings.

    The rules, issued at the end of 2014  by the Treasury Department and the Internal Revenue Service, lay out detailed requirements for nonprofit hospitals that have or want tax-exempt status, about 60 percent of hospitals nationwide.

    The rules, published in the Federal Register on Dec. 31, address a peculiar feature of hospital finances: For decades, uninsured patients have been required to pay much more than Medicaid, Medicare and private insurers pay for the same services. Uninsured patients were often the only ones who paid full “list prices” at hospitals.

    Under the rules, patients eligible for financial assistance cannot be charged more than “the amounts generally billed” to people who have insurance through a government program or a private carrier.

    The rules clarify broadly worded provisions of the Affordable Care Act. Under the rules, each nonprofit hospital must assess the health needs of its community at least once every three years and take steps to address those needs. Hospitals that do not meet this requirement may be subject to a tax penalty of $50,000.

    In addition, each nonprofit hospital must establish and publicize a written policy stating who is eligible for financial assistance and how people can apply.

    Hospitals often go to court to collect unpaid bills. Their collection practices have been documented in hundreds of court decisions around the country. In many cases, the basic facts are not disputed: A patient received care. The hospitals often win by default because the patients do not show up in court.

    The rules generally require nonprofit hospitals to give consumers at least 120 days before taking “extraordinary collection actions,” which include reporting debts to credit bureaus and using debt collection agencies.

    Illinois statutes already impose restrictions on the ability of any hospital to collect debts without offering a payment plan and financial assistance.

    BBB: Beware of quick credit repair offers

    Monday, January 12th, 2015

    Better Business Bureau of Acadiana is warning consumers to beware of companies that falsely promise quick credit repair, often for high fees.

    “Local and national companies are claiming to be able to erase bad credit for upfront fees of $250 or more. Some even charge monthly fees after the first fee. The BBB has great concerns about companies in the credit repair industry that make promises they can’t keep,” said Sharane Gott with the agency.

    She said nobody can erase bad credit.

    “Consumers can have credit reporting errors corrected, but if it is a valid debt, it is reportable. No one can make bad credit scores simply disappear,” Gott said.

    She said numerous companies claim they can clean up your credit report so you can obtain a car loan, a home mortgage or even get a job.

    “Based on BBB experiences, these companies can’t deliver,” Gott said. “The truth is, no one can legally remove accurate and timely negative information from a credit report.”

    Not only are these companies making promises they can’t deliver, she said they are charging a great deal of money for a free service you can do yourself.

    “The law does allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost,” Gott said.

    “According to the Fair Credit Reporting Act, you are entitled to a free copy of your credit report if you’ve been denied credit within the last 30 days. You can also dispute mistakes or outdated items for free,” Gott said.

    She advised people to:

    Avoid any company that wants you to pay for credit repair services before they provide any services. It is against the law.

    Avoid any credit repair company that will not tell you your legal rights and what you can do yourself for free.

    Avoid any credit repair company that tells you not to directly contact a credit reporting company.

    Avoid any credit repair company that advises you to dispute all of the information in your credit report.

    Avoid any company that tells you it can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.

    Avoid any company that suggests creating a new credit identity or applying for an Employer Identification Number to use instead of your Social Security number. This is illegal, and it leaves consumers open to prosecution for fraud.

    “You can improve your credit report, but it takes time, a conscious effort and sticking to a personal debt repayment plan,” Gott said.

    To rebuild your credit, she advises starting by establishing credit.

    “A good credit history is essential. If you don’t have any credit cards, you might consider opening an account, using it sparingly and paying it off at the end of the month. Someone with no credit cards tends to be regarded as higher risk than someone who has managed credit cards responsibly,” Gott said.

    “Consumers are entitled to one free report from each of the three companies, from It is vital to check these reports for inaccuracies and dispute any errors,” Gott said. “Checking your credit reports does not affect your score.”

    People should also pay off their debt rather than move it around, she said. “Shuffling debt around from one line of credit to a new one can be a problem.”

