Better Off Deadbeat: Getting Bill Collectors Off His Back. He Sues Them.(dallasobserver.com)
dallasobserver.com
Better Off Deadbeat: Getting Bill Collectors Off His Back. He Sues Them.
http://www.dallasobserver.com/2010-01-21/news/better-off-deadbeat-craig-cunningham-has-a-simple-solution-for-getting-bill-collectors-off-his-back-he-sues-them/
12 comments
I have really mixed feelings about this article.
I really feel like this guy, Craig, who is suing the debt collectors is a hacker for finding the information about possible violations and pursing it legally.
I am also all for punishing debt collectors for actions that abuse debtors.
However, there are several things that rub me the wrong way.
1) The fact that it is easier (less expensive) for a company to settle a case for $1K, rather than fight and win a case while costing themselves $10k gives the companies no incentive to fight back. Also, The plaintiff is already in debt and is having trouble paying, so what would a company get out of counter suing?
2) Statements like - "Katz doesn't believe that people are morally obligated to pay back their debts." and "People are brainwashed to think that paying a credit card is more important than paying for the necessities of life." - Maybe if people spent more time worrying about the necessities of life and less about luxury they wouldn't be in debt in the first place.
I really feel like this guy, Craig, who is suing the debt collectors is a hacker for finding the information about possible violations and pursing it legally.
I am also all for punishing debt collectors for actions that abuse debtors.
However, there are several things that rub me the wrong way.
1) The fact that it is easier (less expensive) for a company to settle a case for $1K, rather than fight and win a case while costing themselves $10k gives the companies no incentive to fight back. Also, The plaintiff is already in debt and is having trouble paying, so what would a company get out of counter suing?
2) Statements like - "Katz doesn't believe that people are morally obligated to pay back their debts." and "People are brainwashed to think that paying a credit card is more important than paying for the necessities of life." - Maybe if people spent more time worrying about the necessities of life and less about luxury they wouldn't be in debt in the first place.
In a society where people are pulled in to debt by the most skilled marketeers that money can buy I can't find much sympathy for the card companies.
I avoid debt like the plague it is but I can see people that are less financially aware fall in to these traps very easily.
All the debt collecting agencies have to do to avoid this particular trap is to comply with the law. All the time.
No need for them to be sued or to sue in the first place.
I sincerely hope he gives them hell, they've given enough people down on their luck hell themselves.
I avoid debt like the plague it is but I can see people that are less financially aware fall in to these traps very easily.
All the debt collecting agencies have to do to avoid this particular trap is to comply with the law. All the time.
No need for them to be sued or to sue in the first place.
I sincerely hope he gives them hell, they've given enough people down on their luck hell themselves.
In some cases, I can agree with you. There are predatory practices that shouldn't even be legal.
But this guy went out and borrowed $100k to put directly into risky investments. He also bought four houses at zero down, maximizing his risk of default. He wasn't suckered into this, it was a calculated move to try and get rich quick. Then it blew up in his face, and while that is not his fault directly, he's clearly smart enough to have known the risks. Now that his (not so) little bet has gone against him, he doesn't want to pay it back?
I call bullshit.
But this guy went out and borrowed $100k to put directly into risky investments. He also bought four houses at zero down, maximizing his risk of default. He wasn't suckered into this, it was a calculated move to try and get rich quick. Then it blew up in his face, and while that is not his fault directly, he's clearly smart enough to have known the risks. Now that his (not so) little bet has gone against him, he doesn't want to pay it back?
I call bullshit.
> he's clearly smart enough to have known the risks.
I'd say the opposite: he was too smart for his own good.
He was an Economics major(like me). He was likely taught economic theory based on rational behavior.
During those years, credit card companies sent absurd numbers of 0% offers to everyone over 18. If he didn't borrow money at 0% and reinvest it, that would have been irrational and gone against everything he was being taught in school.
I'm assuming he had a few things working against him:
- Limited knowledge of the world and no first hand experience of a recession.
- Dangerous knowledge from Economics class that teaches you people act rationally, without emotion, according to a simple utility maximizing function.
- Employees in the financial industry who earned their incentives based purely on the amount of money being borrowed in the short term, with no consequences if the debts turned out to be bad.
- Very limited understand of probability and statistics. I've met very few people in my life who have adequate schooling in these subjects.
I had a similar experience(though luckily on a smaller scale) my senior year of college. I was given a $50,000 line of credit from Bank of America, despite the fact that I'd never held more than a summer job or made more than $8,000 in a single year.
