Archive for October, 2006

DON’T, AND I MEAN DON’T, LET ANY DEBT COLLECTOR TALK YOU INTO MAKING A SMALL PAYMENT, OR ANY PAYMENT AT ALL, ON AN OLD DEBT WHICH WAS CHARGED OFF YEARS AGO.

Monday, October 16th, 2006
October 16th, 2006

If you owe a debt which was charged off years ago, DO NOT–I REPEAT, DO NOT–let a debt collector talk you into making a small or token payment on it.

The debt collector will lie to you and tell you that it will “improve your credit”.  This is a lie.  It’s already charged off, and because it’s an old debt, it probably has a minimal impact on your credit score anyway.

WHY DOES THE DEBT COLLECTOR WANT YOU TO MAKE A MINIMUM PAYMENT ON THE DEBT?  BECAUSE THEN THE DEBT COLLECTOR CAN “RE-AGE” THE DEBT AND CONTINUE COLLECTING IT FOR ANOTHER SEVEN YEARS PLUS SIX MONTHS!

It works like this: a charged-off debt can not be reported to your credit report after seven years and six months from date of charge-off.  It will, in effect, disappear from your credit report and will have no further impact on your credit score.  However, if a debt collector can persuade you to make a token payment, this constitutes “activity” on the account and the seven-years-plus-six-months time period starts over again from the date of your payment.  You have just subjected yourself to another prolonged period of collection calls from jerk-off debt collectors.

This is particularly unfair when debt collectors buy really old debt.  Debt collectors are desperate out there these days and will buy debt that is 15, even 20 years old which can no longer be reported to your credit report, UNLESS YOU SHOW MORE CURRENT ACTIVITY ON THE ACCOUNT BY MAKING A TOKEN PAYMENT!  When you make such a token payment, you hand the debt collector the keys to the kingdom.  Viola!  The debt collector can now report the debt to your credit report again, to pressure you into paying it.

So, the moral of the story is: DON’T LET ANY DEBT COLLECTOR TALK YOU INTO MAKING ANY TOKEN PAYMENTS ON OLD ACCOUNTS!  Let those old accounts be.

Hope this helps.

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Newest & Latest Identity Theft Schemes

Sunday, October 8th, 2006
October 8th, 2006

U.S. Attorney Deborah Yang of Los Angeles has been perhaps the country’s most vigorous prosecutor of identity theft crimes.  She released a report to the L.A. Times yesterday (Saturday 7 October) detailing her investigations of the three newest sources of identity theft.  They are:

1. Mortgage bank employees: quick and easy mortgage companies do less background screening of their employees than major banks will do, so identity theft operatives can often get jobs there without rigorous background checks.  Once inside, these employees have access to all kinds of personal information from persons applying for loans.  They steal the information and, for a price, give it over to the identity theft rings.

2. Mail carriers: the identity theft rings have co-opted some mail carriers into delivering mail with personal identifying information to the identity thieves instead of the addressees, obviously for a price.  Ms. Yang said in the article that the investigation into this is continuing.

3. Restaurants: your friendly local waiter or waitress may be working for an identity theft ring.  The waiter or waitress (again, for a price) swipes your credit card into a “scanner” which captures the electronic information from the card.  The waiter or waitress then delivers the contents of the scanner to the identity theft ring, which then creates a new card with your name, the electronic information from your card and new passwords, etc. as supplied by the identity thieves.  Viola!  The identity thieves go shopping with your card, run up false charges and then destroy the card.

The moral of the story?  Realistically, if waiters, mortgage employees and mail carriers are now being co-opted by the major identity theft rings, there is no absolute way to prevent identity theft short of living out of a cave.  The solution is to know how to address the identity theft once it occurs, and then not worry about it.  As a practical matter, someone who knows how to handle an identity theft usually loses no money and, these days, not too much time.  There are always exceptions, but if you know how to handle these situations, you’re less likely to be badly victimized if it does happen to you.

There are many useful tips on handling identity theft elsewhere on this blog and also on socalcreditdamage.com.

I hope this has been helpful to you.

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Identity Theft Victim Takes MBNA and Debt Collector Law Firm to Court over Alleged “Railroad Justice” Arbitration Agreement and Debt Collection Abuse

Wednesday, October 4th, 2006
October 4th, 2006

Benjamin Scott, a retired engineer from Pasadena, has brought a lawsuit against MBNA and its debt collection law firm, Patenaude & Felix, alleging that MBNA and Patenaude & Felix wrongfully attempted to collect a fraudulent $30,000 debt against him.  The lawsuit alleges that the debt was the result of an identity theft, which was known to MBNA and Patenaude & Felix which yet continued to try to collect the debt.  The lawsuit alleges that MBNA and Patenaude & Felix “railroaded” Mr. Scott by wrongfully using a hidden arbitration clause in a credit card application Mr. Scott never even signed to conduct a bogus arbitration against him for which he never even received notice.  Patenaude & Felix then sued Mr. Scott in Pasadena Superior Court to collect on the  arbitration award, but dropped the lawsuit when Mr. Scott refused stood his ground and refused to pay.  Now Mr. Scott is turning the tables and seeking justice against both MBNA and Patenaude & Felix.  Scott v. MBNA and Patenaude & Felix, Case No. GC 037 707.

