Growing Debt Collection brings both Reform and Limitation Concerns

May 23, 2014

The United States courts are reforming how the process of debt collection lawsuits works, especially in the area of default judgments.  Despite the positives of reform, there are concerns that the proposed changes will prevent creditors’ legal rights to collect the debts that they are rightfully owed. According to a report by American Banker, “The consumer debt case reforms recently proposed by New York’s chief judge are part of broader regulatory practices occurring in the credit and collection industry.”

Each year, there are tens of thousands of credit collection lawsuits, which are mainly brought by third parties who have purchased large portfolios of delinquent credit card debt. The reforms that are now underway were announced by New York Chief Judge Jonathan Lippman. The hope is that these reforms will ensure a fair legal process.

In an article by ACA International, Lippman is quoted as saying, “While no one disputes that consumers should pay their debts or that businesses have every right to resort to the courts to collect what is legally owed to them, the Judiciary has an obligation to prevent inequitable debt collection practices in the courts and ensure a fair legal process for all litigants.”

On the other hand, there are concerns that the proposed changes will limit creditors’ abilities to use the court system in order to collect the rightfully-owed debts. In a statement to the American Banker by Vice President of Public Affairs, Mark Schiffman states that “ACA International’s members have always followed court rules and will continue that practice.”

After the reforms were announced, the New York Attorney General, Eric T. Shneiderman, issued a statement in regards to dealing with two major debt collectors: Portfolio Recovery Associates, LLC, and Sherman Financial Group, LLC. According to the statement, the settlements with both Portfolio Recovery Associates and Sherman Financial Group were for repeatedly bringing improper actions against certain New York consumers.

According to ACA International, “The settlements require Portfolio Recovery Associates and Sherman Financial Group to vacate the improper judgments with the court and cease any further collection activities on the judgments, make key enhancements to their debt collection practices, and pay civil penalties and costs to the state in the amounts of $300,000 and $175,000, respectively.”

Lippman stated in an article that he admires a number of states for the consumer credit lawsuit best practices that they use; Maryland, Connecticut, and North Carolina, to name a few. As the reforms are applied to cases related to the credit and collection industry, the hope is that the changes will overflow and apply to all types of litigation.



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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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