If I had walked into my local bank and asked for that kind of loan, my banker would have laughed in my face. But Bank of America gave it to me just by filling out a form and making a phone call.
The system was absurd and many people were screwed. Banks should have known better. They've been around for hundreds of years while myself and many others have been around for about 20.
The lenders should have been smart enough to have known the risks.
I'd say the opposite: he was too smart for his own good.
He was an Economics major(like me). He was likely taught economic theory based on rational behavior.
During those years, credit card companies sent absurd numbers of 0% offers to everyone over 18. If he didn't borrow money at 0% and reinvest it, that would have been irrational and gone against everything he was being taught in school.
I'm assuming he had a few things working against him:
- Limited knowledge of the world and no first hand experience of a recession.
- Dangerous knowledge from Economics class that teaches you people act rationally, without emotion, according to a simple utility maximizing function.
- Employees in the financial industry who earned their incentives based purely on the amount of money being borrowed in the short term, with no consequences if the debts turned out to be bad.
- Very limited understand of probability and statistics. I've met very few people in my life who have adequate schooling in these subjects.
I had a similar experience(though luckily on a smaller scale) my senior year of college. I was given a $50,000 line of credit from Bank of America, despite the fact that I'd never held more than a summer job or made more than $8,000 in a single year.
If I had walked into my local bank and asked for that kind of loan, my banker would have laughed in my face. But Bank of America gave it to me just by filling out a form and making a phone call.
The system was absurd and many people were screwed. Banks should have known better. They've been around for hundreds of years while myself and many others have been around for about 20.
The lenders should have been smart enough to have known the risks.
It's quite a stretch to paint him as a victim here. If he'd needed the money, that would be one thing. But he took unnecessary loans to do speculative, risky investing. Sure, the "system" should have known better, but so should he.
I was also an Econ major. At no time did I become so out of touch with reality as to actually believe that people behave rationally when it comes to economic decisions. Calling that information dangerous is just disingenuous.
The banks failed at risk management, that we know. But there is individual responsibility as well. Every person who got a mortgage with a payment that was more than their take home pay is equally culpable in the subprime crisis. And people like this guy are even more to blame. I know people are bad at probability and statistics, but we shouldn't give them a pass on basic arithmetic.
I was also an Econ major. At no time did I become so out of touch with reality as to actually believe that people behave rationally when it comes to economic decisions. Calling that information dangerous is just disingenuous.
The banks failed at risk management, that we know. But there is individual responsibility as well. Every person who got a mortgage with a payment that was more than their take home pay is equally culpable in the subprime crisis. And people like this guy are even more to blame. I know people are bad at probability and statistics, but we shouldn't give them a pass on basic arithmetic.
Not really. Banks have a fiduciary responsibility to lend out their money with some caution.
The banks colluded because they too wanted to make a pile of money quickly, then when it all blew up they went after all the collateral leaving the private individuals holding the debt after the foreclosure.
The banks colluded because they too wanted to make a pile of money quickly, then when it all blew up they went after all the collateral leaving the private individuals holding the debt after the foreclosure.
I don't disagree, but that doesn't absolve him of responsibility. He is as much a perpetrator of this as the banks are. If he'd needed the money, that would be one thing, but he took unnecessary loans to do speculative, risky investing.
I doubt he understood that he was doing speculative, risky investing.
Mid-bubble, I can't count how many people told me that the market can only go up, or who looked at me like I was insane when I said I was watching month-over-month sales to try to avoid getting creamed when the bubble inevitably burst.
Mid-bubble, I can't count how many people told me that the market can only go up, or who looked at me like I was insane when I said I was watching month-over-month sales to try to avoid getting creamed when the bubble inevitably burst.
Yeah I'm really split on this myself. On the one hand he should have known better than to take on that much debt. On the other hand, the people offering him such easy credit should have to face the consequences of the risks they were taking by lending money to overextended borrowers.
The fact that it is easier (less expensive) for a company to settle a case for $1K, rather than fight and win a case while costing themselves $10k gives the companies no incentive to fight back. Also, The plaintiff is already in debt and is having trouble paying, so what would a company get out of counter suing?
The right incentive is for enough people to do this that the companies find it cheaper to train their phone collectors about what they're legally allowed to do.
The right incentive is for enough people to do this that the companies find it cheaper to train their phone collectors about what they're legally allowed to do.
IMO, morals are for dealing with human beings. The actions of a company will tend toward whatever is legally and economically possible, so a person in a conflict with a company should act within that framework if they want a fair outcome.
