Certain Debt Repair Companies Use and Abuse Debt Validation, Collectors Charge (John Rossman quoted)


John Rossman, chair of Moss & Barnett's creditors' remedies and bankruptcy team, was quoted in the insideARM.com article, "Certain Debt Repair Companies Use and Abuse Debt Validation, Collectors Charge," (written by Aaron Steinberg, Sept. 23, 2015). Excerpts from that article appear below.

“The idea of credit repair, of companies cranking out hundreds of forms on behalf of consumers is nothing new, but I see damage being done to consumers who may not understand what they’re getting into with the form letters [sent by these companies],” says John Rossman, an attorney with Moss & Barnett, Minneapolis. “The CFPB and the FTC need to investigate this carefully.”

State Attorneys General have been actively investigating spurious debt repair organizations recently. For example, Minnesota’s State AG has been policing debt repair and debt validation schemes since 2009, for example. But State AGs’ authority is limited to the boundaries of their states, adds Rossman, who emphasizes the need for a federal authority to use the tools at their disposal, namely UDAAP, to investigate.

In what may be the beginning of a trend, the CFPB did bring charges under UDAAP against one debt repair service, World Law Group, earlier this month, although the CFPB’s allegations did not include debt validation requests. In the meantime, Rossman suggests, the collections industry should do what it can to help federal regulators with these investigations.

“In my mind, one function of this industry is to protect consumers,” Rossman says. “One aspect of that is to protect consumers from circumstances, products and services that may not offer them any benefit, and which may hurt them in some cases. It’s incumbent on firms, when they see a practice like this, when the get hundreds of nearly identical validation requests, to go to the FTC and CFPB and say, ‘We’ve received these requests and the circumstances are odd.’”

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