Source: http://www.engstrandlaw.com/consumer-rights-debt/
Timestamp: 2019-04-23 18:44:12+00:00

Document:
In these tough economic times, all too often hard-working families that have fallen behind on their debt obligations have been harassed by a barrage of telephone calls from debt collectors both at their home and place of business.
Under the Fair Debt Collection Practices Act (FDCPA), you can write to the debt collector and demand that they immediately cease and desist from calling you at your home and place of business. You do not need any legal expertise to draft this letter for yourself. You simply need to state that “Under the Fair Debt Collection Practices Act demand is made upon you to immediately cease and desist from telephoning me at my home and place of business in connection with the disputed debt.” Continued telephone calls after this letter has been received by the debt collector is a violation of law. It is best not only to mail this letter to the debt collector, but also to fax it to them to insure that the calls will immediately stop.
On the other side of these tough economic times are law firms getting involved in debt collections when they have no experience in this field. Because of stringent protections afforded to the consumer under federal law, debt collection is a veritable minefield for law firms that have no business being in the business of collecting debts.
A debt collector is defined by the FDCPA as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. §1692a(6). Therefore, a debt collector would include an attorney who has written a letter on behalf of a client to collect a debt.
Lately, it has been our firm’s experience that many of our clients are receiving dunning notices from law firms that have failed to disclose that they are debt collectors and that they are “attempting to collect a debt and that any information obtained will be used for that purpose . . . .” See 15 U.S.C. §1692e(11). Such disclosure in the initial communication with a consumer is required by 15 U.S.C. §1692e(11). Failure to make such a disclosure in the initial communication constitutes a false, deceptive or misleading representation or means in connection with the collection of a debt. 15 U.S.C. §1692e.
We have also seen a number of these inexperienced law firms attach a draft summons and complaint to their dunning notices to the consumer. Ostensibly, this is done to drive home the point that unless the consumer fork over the money that is owed, they are serious about commencing immediate litigation by virtue of the fact that they have already prepared a summons and complaint. Unfortunately for these inexperienced law firms, attaching to their dunning notice a draft of a summons and complaint constitutes a further false, deceptive or misleading representation or means in connection with the collection of a debt pursuant to 15 U.S.C. §§1692e(13).
The FDCPA imposes statutory damages upon a debt collector of up to One Thousand Dollars ($1,000.00) per violation per individual consumer, plus court costs and attorney fees. 15 U.S.C. §1692k(a)(2)(A). If it turns out that the debt collector has violated the FDCPA with respect to other consumers, class action damages of up to the lesser of $500,000.00 or 1 percent of the debt collector’s net worth can be awarded. 15 U.S.C. §1692k(a)(2)(B).
(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. . . .
Therefore, if the inexperienced law firm is found to have sent out a number of these dunning letters, class action damages may be warranted. At the very least, you can bring an action in Small Claims Court for the $1000.00 in statutory damages against this law firm without the need to hire any attorney based upon the above statutory sections that we have provided you with. However, if you believe that there may be the potential for a class action against the attorney debt collector, you should call us immediately. We are experienced in successfully handling class actions and, more importantly, we are experienced in this unique area of law.
Credit card companies are, for all intents and purposes, banking corporations. Almost uniformly, these companies are national banks. Frequently, these national banks assign the credit card debt to other national banks. Therefore, if you are in default, you may end up receiving notices from a third-party company claiming that the credit card debt has been assigned to it by the original issuer of your credit card. In that case, a third-party credit card company that has taken an assignment of your debt had best be licensed to do business in New York if they have any hope to collect upon it.
A foreign corporation shall not do business in this state until it has been authorized to do so as provided in this article. A foreign corporation may be authorized to do in this state any business which may be done lawfully in this state by a domestic corporation, to the extent that it is authorized to do such business in the jurisdiction of its incorporation, but no other business.
Business Corporation Law §1301(a). Accordingly, failure to be so licensed is a fatal omission which would render the credit card company without legal capacity to sue in this state.
Credit card companies frequently jack up the interest rates when consumers fall behind on their payment obligations. Some of these companies charge usurious amounts of interest, calling it a “default rate of interest”. These banks rival loan sharks in the amount of interest that they charge and try to legally get away with. Rates as high as 29.9 percent have been seen by us in our experience of representing clients in this area of law.
It has long been the law in New York that usurious contracts are void and unenforceable. Gen’l Oblig. Law §5-511. This means that if the default rate of interest is found to be usurious, you would not have to pay anything on that credit card debt—the entire debt obligation (the total amount that you owe on the credit card) would be void.
New York sets criminal usury at a rate greater than twenty-five percent (25%). Penal Law §190.40. The civil usury rate is set at a rate greater than sixteen percent (16%). N.Y. Banking Law §14-a. A “default rate of interest” at 29.99% would clearly be considered usurious under New York law. However, federal law (29 U.S.C. §85) for national banks allows these credit card companies to charge their “home state’s” interest rate, which in the case of credit card issuers is typically greater than New York’s usury limit. But it should be noted that this federal statute does not automatically preempt New York’s usury limits by allowing these national banks to charge the higher rate. Before a national bank can get away with charging what in New York would be considered a usurious interest rate, the national bank must first be able to prove that “at least one significant non-ministerial action associated with the [credit card holder’s] account took place in the ‘bank’s home’”. Citibank (S.D.), N.A. v. Hansen, 28 Misc.3d 195, 196, 902 N.Y.S.2d 299, 301 (Dist. Ct. Nassau County 2010).
Therefore, national banks when they sue on the credit card debt all too often fail to specify the law governing its right to recover a rate that exceeds New York’s usury limit and plead a non-ministerial act performed on the account in its “home state”. Our firm has been successful in having these credit card contracts declared usurious and, hence, unenforceable.
If you are being sued by a credit card company claiming that you owe it a significant sum of money based upon an outrageous default rate of interest, we can help you fight back hard.

References: §1692
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