Welcome to the new location.
However, there is still some housekeeping to be done, so be patient while it’s taken care of.
As for being able to post comments? Well, it’s being worked on. Hopefully soon (as soon as guards against spammers and other S.O.B.’s are put in place and working).
Rottweiler,
ODO! Admin Team and Editor In Chief.
ODO! is becoming a part of Debtor Talk as of December 27. However, ODO!’s mission will not change, nor will the practice of my NOT mincing my words nor playing favorites on either side of the fence.
Therefore ODO!’s web address will be changing. Please update your bookmarks to reflect the new address:
http://debtortalk.net/outdebtout .
See you there…and at Debtor Talk discussion boards. 
I put this up originally in a slightly different way at Debtorboards: http://www.debtorboards.com/index.php/topic,7867.msg56106.html#msg56106 .
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If you think it’s bad that a creditor would cut the line to just above what you owe? This story posted on “Smart Money.com” by reporter Kelli B.Grant last Wednesday–“How to Blow Your Credit Limit — Without Spending”–shows it CAN get worse:
Under different circumstances, David Chaplin-Loebell wouldn’t have minded that American Express … cut his unlimited credit line to just $5,000…when AmEx reduced his line in October, he had an outstanding balance of $10,000. “I found out by having a business purchase declined,” …Chaplin-Loebell, who lives in Philadelphia, is now paying the balance under his regular card terms, and presumes the line will free up for new purchases once he’s below the limit. “For now, they’ve essentially frozen the account,” …
Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300. And that didn’t include the $35 over-limit fee. Pensabene grappled with customer service until they agreed to remove the fee, and then paid the balance in full. …
Like, let’s say, instant contract default. Even if one never went over the credit limit and/or was ever even late with a payment. And, yes, it’s as legal for the credit card companies to do this as to cut the line to just above what is owed:
[T]he practice of cutting credit lines below the balance is legal … says Chi Chi Wu, a staff attorney for the National Consumer Law Center, a consumer advocacy group. Federal Reserve rules requiring lenders to give cardholders 45 days notice before reducing a credit line to the point that it would trigger penalties won’t go into effect until July 2010. “[Until] then, there are no federal protections,”
Why would they do this?
One possibility is that this is yet another attempt by card issuers to get consumers to close their accounts (while bringing in a little fee income in the short term), says Dennis Moroney, research director and senior analyst for consulting firm Tower Group. “I can’t rationalize in my mind what other motivation there would be,”
The rationalization? Risk avoidance and narrowing the target market.
This is still another incentive for consumers to give up and close the account but allow the credit card company to rake in still.more.fees while doing it. But instead of coming right out and telling the consumer “We are cancelling your account”, which they can well do by contract, they are trying to back out. A little at a time.
Why do it this way rather than just go ahead and close accounts? Well, it seems that credit card companies are WAY oversubscribed relative to the economy and the carrying capacity of the companies.
If they were to just shut down the accounts they no longer want? It would not only be the public relations nightmare they are getting anyway, but it would scare the bejeezers out of their stockholders AND it may well get attention from Federal regulators they do not want.
Guess which risk they decided to take? Angry stockholders and pissed-off regulators are a lot more painful than some ticked-off consumers whose goodwill the credit issuers don’t want anyway.
If you were thinking just to pay off the account then sock-drawer it to try to keep the line open? Well, think again: Spokeswoman Cindy Savio of HSBC said:
“[I ]n an effort to reduce credit risk and refine strategies for our card business, we have tightened credit standards, reduced or canceled higher risk credit lines, and closed a number of inactive accounts,”
Use the account? We will screw you.
Don’t use the account? We will screw you.
Is it just me, or do I see a “Catch-22″?
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Grant, Kelli B., “How to Blow Your Credit Limit–Without Spending”, SmartMoney.com, March 11, 2009. Downloaded March 15, 2009. Available from http://www.smartmoney.com/spending/deals/card-issuers-will-not-hesitate-to-slash-your-credit-line/ .
You may also be getting something else: Assessed bank fees simply trying to access YOUR money.
This Associated Press report (via. the ‘Clarion-Ledger’ [Mississippi]), “Jobless hit with bank fees on benefits” (“Fair Use” claimed) tells of the unpleasant “surprise” some unemployed people have discovered when they try to use the “convenient” cards, or even ask the bank via. phone how to use them!
One unemployed engineer–Arthur Santa-Maria from New Mexico–found out the hard way just why banks such as Bank of America (B0A) have found these contracts with several states to administer the unemployment benefits via. prepaid debit card attractive:
[H]e was issued a Bank of America debit card …was surprised to learn he had to pay fees to get his money. He asked the bank to waive them. It said no. That’s when Santa-Maria called back to ask how to check his account online. He logged on and saw that the call cost him a half dollar. To avoid more fees, Santa-Maria found a Bank of America ATM at a strip mall and withdrew $80 at no charge… [H]e decided to take out the rest of his money — $250 — and deposit it in his bank account.
