"White Businessman Winking at Camera Holding Blank Sign", via "White Businessman Winking at Camera Holding Blank Sign", via jim pruitt, ThinkStock.
“White Businessman Winking at Camera Holding Blank Sign”, via jim pruitt, ThinkStock.

In a monumental act of hubris and deceit, an Erie, PA debt collection firm had employees pose as sheriff’s deputies and staged phony courtroom sessions where they bilked delinquent consumers out of their money.

We’ve covered this story extensively (go here and here for more details).

My take? Debt collection agencies are getting more brazen by the day.

Consider these cases:

  • A St. Louis woman says she received vulgar phone messages from a California debt collector trying to collect on behalf of a funeral home – and she has the taped messages to prove it. The agency, Rumson, Bolling and Associates repeatedly harassed the woman, who repeated some of the messages for KMOV in St. Louis. “They told me they were going to dig my daughter up and hang her from a tree,” she said.
  • Kristen Garrett, the public relations coordinator for Pittsburgh-based nonprofit Advantage Credit Counseling Service, told Bankrate.com about a senior citizen who received calls from a collection agency threatening “debtors prison” if she didn’t pay her bills. “The police are outside and we’re going to drag you to jail,” the collector said.

Then there’s the Erie, Pennsylvania case. In this action, the would-be Uncle Sam is Unicredit America Inc., an Erie-based debt collection agency that garnered cash from delinquent consumers by staging courtroom-like proceedings – complete with bogus judges, attorneys and deputies.

According to a lawsuit filed by the Commonwealth of Pennsylvania, Unicredit staged their version of “Law and Order” in an office at its Erie, PA location. The room had a raised bench for the judge, bookshelves crammed with legal tomes, and tables for attorneys. The suit claims that Unicredit used phony deputies issuing fake summons’ to lure unwitting consumers to “court” in order that they make good on their debts. Once there, the suit alleges that Unicredit staged fake courtroom proceedings that often resulted in “defendants” reaching into their wallets and for their checkbooks to pay for debts held against them by the agency.

“This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection,” Pennsylvania Attorney General Tom Corbett said in a statement.

Last week, Erie County Court Judge Michael E. Dunlavey ordered Unicredit to shut down its debt-collection operation. A full hearing is scheduled for December 13, 2010.

While it’s too early to say for sure how the Erie County Court will decide the case, consumers should take heed of this cautionary tale.

Washington finally has, at long last…maybe. It is, indeed, amazing how our federal legislative friends always seem to get the memo by snail mail in an era of real time reality.

In October, Credit.com reported on Sen. Al Frankin’s (D-MN) proposed legislation to curb abusive debt collection practices. The bill, more formally known as Senate Bill 3888, “The End Debt Collector Abuse Act of 2010”, mandates the following steps:

  • Prohibit debt collectors from seeking arrest warrants to collect on debts.
  • Give consumers the information they need to protect themselves from unscrupulous debt collectors.
  • Require debt collectors to conduct thorough investigations when consumers dispute the debt.
  • Increase penalties on debt collectors who break the law to discourage them from employing unethical practices.
  • Allow judges to provide injunctive relief to consumers when debt collectors continue to violate their rights as specified under the Fair Debt Collection Practices Act.

The legislation has some powerful support, garnering endorsements from the National Consumer Law Center, the Center for Responsible Lending, and the National Association of Consumer Advocates.

While the Franken bill is a good( albeit ridiculously long overdue) step, until—or even if—enacted, consumers must take concrete steps to protect themselves.

If ever you are approached about a debt, “job one” is to confirm the legitimacy of the company collecting the debt and demand written validation of the debt. Any unusual activity should immediately be reported to the police, as well as your state’s Office of the Attorney General and/or your state’s consumer protection agency (which, oftentimes, is a division of the Office of the Attorney General).

Nevertheless, the Erie case has shone a bright spotlight on the hot button issue of abusive debt collection practices, and that’s a positive step. For now, officials at Unicredit can count on one certainty – the next courtroom they enter will be a real one – and they’ll be the ones with the target on their backs.

It’s a fate other debt collectors would be wise to avoid. However, some folks just can’t help themselves, can they?

For the record, I just can’t figure out how most of them can live with themselves. So, for any employee of a debt collection agency who might be reading this blog, let me ask you – how can you live with yourself?

Originally posted at Credit.com