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Post date: December 18 2007

Attorney General Cuomo Stops Debt Collection Abuses By Western N.y. Company

ALBANY, N.Y. (December 18, 2007) - Attorney General Andrew M. Cuomo today announced that a Western New York debt collection company that acted overzealously in attempting to collect debts from consumers - including using abusive, false and misleading tactics - has agreed to pay $85,000 in penalties and costs and immediately reform its business practices.

"While companies indeed have a right to collect money owed, debt collectors do not have a right to abuse and harass consumers and prey on those who may find themselves in over their heads," said Attorney General Cuomo. "This company's alleged tactics went far beyond legal - or even normal - methods of debt collection. With this settlement, it has changed its practices to comply with New York State and Federal laws."

National Action Financial Services, Inc. (NAFS) of Williamsville was the subject of approximately 90 complaints from across the country to the Attorney General's Office over the past three years (approximately one-third were from New York State). According to many of the complaints, the debt collection company engaged in "skip tracing" violations, a practice in which NAFS continually called third parties for location information despite requests to stop.

Other complaints indicated that NAFS collectors were falsely claiming that they were calling from an attorney's office, claiming that NAFS or a creditor was about to commence legal action, discussing debts with third parties, and/or continuing to call debtors despite requests to stop.

In one instance, a consumer alleged that a collector harassed her by sending a fax 20 times within 2 ? hours to her employer. After Attorney General Cuomo's Office approached NAFS with the complaint, the company conducted its own internal inquiry and fired the collector.

In addition to the $85,000 in civil penalties and costs to New York State, the agreement requires NAFS to immediately reform collection practices to be in line with state and federal laws, and to devote more resources to ensuring compliance. NAFS, which cooperated fully with the investigation, must also submit a report detailing the changes to the Attorney General's Office by March 11.

Under federal law, debt collection agencies are allowed to contact individuals by various means, but they are restricted from contacting debtors at inconvenient times or places (e.g. before 8 a.m. or after 9 p.m.). The Federal Fair Debt Collection Law prohibits agencies from contacting individuals at their place of employment if the agency knows that the debtor's employer disapproves. Debt collection agencies are barred from engaging in abusive and unfair tactics and misleading representations, including:

  • Repeatedly or continuously calling with the intent to annoy or harass
  • Placing telephone calls without meaningful disclosures of their identity
  • Falsely implying that collectors are attorneys or that there is the involvement of an attorney in collecting a debt
  • Falsely claiming that they are government representatives
  • Falsely claiming that an individual has committed a crime or threaten arrest or imprisonment
  • Falsely implying that the debt collector is employed by a credit bureau
  • Collecting an amount greater than what is owed

New York State's Debt Collection Procedures Law offers additional protections such as prohibiting:

  • Communicating the nature of a debt with an individual's employer prior to obtaining a judgment against the debtor
  • Threatening to collect a fee over and above the owed debt
  • Contacting an individual or family member with such frequency or at such unusual hours as can be reasonably considered abuse or harassment.

More information about debt collection and relevant state and federal laws can be found online at Debt Managment Consumer Tip Publication..

Attorney General Cuomo urges consumers experiencing credit-related financial problems or debt collection phone calls to consider seeking assistance by contacting a not-for-profit credit counseling agency licensed by the New York State Banking Department (

The NAFS case was handled by Assistant Attorney General Dennis Rosen and Senior Investigator Peter Eiss under the supervision of Russell Ippolito, Assistant Attorney General-In-Charge of the Buffalo Regional Office.