Afterward, Santa-Maria logged on to his account and saw a charge of $1.50 for two withdrawals in one day.
Nice: He gets charged to call them to ask how to use the thing.
Then he gets charged to get his balance on-line.
Then, to add insult to injury? Mr. Santa-Maria gets dinged an additional penalty fee for making two withdrawals in one day! And was his bank BoA? If so, that was adding insult to injury.
Avoid this expense by “using the card in the right way”? Not so easy: Since many an expense cannot be paid with a debit card–such as the rent and utilities–and a single benefit payment (benefits are generally paid by the week) is likely less than the amount of the biggest bills over the course of a month which necessitates multiple withdrawals and re-deposits into an existing account, either at that bank or another one? One can easily see the income potential for a bank like BoA.
But why would the states agree to a program that could be a political millstone around their necks? After all, their unemployed constituents would not exactly be fond of being treated like little children–or welfare cheats–simply to get the unemployment benefits they are qualified for.
Unless…
A typical contract looks like the agreement between Citigroup and the state of Kansas… The state expects to save $300,000 a year by wiring payments to Citigroup …
Citigroup’s bill to the state: zero. The bank collects its revenue from fees paid by merchants and the unemployed.
It’s cheaper to wire money in bulk and let the private sector take on the expense…and the opportunity to make a big profit…of distributing the funds to beneficiaries. After all, issuing individual checks is expensive and states are not adverse to saving beaucoup bucks where they can. New Mexico certainly does:
The state saves up to $1.5 million annually by not printing checks.
Are these fees necessary? Not really; the banks are open to administering the distribution of the benefits if the states would just pony up those administration fees.
You can guess what the states will NOT do. Nor will they necessarily think the current fee schedule is “unfair”:
Bank of America spokeswoman Britney Sheehan pointed out that the fees charged in New Mexico are similar to those charged in the 29 other states with unemployment debit cards.
How prevalent is the issuance of pre-paid debit cards as the medium for paying unemployment benefits? Thirty states now use these debit cards for paying benefits; eleven are considering switching to debit cards from paper checks. (The rest use checks or direct deposit.)
[See the original graphic here .]
Are there benefits? Maybe, if one is among the “unbanked”:
[T]he cards can save money for jobless workers who have no bank accounts. In the past, these people had to use corner check-cashing shops that charged fees as high as 2 percent, or $6 for a $300 check. Now, they can swipe their cards at McDonald’s, Wal-Mart or elsewhere for free
A bargain for these people? Hardly: It’s very unlikely that businesses will give “cash back” without a purchase or even with one.
This also overlooks the fact that many of these banks may not be located where the unemployed worker is or can get to and the ATMs they can access may not be in the “network”. That means more fees, potentially to at least two different entities (the ATM owner and the issuing bank). Since the average fee for a withdrawal at a non-network ATM is already substantial (it averages around $2.00 a withdrawal where I am located (CT)), the fess for using a check cashing service may well be cheaper than the fees tied to the use of the debit card over time.
Also remember that “pre-paid” debit cards do not allow for any sort of “overdraft” privilege so there are no additional costs to the bank for such transactions. Or, do they prohibit overdrafts? Perhaps not: Seems that such a logical conclusion–don’t allow overdrafts–may not be in the best interests of the bottom line of some banks:
Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what’s on the card.
How nice: Overdraft fees, too.
The only way to avoid all of this is to handle the debit card as if it were a paper check:
They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller.
And they claim this service is really for the “convenience” of the beneficiary? Since when is having to wait in line at a bank and then dealing with a teller (especially if the bank is not the one one has their account(s) at) “convenient”?
No…the reason for all of this bulldung is here:
Some banks…also make money on the interest they earn after the state deposits the money and before it’s spent. The banks and credit card companies also get roughly 1 percent to 3 percent off the top of each transaction made with the cards.
As an example, in Missouri, analysts figure the average recipient uses the card six to ten times a month:
…94,883 people claimed unemployment benefits through debit cards from Central Bank….If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week…the bank’s revenue would jump to more than $521,000. That would yield $6.3 million a year.
As Rachael Davis from St. Louis, MO, recently unemployed said to the AP [after she had to pony up $6.00 for two $40 transactions against such a debit card]:
“It’s a racket. It’s a scam.”
Need I say more?