Go this guy for pursuing open source litigation. Anyone who reads John Robb will immediately recoginze the scenario of decentralized community vs. bureacracy as 4th generation warfare.
Go this guy for pursuing open source litigation. Anyone who reads John Robb will immediately recoginze the scenario of decentralized community vs. bureacracy as 4th generation warfare.
> The fact that it is easier (less expensive) for a company to settle a case for $1K, rather than fight and win a case while costing themselves $10k gives the companies no incentive to fight back.
Of course, that works both ways -- debt collection agencies frequently pile on their own fees to the original debt, which for small debts can double the amount the consumer pays back. Most people don't fight these charges because it's too much trouble to do so. This is just giving them a taste of their own medicine.
Of course, that works both ways -- debt collection agencies frequently pile on their own fees to the original debt, which for small debts can double the amount the consumer pays back. Most people don't fight these charges because it's too much trouble to do so. This is just giving them a taste of their own medicine.
1) On the surface I agree. However, the collections agencies must do this math themselves, and decide that n settlement tradeoffs is still profitable on the whole. Further they have probably done the math saying "if I let my employees break the law in X way, ill have $Y in extra collections, and $Z settlements/suits for breaking the law". Then it is a matter of maximizing $Y - $Z. In that respect I am in favor of more people filing suit -- there is no reason for a company to go beyond what has been deemed appropriate for debt collection. Such laws were in place when the debt was incurred (risk was taken), and when it was traded, they should be reflected in the "debt transfer" price and the initial risk interest rate.
2) Plenty of people had high credit limits. Then, because some bankers screwed up the economy, were let go of their jobs. At this point they had no incoming cash, and plenty of credit. How do you propose they take care of their necessities if not the credit cards? Not saying this is every case, just proposing that sometimes debt isn't over luxuries.
2) Plenty of people had high credit limits. Then, because some bankers screwed up the economy, were let go of their jobs. At this point they had no incoming cash, and plenty of credit. How do you propose they take care of their necessities if not the credit cards? Not saying this is every case, just proposing that sometimes debt isn't over luxuries.
Statements like - "Katz doesn't believe that people are morally obligated to pay back their debts."
I'm not sure I disagree -- "Usuary" used to be thoroughly illegal/immoral/etc didn't it?
... and "People are brainwashed to think that paying a credit card is more important than paying for the necessities of life." - Maybe if people spent more time worrying about the necessities of life and less about luxury they wouldn't be in debt in the first place.
I definitely believe credit cards are less important than basic necessities.
I'm not sure I disagree -- "Usuary" used to be thoroughly illegal/immoral/etc didn't it?
... and "People are brainwashed to think that paying a credit card is more important than paying for the necessities of life." - Maybe if people spent more time worrying about the necessities of life and less about luxury they wouldn't be in debt in the first place.
I definitely believe credit cards are less important than basic necessities.
Usury was forbidden by the Bible, if memory serves. Still, that doesn't make accepting the loan moral and offering the loan immoral. Presumably both sides are breaking the old Biblical prohibition.
The bible prohibits any interest, not just excessive interest. A loan is supposed to be charity, not a money making opportunity.
If someone needs money to open a business or the like, then the lender is supposed to partner/go into business with him, not just lend at interest.
You can get around the prohibition by structuring the partnership into something that acts like interest, but the intent of that is for business, it's not intended to replace charity loans.
If someone needs money to open a business or the like, then the lender is supposed to partner/go into business with him, not just lend at interest.
You can get around the prohibition by structuring the partnership into something that acts like interest, but the intent of that is for business, it's not intended to replace charity loans.
I think the point is that most people don't run up massive credit card debt on 'the basic necessities of life.'
> I really feel like this guy, Craig, who is suing the debt collectors is a hacker for finding the information about possible violations and pursing it legally.
I dont know. The more I read it it sounds like a guy who took a risk and lost big - and now is scrabbling round for "get out of jail free" cards.
With that said; I dont find much sympathy for the individual (his motives dont sync with me) but that's something worth "enduring" if he can actually help to impact the industry. shrug
I dont know. The more I read it it sounds like a guy who took a risk and lost big - and now is scrabbling round for "get out of jail free" cards.
With that said; I dont find much sympathy for the individual (his motives dont sync with me) but that's something worth "enduring" if he can actually help to impact the industry. shrug
Given that collectors have called me repeatedly looking for someone else and refused to listen when I told them it was a wrong number, I have no trouble believing they are violating laws in dealing with people that actually have debts. If suing them will get them to change, I'm all for it.
