We have previously discussed the great powers, but also the limits, of federal student loan collectors and how the federal student loan collectors will often violate the Fair Debt Collection Practices Act (FDCPA).
You may recall that Allied Interstate has been fined nearly a million dollars for its misconduct in collecting federal student loans.
Some of the more common abuses involve lying about garnishment.
We have put a copy of a lawsuit against the large debt collector Allied Interstate for allegedly violating the FDCPA in its efforts to force our client into making payments on federal student loans that he could not afford.
The case is currently pending in federal court (Northern District of Alabama) and Allied Interstate has denied doing anything wrong.
If you have experience with Allied Interstate collecting student loans, particularly federal student loans, and you live in Alabama, please get in touch with us as we would like to learn about your experiences.
COMPLAINT
COMES NOW the Plaintiff, by and through counsel, and for his Complaint against the Defendants:
- This action arises out of Defendant’s repeated violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), out of state law violations and out of the invasions of Plaintiff’s personal and financial privacy by the Defendant and its agents in their illegal efforts to collect a consumer debt from Plaintiff.
- Congress found it necessary to pass the FDCPA due to rampant abusive practices by dishonorable debt collectors. 15 USC § 1692 is entitled “Congressional findings and declaration of purpose” and it states as follows:
(a) There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
(b) Existing laws and procedures for redressing these injuries are inadequate to protect consumers.
(c) Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.
(d) Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.
(e) It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.
[Emphasis added].
PARTIES
- Plaintiff Israel Henry (hereinafter “Plaintiff”) is a natural person who is a resident and citizen of Alabama.
- Defendant Allied Interstate, Inc. (“Allied”) is a foreign debt collection firm that engages in the business of debt collection. It conducts business in Alabama.
- Fictitious Defendants “A” through “F” (as set forth in the caption and fully incorporated herein) thereby intending to refer to the legal person, entity or individual who attempted to collect a debt from Plaintiff and who committed the wrongful acts alleged in the Complaint; names of the Fictitious parties are unknown to the Plaintiff at this time but will be added by amendment when ascertained.
- Any reference to any Defendant or to Allied also includes all Fictitious Defendants.
BACKGROUND INFORMATION ON FEDERAL STUDENT LOANS AND COLLECTION OF STUDENT LOANS AND FACTUAL ALLEGATIONS IN THIS CASE
- Federal student loans entitle the collection agencies collecting on them to have more tools available to collect the debts than typical consumer debts.
- Additionally, certain restrictions and requirements are placed on student loan collectors.
- Given the immense power that collectors have at their disposal (directly or indirectly), it is imperative that student loan collectors not lie to consumers or abuse consumers.
- When student loan collectors do so, they give a black mark to the Department of Education which is not at all interested in student loan collectors breaking the law.
- In fact, the Department of Education has the power to remove student loan collection companies from the very lucrative role of being allowed to collect student loans when the Department, or a court, finds a student loan collection agency guilty of abusive collection practices.
- Normally, pre suit garnishment is not allowed in collecting debts in Alabama.
- However, the Department of Education has the ability to garnish student loans if all of the required procedures are followed.
- The consumer must be notified in writing of the intent to garnish wages.
- The consumer must be notified in writing 30 days or more before the garnishment is to begin.
- The consumer has the right to dispute the appropriateness of the garnishment procedures.
- The consumer has a right to a hearing on the garnishment.
- Despite these protections, garnishment is a powerful tool to collect delinquent student loans.
- Unfortunately, when collection agencies allow, tolerate, and even encourage abuses related to garnishments (and threats to garnish), this powerful tool becomes a hammer to illegally threaten consumers with the drastic step of garnishment.
- This case illustrates the willingness to violate the law in collecting student loans from one of the largest debt collectors in America.
- Plaintiff allegedly incurred a financial obligation (federal student loans) that was primarily for personal, family or household purposes and is therefore a “debt” as that term is defined by 15 U.S.C. § 1692a(5).
- Allied Interstate began collection activities against Plaintiff related to the student loans.
- On or about August 26, 2011, Allied Interstate contacted Plaintiff’s work.
- Allied Interstate was rude to Plaintiff’s co worker who answered the phone.
- On or about August 29, 2011, Allied Interstate called Plaintiff’s cell phone before 9 am.
- The collector identified himself as Mike Southerington (sp?).
- Allied Interstate stated that garnishment was already started on Plaintiff’s wages.
- Plaintiff requested payment options to rehabilitate his loans.
- Allied Interstate told Plaintiff that Plaintiff was required to go through all of his income and expenses on a monthly basis.
- Allied Interstate said Plaintiff had to make a down payment.
- Down payments are not required to rehabilitate a student loan.
- This is a favorite lie of student loan collectors.