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Leonard, Christopher, “AP IMPACT: Jobless hit with bank fees on benefits”, The Clarion-Register, Mississippi, February 19, 2009. Originally via the Associated Press; downloaded February 19, 2009 from http://hosted.ap.org/dynamic/stories/B/BANK_FEES_JOBLESS_BENEFITS?SITE=MSJAD&SECTION=HOME&TEMPLATE=DEFAULT
(“Fair Use” claimed for all quoted materials.)
The crew at “Saturday Night Live” has the right idea for handling one’s financial affairs during these uncertain times (thanks to “Doctor Evil” at Debtorboards for this lead):
This video can be found at “Hulu.com”: http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff (WARNING: This is a copyrighted item; the “Hulu” site is the official source for this NBC.com video. The embed code was obtained from the “Hulu” site and the video is NOT to be copied from “ODO!”)
I suspect AIS, LLC and the Hannas might be close…like Siamese twins??
This thread at “Debtorboards” involves a member who has been contacted by AIS, LLC, those “fine” representatives of the debt buyer industry. Since I never heard of them before this post, I decided to look into them, starting with Bud Hibbs; he seems to have their number: “AIS Services, LLC.”
Among the items posted was a scan of a collection letter this “pro” agency sends out (link to image, enlarged from the front page for this agency at Bud Hibbs’ site). The body of the text reads:
Dear (Consumer):
This letter is to confirm your agreement to settle this account for the amount of $(amount redacted) to be received on 4/24/2008. Payment must be in the form of Check By Phone. Upon clearances [sic.] of funds we will delete this collection from the credit reporting agencies. If this is not your understanding of the agreement, please contact me upon receipt of this letter.
If you are making an electronic payment, please make sure that sufficient funds will be available in your account on the due date.
The letter forwarded to Bud Hibbs had a due date of April 24, 2008; the date on the settlement letter was…exactly the same! Considering that a mailed letter–and this was one–does NOT get to anyone on the day it’s mailed, what chance was there that this was a real, live, honest-to-goodness settlement agreement?
Exactly…no way in heck. It was a simple collection letter, made to look as if the consumer agreed to do a PFD (pay-for-delete), and one which could NEVER have been fulfilled to terms since the due date and the “agreement” date were exactly the same; if the consumer disagreed, they needed to call, presumably that same day! An impossible situation.
Never you mind that this letter also put AIS under the coverage of the CROA (Credit Repair Organizations Act)! Section 404(B)(b) reads:
Payment in Advance.–No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
A PFD by definition requires payment in advance of services rendered (in this case, deletion of a trade line on a credit report). This letter calls for such payment. That, in turn, creates a CROA violation since AIS, LLC is then acting as a CRO.
Note the “settlement offer” letter is also designed to make it appear that the consumer admitted to the debt. If this were the initial communication, it also violates the FDCPA because the §809 [§1692g] notice is missing (the “This communication is from a debt collector…” statement is NOT enough to meet that requirement).
How could it be that people would make such an egregious “error” at AIS’ end?
Well…what people? This letter was almost certainly computer-generated; AIS, LLC, it appears, has NO live collection agents. Their offerings include, it seems, almost anything BUT real people at the client’s (or consumers’) service:
IVR, unattended, inbound and outbound power and predictive dialer from Dial Connection.
…
Indeed…their CSR is “virtual”:
Virtual Collector website at www.payais.com for negotiation, auto-resolution and automated payment processing.
“http://ais.virtualcollector.net/Home.aspx”
This may be why any consumer who disputes the debt needs to do what they tell them to:
Disputes are handled via mail only. Please send a detailed description of the nature of your dispute to the address below:AIS Services, LLC
50 California Street, Suite 1500
San Francisco, CA 94111
Attention: Dispute Department…[M]ake sure to include your Social Security number (required), original account number, our file number (if available) and/or any documentation relevant to your dispute. We will not process disputes that do not have this information or appropriate evidence and/or documentation to substantiate your claim.
They are not within the law by making these demands; as I wrote at DB:
1.) They are admitting to deliberately NOT getting verification as required per §809 [§1692g] of the FDCPA. In fact, it appears as if the consumer is expected to “validate” their own alleged debt. Never mind that providing all the information they would want would give THEM documentation it is clear that they DO NOT HAVE and may well not be able to get.
In addition, NONE of the information demanded is required to validate debt per the FDCPA (all that’s needed is enough to identify the collection account so the collector knows which one to get verification for). Certainly the consumer is NOT required to provide a detailed request nor any documentation to get validation.
Also, verbal disputes are acceptable per the FDCPA, but do not invoke all the protections per the FDCPA. The fact that AIS, Inc. will accept ONLY written disputes from consumers (that instruction to call them in that dunning letter is not consistent with their own procedures!) is a violation in itself, and adds to the “false and misleading” character of their collection process.