Benjamin Scott, a retired engineer and a resident of Pasadena, Ca. for 40 years, became a victim of identity theft when someone stole his identity and opened up a MBNA credit card.  Mr. Scott had never had a MBNA credit card.

The identity thief falsely filled out the credit application for addresses in Murietta, Ca. and San Diego, Ca..  The real Benjamin Scott had never lived in either location.  As with many sophisticated identity thieves, this thief made minimum monthly payments on the card for a lengthy period of time to build up credit, eventually extending the credit limit to approximately $30,000.00.

Meanwhile, the real Benjamin Scott knew nothing of this: all bills were sent to the Murietta or San Diego addresses, from which the payments were made.

In 2003, the identity thief defaulted on the credit card, leaving behind a debt of over $30,000.00.  MBNA then began collection proceedings for the debt against the real Benjamin Scott.  Suddenly, once MBNA began its collection proceedings, MBNA got the address right and began sending collection notices to Mr. Scott at his Pasadena address.  Mr. Scott immediately contacted MBNA and explained the identity theft.  The lawsuit alleges that MBNA continued its collection efforts in spite of Mr. Scott’s repeated explanation to MBNA of the identity theft.  Further, Mr. Scott alleges that he repeatedly requested a copy of the credit application for the MBNA card, to prove to MBNA that the debt was fraudulent and he did not owe it, but MBNA refused to provide him with a copy of the application.

MBNA and Patenaude & Felix then used a small-print binding arbitration agreement in the credit card application—which the real Mr. Scott had never even signed—to set up an arbitration against Mr. Scott through the National Arbitration Forum (“NAF”).  Scott’s attorney, prominent Los Angeles-area consumer protection attorney Robert F. Brennan, comments on MBNA’s arbitration: “MBNA’s debt collection and arbitration set-up is nothing but railroad justice, designed to railroad consumers into paying debts they do not owe.  MBNA’s fine-print arbitration agreement is a sham and is slanted against consumers, who never even know they’re signing it when they sign up for a credit card.  Using NAF to arbitrate these matters is a joke.  NAF is the banking industry’s best friend and is MBNA’s favorite arbitration body because it finds in MBNA’s favor in the overwhelming majority of the cases which it arbitrates.  MBNA’s fine-print arbitration agreement then prevents consumers from challenging the NAF arbitration decisions.  Not surprisingly, MBNA directs all of its arbitrations to NAF.  NAF arbitrators of course know which party is supplying the business each and every time they sit down to dispense injustice to consumers.  Consumers who wish to challenge this arrangement get no ability to choose a different arbitration body, and the NAF arbitration rules are designed to railroad consumers through abbreviated hearings in which the consumers get little or no chance to present their cases.”

MBNA and Patenaude & Felix mailed the notices of this arbitration to Mr. Scott at the fraudulent Murietta address, so of course he never even received the notice he would have needed to attend.  As alleged in the lawsuit, NAF found against Mr. Scott in an arbitration he did not even attend and entered an arbitration award against him of over $33,000.00.

Patenaude & Felix then filed a Petition in the Pasadena Superior Court to enforce the arbitration award, this time getting Mr. Scott’s address right for service of all of the legal papers for this action.  Mr. Scott stood firm and refused to pay the claim.  On the eve of the trial, after several months of litigation in which Mr. Scott had had to hire an attorney and after several alleged threats against Mr. Scott, Patenaude & Felix and MBNA backed down and dismissed the case.

Mr. Scott, however, wants to send a message to MBNA and Patenaude & Felix about aggressive and unfair collection tactics, particularly against victims of identity theft.  Mr. Scott has hired Robert F. Brennan of Brennan, Wiener & Assoc. to represent him against MBNA and Patenaude & Felix.

“Mr. Scott and I are outraged about the way MBNA ignored Mr. Scott’s repeated communications about the identity theft,” comments Brennan.  “This whole episode was an effort to railroad Mr. Scott into paying a debt he did not owe.  Mr. Scott and I are positively eager to present this case to a jury to see what they may have to say to MBNA and Patenaude & Felix.”

The matter is currently pending in the Pasadena Superior Court, Scott v. MBNA and Patenaude & Felix, Case No. GC 037 707.

About Robert F. Brennan: Robert F. Brennan, Esq. and his firm, Brennan, Wiener & Associates, 3150 Montrose Ave., La Crescenta, Ca., handle unfair debt collection, identity theft and wrongful credit report damage cases for residents of Los Angeles, Riverside, San Bernardino, Orange and Ventura Counties. Brennan, Wiener & Associates have a track record of successfully cleaning up credit reports and also of obtaining compensation for their clients.  Brennan, Wiener & Associates enjoys an “AV” rating on the Martindale-Hubbell law firm rating system, the highest possible rating.  In 2006 Mr. Brennan was selected as a “Southern California Super Lawyer,” an honor reserved for the top 5% of practicing attorneys in a geographical area.

Mr. Brennan encourages consumers who have suffered from debt collection or forced arbitration abuses to contact Trial Lawyers for Public Justice at www.tlpj.org.

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