- Allied Interstate then told Plaintiff that Plaintiff must make ten consecutive monthly payments of $180 each.
- The law requires, for rehabilitation, that nine payments be made in a ten month period.
- Student loan collectors frequently lie about this and say that the nine payments have to be made consecutively or that there must be ten consecutive monthly payments.
- Plaintiff told Allied Interstate he could not afford this monthly payment.
- Monthly payments under rehabilitation are required to be reasonable for consumers given their income and expenses.
- Allied Interstate said the garnishment was already in process.
- Plaintiff asked the Allied Interstate collector if he had added up the numbers on the income and expenses.
- Allied Interstate said “No.”
- Making consumers go through the process of listing all income and expenses and not examining such numbers by collectors is a favorite tactic of student loan collectors.
- This is designed to humiliate the consumer.
- This is designed to exercise power over the consumer.
- This tactic is to establish the dominance of the collector over the consumer.
- The numbers reflected a negative monthly cash flow.
- When Plaintiff protested Allied Interstate not paying attention to these numbers, the response was there was no need to examine the numbers as employment verification had been made and the garnishment would proceed.
- Allied Interstate had no intention of finding a reasonable repayment option with Plaintiff.
- Instead, Allied Interstate only wanted to force Plaintiff to pay a down payment and higher than reasonable monthly payments as this increases the commission and bonuses that Allied Interstate gains.
- Plaintiff responded to the threat of garnishment by saying he thought he was entitled to a hearing.
- Allied Interstate said there was no right to a hearing.
- Lying about the garnishment process is a favorite trick of student loan collectors.
- Allied Interstate transferred Plaintiff to a so called “garnishment specialist” who would explain the laws and rules of garnishment of student loan debt.
- This so called garnishment specialist at Allied Interstate told Plaintiff that the only requirement to start wage garnishment was to send a letter to Plaintiff’s employer.
- Allied Interstate lied to Plaintiff about the process of garnishment.
- Allied Interstate lied to Plaintiff about the requirement of notifying Plaintiff in writing of any intention to seek wage garnishment.
- Allied Interstate lied to Plaintiff about the availability of a document review.
- Allied Interstate lied to Plaintiff about the availability of Plaintiff’s right to challenge the garnishment before it happened.
- Allied Interstate lied to Plaintiff about the right to a hearing before wage garnishment.
- Allied Interstate, through the so called garnishment specialist, said Plaintiff’s wages would be garnished while Plaintiff sought a hearing.
- Allied Interstate, frustrated through Plaintiff’s insistence that Allied Interstate was not telling him the truth, told Plaintiff that he had refused to pay the debt and therefore the wage garnishment would be started immediately.
- Allied Interstate then rudely hung up the phone on Plaintiff.
- Plaintiff was horrified by these threats as wage garnishment would be devastating to his family, as his wife had lost her job and had found another job, but one that was much lower paying.
- Plaintiff called Allied Interstate and the collector identified himself as Mike Southerington (sp?).
- Plaintiff asked to speak to the collector’s supervisor.
- The collector said he was the supervisor.
- Plaintiff told Allied Interstate not to call him during the hours of 8 am and 5 pm central time as his job did not permit these types of calls.
- Plaintiff sought assistance from the Department of Education.
- Plaintiff was told by a “Tabatha” at the Department of Education that Allied Interstate had to work with him to find a reasonable monthly repayment option.
- Plaintiff called the Allied Interstate Special Collections Unit (after being provided the number by Tabatha) and Plaintiff spoke with a “Karen” who then transferred him to a “Jeff Hart.”
- Jeff Hart said none of the information that Plaintiff had provided about his monthly cash flow was in the collection notes.
- Plaintiff is seeking to make arrangements with the Department of Education or another collection agency so Plaintiff does not have to face any further harassing abuse by Allied Interstate.
- Allied Interstate has contacted Plaintiff with additional calls and on at least one occasion did not leave the required disclosures when leaving a voicemail message.
- Allied Interstate has contacted Plaintiff at a time and place it knows is inconvenient and has called Plaintiff at work when it knows Plaintiff cannot receive these types of calls at work.
- Allied has not apologized to Plaintiff.
- Allied has no intention of apologizing to Plaintiff.
- Allied has refused to give all required disclosures under the FDCPA when communicating with Plaintiff.
- Allied is a debt collector under 15 U.S.C. § 1692a(6).
SUMMARY
- All of the above-described collection communications made to Plaintiff by Allied and collection agents of Allied were made in violation of the FDCPA.
- Allied violated numerous sections of the FDCPA, including, but not limited to: 1692b(1), 1692c(a)(1), 1692c(a)(3), 1692d, 1692d(5), 1692e, 1692e(1), 1692e(2), 1692e(4), 1692e(5), 1692e(7), 1692e(10), 1692e(11), 1692f, 1692f(1), 1692f(6), and 1692g.