I've had that problem alot with my last phone number. And now it started happening with my new number. I dunno what to do other than change the damn number. It's stupid, and I had a guy call twice just to make sure. And I have to keep this phone on for emergency calls (I'm a sysadmin). I put this number on the no-call list which didn't do anything. They can probably get away with by saying they had no clue the number was reassigned and that they already had dealing with the person. This is a loophole of the no call list.
Use Google VOice or a similar service and only calls you allow will get through. ALl others could go to a voicemail that's the sound of a disconnected phone.
As someone who is financially conservative, I frown upon people intent to avoid debt they willingly incurred.
On the other hand: "Usually it's settled because the agency says, Uh, we didn't intend to do that. Our collector said the wrong thing and we fess up and say, 'I didn't mean to do it but I did it..."
Really? That's the collection agency's defense? I didn't mean to do it?
If it's your business to get debtors to pay their debts, you deserve to get busted when the debtor knows the law better than you. It's your business for Pete's sake.
Add to that the complaints about all the technicalities and about individuals filing lawsuits without the need for a lawyer, and it's pretty clear that collections agencies thrive on and exploit the ignorance of debtors, which is ashame.
On the other hand: "Usually it's settled because the agency says, Uh, we didn't intend to do that. Our collector said the wrong thing and we fess up and say, 'I didn't mean to do it but I did it..."
Really? That's the collection agency's defense? I didn't mean to do it?
If it's your business to get debtors to pay their debts, you deserve to get busted when the debtor knows the law better than you. It's your business for Pete's sake.
Add to that the complaints about all the technicalities and about individuals filing lawsuits without the need for a lawyer, and it's pretty clear that collections agencies thrive on and exploit the ignorance of debtors, which is ashame.
Their defense seems to me like a lie. By the sheer amount of occurrence of these lawsuit, you'd think they would make sure their employees don't break the law. Except they probably don't think their business could work without breaking the law. This business is as scrupulous as the mafia. They have no way of making money without breaking the law. How many people would pay if you told them all we can do is wreck you credit that is already wrecked.
On the other hand, they do bring in a balance that allows us all to have cheap unsecured debt. So.. these evil guys are necessary for the system to exist the way it is today.
On the other hand, they do bring in a balance that allows us all to have cheap unsecured debt. So.. these evil guys are necessary for the system to exist the way it is today.
I can see both sides of this story, and I'm quite sure collection agencies break the rules, and they deserve to get called on it.
But... "I don't have to do anything but stay black and die." That sort of behavior is where I draw the line. You made the bad calls, you got into debt, pay your damn debts. And sue the collectors too if you like, but that they are doing wrong things doesn't obviate your responsibilities.
But... "I don't have to do anything but stay black and die." That sort of behavior is where I draw the line. You made the bad calls, you got into debt, pay your damn debts. And sue the collectors too if you like, but that they are doing wrong things doesn't obviate your responsibilities.
At the scale of a small-time investor, you must pay your damn debts. But do you feel that holds true going up the food chain? GM will never have to repay all of it's debts that were coerced out of the american public against our will. The bankers at the large banks who coerced almost ONE TRILLION DOLLARS worth of debts are getting their fattest bonuses ever, and will likely not fully repay those debts.
But the little guy has a moral obligation? Yeah, his only mistake was only borrowing $100k. If he had been a slick stanford or harvard MBA he would have borrowed $250million, and gotten a congressional pat on the back when he defaulted.
But the little guy has a moral obligation? Yeah, his only mistake was only borrowing $100k. If he had been a slick stanford or harvard MBA he would have borrowed $250million, and gotten a congressional pat on the back when he defaulted.
I'm...not sure where you're going here other than possibly using my comment as a springboard for your soapbox, but since you asked; I never implied in any way I feel that just the little guy has a moral obligation. I think GM and your "slick Stanford or Harvard MBA" toting strawman should have to pay their debts too. <shrug> Now if doing that would cause even greater grief, say to the hundreds (of thousands?) of employees who'd lose their jobs? It's a tough call, and one I'm glad I'm not making.
The correct response to elected officials not doing what you want is to vote someone in who will.
The correct response to elected officials not doing what you want is to vote someone in who will.
This article is about a FatWallet member named codename47. If you want to read a more complete discussion about the article you can at http://www.fatwallet.com/forums/finance/984518/
What a great hack. Nobody should feel any unease at using perfectly legal methods to fight back against a system that is designed to screw people over. Who exactly deserves our sympathy in this article? Verizon? Time Warner? Bank of America? They would steal candy from a baby and charge the parents a service fee.