    To pay off your debt, she advises paying off the highest balances first. “Though you may be tempted to pay off smaller balances first, paying down a large balance on a particular line of credit may raise your score, because it represents the freeing-up of a larger portion of your available credit,” Gott said.

    And finally, don’t hide. “If you are over your head in debt, contact your creditors. If you can start managing your credit and paying on time, your score should increase over time. Seeking assistance from a credit counseling service will not hurt your credit score,” Gott said.

    Payday loan collection scam

    Friday, January 9th, 2015

    Consumer Alert: Scammers Claiming to Represent Advance America Target Illinois ConsumersCompany offers tips for avoiding payday loan and debt collection scams


    SPARTANBURG, S.C.Jan. 8, 2015 /PRNewswire/ — Advance America, a national provider of payday loans and other financial services, has recently become aware of a new wave of scams targeting consumers in Illinois. These scam artists, posing as Advance America representatives to collect money from unsuspecting consumers, are in no way affiliated with the company.

    Over the past few weeks, in particular, scammers have contacted Illinois residents claiming that they have been pre-approved for a loan, and then asking them to purchase a prepaid debit card or wire money as a “processing fee” or “good faith deposit.” In other cases, scammers seek to collect on “unpaid” payday loan debt, often threatening arrest or legal action or demanding personal financial information over the phone.

    “Scammers often use the reputation of a legitimate, respected business to con victims out of their money,” said Patrick O’Shaughnessy, president and CEO of Advance America. “Legitimate payday lenders such as Advance America are highly regulated at both the state and federal level and will never use the kind of fraudulent and illegal tactics employed by scam artists.”

    Advance America urges consumers to identify the warning signs of financial fraud and follow these tips for avoiding payday loan and debt collection scams. If individuals suspect being scammed, they should report it immediately to local law enforcement and to the lender that the scammer claims to represent. Advance America customers can call 888-310-4238.

    Learn the signs of a scam

    Federal law strictly regulates how real bill collectors and loan agents can do business. The federal Fair Debt Collection Practices Act (FDCPA) specifically prohibits debt collectors from being abusive, unfair or deceptive in trying to collect a debt. The law specifically says debt collectors cannot threaten consumers with arrest or jail time if they don’t pay their bill. If someone claims you will face criminal prosecution unless you immediately wire them money, it’s almost certainly a scam.

    Scammers may also claim that you have been pre-approved for a loan, and then require you to purchase a prepaid debit card or wire money as a “processing fee” or “good faith deposit.” Others may really be identity thieves out to get your personal or financial information.

    How to Avoid Scams:

    In addition to understanding how lenders and bill collectors can operate, consumers should also take steps to protect themselves, including:

    • Never give personal information such as your Social Security number or bank account information online or over the phone without verifying that you are working with a legitimate lender or bill collector. To verify, call the establishment back using a known number, such as the number listed on your statement or on the back of your credit/debit card.
    • Be suspicious of any email with urgent requests for personal financial information. If an email demands immediate action or makes upsetting or exciting false statements, it’s likely a scam.
    • Verify company licenses when applying for a loan online. Legitimate lenders will display state licenses on their websites to verify that they are full-service, licensed lenders complying with state and federal laws.
    • Never wire money or provide prepaid debit card information to a lender claiming you have been pre-approved for a loan and must make an initial payment as a “show of good faith.”
    • Keep anti-virus, anti-malware, and spam email protection software up to date on all your computing devices.
    • Maintain a record of all outstanding debt, and include lender contact information.
    • Regularly check your bank, credit and debit card statements to ensure there are no unauthorized transactions. Likewise, check your credit report (using Equifax, Experian, or TransUnion) every four months on a rotating basis; credit reports are often one of the first places where signs of identity theft or fraud will appear.
    • If someone approaches you claiming you owe them a debt, demand they provide written proof of the debt as the law requires – especially if it’s for a charge you don’t recognize.