- The above-detailed conduct by Allied of harassing Plaintiff in an effort to collect this debt was also an invasion of Plaintiff’s privacy and resulted in actual damages to the Plaintiff.
- The above detailed conduct by Allied reflect its knowledge and appreciation for the harm that would naturally and likely happen to Plaintiff and with full knowledge thereof that Allied willfully, maliciously, recklessly, and/or negligently undertook its actions and it was successful in causing the harm to the Plaintiff that Allied wanted to cause.
- The collection activities by Allied and its agents caused Plaintiff stress and anguish.
- Allied’s repeated attempts to collect this debt from Plaintiff and refusal to stop violating the law was an invasion of Plaintiff’s privacy and Plaintiff’s right to be left alone.
- Plaintiff has suffered actual damages as a result of these illegal collection communications by Allied in the form of monetary loss, anger, anxiety, emotional distress, fear, frustration, damage to reputation, upset, humiliation, embarrassment, amongst other negative emotions, as well as suffering from unjustified and abusive invasions of personal privacy, which was due to the illegal conduct of Allied.
- The only way that abusive debt collectors like Allied will stop their abusive practices towards consumers is by a jury verdict fully compensating Plaintiff for the harm done to Plaintiff and by a punitive damage award.
- A punitive damage award will get the attention of Allied and other abusive debt collectors so that they will realize that it no longer makes economic sense to abuse consumers and to gain an unfair competitive advantage over honorable, law abiding collectors.
- A full compensatory damage award and a full punitive damage award will accomplish the goals of Congress in passing the FDCPA – stop abusive collection practices against consumers and prevent dishonorable debt collectors from having an unfair advantage over collectors that operate within the boundaries of the law.
RESPONDEAT SUPERIOR LIABILITY
- The acts and omissions of Allied’s agents who communicated with Plaintiff as more further described herein, were committed within the line and scope of their agency relationship with their principal Allied.
- The acts and omissions by these other debt collectors were incidental to, or of the same general nature as, the responsibilities these agents were authorized to perform by Allied in collecting consumer debts.
- By committing these acts and omissions against Plaintiff, these other debt collectors were motivated to benefit their principal the Allied.
- Allied is therefore liable to Plaintiff through the doctrine of Respondeat Superior for the wrongful, intentional, reckless, and negligent acts, errors, and omissions done in violation of state and federal law by its collection employees, including but not limited to violations of the FDCPA and Alabama tort law, in their attempts to collect this debt from Plaintiff.
- Allied negligently and/or wantonly and/or hired, retained, trained or supervised incompetent debt collectors and is thereby responsible to the Plaintiff for the wrongs committed against Plaintiff and the damages suffered by Plaintiff.
CAUSES OF ACTION
COUNT I.
VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT
15 U.S.C. § 1692 et seq.
- Plaintiff incorporates by reference all of the above paragraphs of this Complaint as though fully stated herein.
- The acts and omissions of Allied and its agents constitute numerous and multiple violations of the FDCPA with respect to the Plaintiff including, but not limited to the following: 1692b(1), 1692c(a)(1), 1692c(a)(3), 1692d, 1692d(5), 1692e, 1692e(1), 1692e(2), 1692e(4), 1692e(5), 1692e(7), 1692e(10), 1692e(11), 1692f, 1692f(1), 1692f(6), and 1692g..
- As a result of Allied’s violations of the FDCPA, Plaintiff is entitled to statutory damages; actual and compensatory damages; and reasonable attorney’s fees, expenses and costs, from Allied.
COUNT II.
INVASION OF PRIVACY
- Plaintiff incorporates by reference all of the paragraphs of this Complaint as though fully stated herein.
- Alabama law recognizes Plaintiff’s right to be free from invasions of privacy and Allied violated Alabama state law as described in this Complaint.
- Congress explicitly recognized a consumer’s inherent right to privacy in collection matters in passing the Fair Debt Collection Practices Act, when it stated as part of its findings:
Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
15 U.S.C. § 1692(a) (emphasis added).
- Congress further recognized a consumer’s right to privacy in financial data in passing the Gramm Leech Bliley Act, which regulates the privacy of consumer financial data for a broad range of “financial institutions” including debt collectors (albeit without a private right of action), when it stated as part of its purposes:
It is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information.
15 U.S.C. § 6801(a) (emphasis added).
- Allied and/or its agents intentionally, recklessly, and/or negligently interfered, physically or otherwise, with the solitude, seclusion and or private concerns or affairs of the Plaintiff, namely, by repeatedly and unlawfully attempting to collect a debt and thereby invaded Plaintiff’s privacy.
- Allied and its agents intentionally, recklessly, and/or negligently caused emotional harm to Plaintiff by engaging in highly offensive conduct in the course of collecting this debt, thereby invading and intruding upon Plaintiff’s right to privacy.