I have mixed feelings about this guy, but it's telling that a lot of the objections are to this guy acting like a lawyer. I mean, how dare he! What does it mean when they object more, as if morally, to the people who are filing pro se---and winning anyway? Hmm.
The fact is, credit needs to be tightened up. People like Cunningham get in over their heads. That's on them. The onus of extending risk to such borrowers is on the lenders. These lawsuits are just going to be another factor in calculating risk, which will ultimately, one would hope, tighten up credit.
Rampant, aggressive debt collection is just the flipside of loose credit and lending.
Rampant, aggressive debt collection is just the flipside of loose credit and lending.
I'm fine with legit collections calls as long as a human collector has to waste equal or more time trying to reach me.
This recent invention of automated collections calls seems to shift an enormous amount of abusive power to the collector. Now I can receive random calls at almost any hour of the day, nearly every two or three days, only to have a recording spew a number I need to call back to talk to a collector.
The worst part is, I'm not the one they are looking for, it's whoever (had my phone number previously | gave my phone number as a fake).
I wonder if Craig from this article will take my case for a referral fee :P
This recent invention of automated collections calls seems to shift an enormous amount of abusive power to the collector. Now I can receive random calls at almost any hour of the day, nearly every two or three days, only to have a recording spew a number I need to call back to talk to a collector.
The worst part is, I'm not the one they are looking for, it's whoever (had my phone number previously | gave my phone number as a fake).
I wonder if Craig from this article will take my case for a referral fee :P
Wow, this guy epitomizes the concept of defeating your enemy by becoming them. He's just as nasty as the collection agencies. The fact that he's attacking them, instead of a defaulter is a mere technicality.
> Investors like Cunningham fell the fastest.
One man's investor is another man's parasite.
One man's investor is another man's parasite.
I have dealt professionally in one way or another (mostly incidentally) with debt collection agencies, and they truly are revolting in the tactics they routinely use to pressure debtors for collection. Indeed, the whole industry is set up to win through psychological intimidation and to avoid the court process. That is the only way this industry makes economic sense. Need to collect an $80 bill? It is impossible to do this realistically through a convoluted court system with its costs and delays. If you have thousands of such bills, however, and hire extremely cheap labor to harass the debtors to the point where such debtors see it as easier to pay than to put up with the continual harassment, and, viola, an industry is born that lets vendors sell their otherwise uncollectable receivables wholesale for a fraction on the dollar rather than simply writing them off while giving the participants in that industry a (sordid) method of realizing value from the receivables so purchased. It was always something of a devil's bargain but it worked in practice so long as the harassment techniques could be used without penalty.
For a couple of decades, at least, various laws have existed to enable consumers to defend themselves against sleazy collection techniques. As long as the mass of consumers were ignorant of such laws, however, and had to hire attorneys to pursue claims based on violations of such laws, there was still no effective recourse for consumers - it simply was too expensive and complicated to try to fight back with lawyers for any given violation.
It now seems that the web has supplied the final piece to enable those who are sufficiently motivated, such as Mr. Cunnigham, to both educate themselves and to have the wherewithal to file pro se lawsuits seeking recourse. Ironically, this has exposed the soft underbelly of this particular industry, to wit, if you hire exceedingly cheap workers and pay them to harass debtors into paying, you are dealing with a class of employees who are perhaps the least trainable you could imagine for avoiding the traps that the law now imposes upon those who overstep its highly technical bounds. Thus, for debtors who are sufficiently motivated, it is a bit like shooting ducks in a gallery: little downside, and little upside for that matter (at least for anyone who wants to have a life), but a fairly high percentage of hits.
That said, Mr. Cunningham seems to be about as unscrupulous as the industry he is challenging. At best, he seems to be a vexatious litigant (what else does it mean to sue 27 undoubtedly minimum-wage employees of the agencies in their individual capacities for technical violations of laws just because he has a gripe with their employer and, not only sue, but also bombard them with endless oppressive discovery requests?); at worst, he appears to be someone who has no scruples whatever about stiffing anyone and everyone who has had the misfortune ever to deal with him. It reminds me of a matter years ago where a franchisor had cheated so many innocent franchisees through fraud and misrepresentation that the franchisor bolted up its headquarters and armed it with second-floor security cameras trained at the front entrance as a full-time means of dodging process servers. That particular scammer had it all rationalized and in the end got slammed - a fate which may ultimately await Mr. Cunningham as well as he becomes increasingly reckless and sordid in his conduct.