Inside Illegal Debt Collection Harassment: Why It Happens

Westbury, NYThe process of debt collection appears pretty basic on the surface: a consumer owes money and hasn’t paid, so the company to which funds are owed either attempts to collect the debt itself or moves the debt over to a collection agency for the purposes of collection.

But collecting an outstanding debt can be far more complicated, and in reality, operates as a robust industry grown from the ready availability of credit. And more often than not, collection (for the consumer) can go off the rails and descend into illegal activity where the consumer gets caught in the crosshairs.

North Shore Agency Inc. is one such example of an entity specializing in debt collection, but also having been accused of stooping to illegal means in their efforts to collect. A class-action lawsuit has been filed against North Shore Agency Inc., while other consumers having tired of harassing phone calls or endless notices of collection arriving through the mail, have turned to debt collection attorneys for help.

A common complaint involves harassment for a debt the consumer doesn’t even owe or a debt involving someone else. The Record Searchlight (4/20/13) provides an interesting snapshot of just how debt collection works, and how this all-too-common harassment can drive a consumer to despair, and to their legal representative.

A bill arrives in the mail from a collection agency - possibly from North Shore Agency Inc., but it could also be from any number of collection entities - demanding payment for a bill you do not owe. It could also be addressed to an individual who no longer lives at that address or someone you’ve never heard of in the first place.

The Fair Debt Collection Practices Act (FDCPA) allows a collection agency reasonable leeway to collect an owed debt, short of harassment, which is illegal. But here is where it gets interesting. Once a debt is disputed orally - by the consumer - a savvy collection agency will sell the disputed debt to another collection agency.

Consumers assume that in most cases, debts are assigned to a collection agency by the originating company that sold the appliance, or the furniture, to a consumer who allegedly has not paid.

However, more often than not, debts are sold to collection agencies for a percentage of the value of the debt. And debts can be sold again, and again (individually mind you, not concurrently), to various agencies. When a debt is formally disputed, by way of a letter from you or your attorney, then the burden of proof falls to the collection agency to prove that a) the debt is correctly owed as alleged, and b) it is you, indeed, who owes the debt.

Under FDCPA rules, a debt can be formally challenged within 30 days of the start of collection efforts by sending a registered letter to the collection agency formally disputing the debt and requesting a return receipt.

In so doing, the consumer (you) has just triggered a process that now puts the burden on the debt collector to validate the debt. They are required to prove that you are really the person who owes the money and that all those bills that have come through the mail have been forwarded to right person. That can prove costly for the collection agency, and can also prove to be a liability for them.

Here’s the interesting thing that most consumers don’t know - once a debt has been formally disputed, it has no resale value for the collection agency. He’s stuck with it, and no other agency will buy it. A consumer can verbally dispute a debt until the cows come home, but until it is formally disputed by way of a registered letter or other legally-binding correspondence, the collection stays active and the agency can sell off the debt to a different agency. A verbal, informal dispute doesn’t stop a debt collection agency from selling the debt, and getting a few dollars for it.

One innocent consumer told a business columnist in the Record Searchlight that harassing calls continued for a debt the consumer didn’t even owe. The actual debtors lived in the same apartment complex (but not the same apartment) about three years prior, before moving away. Nonetheless, the harassing calls kept coming.

It remains an illustration of just how big the business of debt collection has become. No longer is it a matter of a company, to whom the debt is owed, making attempts to collect money owed from the consumer who bought the appliance or furniture. Debt accounts have value, and until there is a formal dispute filed, they are bought, sold and flipped to the nth degree.

North Shore Agency Inc. is one of the largest collectors of outstanding debt in America, and boasts millions of invoices, order verifications, reminder notices and collection letters each year.

A class-action lawsuit is currently pending against North Shore Agency Inc., filed by a Tampa woman accusing North Shore Agency Inc. of violating the tenets of Florida’s Consumer Collection Practices Act, as well as the FDCPA. The plaintiff also alleges in her lawsuit that North Shore Agency Inc. mailed threatening debt collection letters to consumers, in an attempt to intimidate them into paying non-existent debts.

North Shore Agency Inc. is a subsidiary of Outsourcing Solutions Inc. and is based in Westbury, Long Island, New York. The case is Casey Joy, On Behalf of herself and All Others Similarly Situated, vs. North Shore Agency, Inc. Case No. 8:CV-00769-T-17EAJ.