- Plaintiff had a reasonable expectation of privacy in Plaintiff’s solitude, seclusion, private concerns or affairs, and private financial information.
- The conduct of Allied and its agents, in engaging in the above-described illegal collection conduct against Plaintiff, resulted in multiple intrusions and invasions of privacy by Allied which occurred in a way that would be highly offensive to a reasonable person in that position.
- The conduct of Allied went beyond the bounds of reasonableness in the collection of the alleged debt for all of the reasons asserted in this Complaint and based upon the evidence which will be presented at trial.
- As a result of such intrusions and invasions of privacy, Plaintiff is entitled to actual damages in an amount to be determined at trial from Allied.
- All acts of Allied and its agents and/or employees were committed with malice, intent, wantonness, and/or recklessness and as such Allied are subject to punitive damages.
COUNT III.
NEGLIGENT, WANTON, AND/OR INTENTIONAL HIRING, TRAINING AND SUPERVISION OF INCOMPETENT DEBT COLLECTORS
- Plaintiff incorporates by reference all of the paragraphs of this Complaint as though fully stated herein.
- Allied negligently, wantonly, and/or intentionally hired, retained, or supervised incompetent debt collectors, who were allowed or encouraged to violate the law as was done to Plaintiff, and are thereby responsible to the Plaintiff for the wrongs committed against Plaintiff and the damages suffered by Plaintiff.
- Had Allied hired competent debt collectors, the violations described in this Complaint would not have occurred.
- Had Allied properly trained and/or supervised the debt collectors, the violations described in this Complaint would not have occurred.
- Allied carried out its hiring, supervision and training activities in a negligent manner and also in a reckless, malicious, and/or intentional manner.
- Allied knew that the actions it was taking against the Plaintiff would likely, and certainly, cause the exact type of injuries and damages that Plaintiff suffered at the hands of Allied.
COUNT IV
NEGLIGENT, WANTON, AND INTENTIONAL CONDUCT
- All paragraphs of this Complaint are expressly adopted and incorporated herein as if fully set forth herein.
- Allied owes a duty to anyone it comes in contact with to act reasonably so as to not unreasonably cause harm.
- Allied owes a duty to consumers against whom it is collecting to act reasonably.
- All of the actions described in this Complaint demonstrate that Allied did not act reasonably towards the Plaintiff.
- Allied, by its described conduct, breached its duty to act reasonably towards Plaintiff.
- Allied proximately caused injuries and damages to Plaintiff which were of the precise nature that Allied anticipated causing when they breached their duty to act reasonably.
- Allied knew, or should have known, that their conduct was likely to lead to the Plaintiff’s injuries yet it acted despite this knowledge.
- Allied acted with full knowledge and with the design and intent to cause harm to Plaintiff.
- Allied was successful in its design, intent, and plan to cause harm to Plaintiff and this is the corporate policy of Allied when dealing with consumers who do not pay debts that Allied allege are owed.
- Allied acted with negligence, malice, wantonness, recklessness, and/or intentional conduct in their dealings with and about Plaintiff as set forth in this Complaint.
- Allied violated all of the duties Allied had and such violations were made intentionally, willfully, recklessly, maliciously, wantonly, and negligently.
- It was foreseeable, and Allied did in fact foresee it, the actions of the Allied would lead and did lead to the exact type of harm suffered by Plaintiff.
- Allied acted with negligence, malice, wantonness, recklessness, and/or intentional conduct in their dealings with and about Plaintiff as set forth in this Complaint.
- Allied invaded the privacy of Plaintiff as set forth in Alabama law.
- Such negligence, malice, wantonness, recklessness, willfulness, and/or intentional conduct proximately caused the damages set forth in this complaint.
- As a result of this conduct, action, and inaction of Allied, Plaintiff has suffered damage as set forth in this Complaint.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff prays that judgment be entered against Defendants for all damages allowable (including statutory, actual, compensatory, nominal and punitive), costs, expenses, fees, injunctive relief to prevent further violations, and for such other and further relief as may be just and proper.
Respectfully Submitted
/s/ John G. Watts
John G. Watts (WAT056)
M. Stan Herring (HER037)
Attorneys for Plaintiff
OF COUNSEL:
Watts & Herring, LLC
The Kress Building
301 19th Street North
Birmingham, Alabama 35203
(205) 879-2447
(888) 522-7167 facsimile
PLAINTIFF DEMANDS A TRIAL BY JURY IN THIS CAUSE.
/s/ John G. Watts
Attorney for Plaintiff
Serve defendant via certified mail at the following address:
Allied Interstate, Inc.
c/o CT Corporation System
2 North Jackson Street, Suite 605
Montgomery, Alabama 36104
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