This entry at “800Notes.com” (a website where people post asking about toll-free numbers and who they are tied to) gives some insight into how AIS, LLC operates :
http://800notes.com/Phone.aspx/1-888-920-1300
A “sassy” wrote on June 26, 2007:
AIS is the name of the company they said that they were collecting a debit from an internet payday loan called onestep cash. AIS claims that I owe this company 600 dollars. I asked to receive a copy of the original loan papers and I’m still waiting to receive these papers. I don’t this amount of money and until I see this in writing I’m refusing to pay this amount.Caller: AIS
Peter Bennett, President of
AIS Services, LLC
50 California St, #1500
San Francisco, CA 94111Peter Bennett, President-direct line: 415-373-6981E-mail: pbennett@incomesciences.com
9320 Chesapeake Dr, San Diego, CA 92123
Phone: 858-650-0464 Fax: 858-650-0465
AIS’ stock in trade appears to be very old defaulted debts (read: Cheap to buy with little or no documentation).
These people have also been known to use every nasty trick in the collections playbook to get people to pay. However, it appears that one of them is NOT giving a phone number that is actually connected to a “live” phone; an “800Notes” user reports that, when he tried to call them:
TJC – 28 Jul 2007
…I got a message saying “the Verizon customer that you are trying to reach is not available, please try your call again later.
Hmmm…hiding behind a voice mail system that filters incoming calls so they never get to anyone? I suppose that this is logical, since there are no CSRs to take them…
As for the old debts? It seems that AIS and its principal don’t care much about some of the niceties of dealing with collection portfolios, starting with making sure the debts they are collecting on have not already been paid before AIS (allegedly) buys them (“cleansing” a portfolio seems to not be a practice of theirs). A consumer complained to Bud Hibbs about this very situation; note the location of the previous CA who was paid:
AIS services purchased an old debt 3 years after it had been PAID IN FULL. … I collected receipts and proof that this debt had been paid. It was sold to AIS in California by a collection company in Georgia (who acknowledged we had paid them back in 2004!), but they sold it to AIS anyway….
Note that this consumer paid a CA…IN GEORGIA…and THAT CA admitted to taking payment and yet sold the debt anyway. Could this CA (actually a JDB [debt buyer] from the wording here) have been owned by the Hanna family? We don’t know as of now, but somehow I hear some quacking ducks…
In fact, I heard enough “quacking” to post this in the Debtorboards thread:
Can we rule out Hanna and Family? I don’t think so: Loganville, GA is their branch office location…so Hanna MIGHT have their hands on this one. Loganville is located in Gwinnett County, GA (Wikipedia entry); one of the towns/cities in that county is NORCROSS, GA, a major business center for the Hanna family. Gwinnett County is also in the ATLANTA, GA, metro area…and that area also includes Norcross (Cobb County Wikipedia page; Metro Atlanta Wikipedia page…see under “Counties” and “Municipalities” ).
Also note that AIS is incorporated in Delaware. The AIS, LLC entry is here: https://sos-res.state.de.us/tin/ controller (link is broken because it will not get the page; the page is attached as a .pdf ). The date, however, raises questions as to whether this entity is the entity we are searching for. If it isn’t? Then that raises a lot of questions, starting with whether they have a corporate existence at all and/or where it is.
(To check for yourself, the URL is http://sos-res.state.de.us/ to get the search page .)
To date, I have not been able to find any real information on Peter Bennett of AIS, LLC; the name turns up a lot in web searches, but none of them (so far) are this guy. It also appears that the Hannas have no connection, but they do have a lot of in-laws (and “outlaws”) in the family, so their involvement, especially noting the practices used at AIS, LLC, cannot be ruled out.
Lenders–Beware the Coming Storm (X-post from Debtorboards)
November 3rd, 2009
This post by Flyingifr originally appeared at Debtorboards on November 3, 2009. It is a succinct commentary on the current credit crisis and how lenders are likely to discover that the “Law of Unintended Consequences” can hurt when it is applied to them and their business model.
The link to the original post: http://debtorboards.com/index.php/topic,8736.msg62516.html#msg62516
The post is used with the express permission of the author.
Flyingifr wrote:
Lenders – beware the coming storm
With the current recession and credit crisis, the news media is beginning to note a cosmic shift in people’s attitudes towards credit. No longer are credit cards being looked at as a universal necessity – they are once again being looked at as a luxury.
I am also seeing a shift in attitudes on both sides of the equasion. Loyalty is history. Lenders, who used to value long term relationships with their customers are now looking at their customers as cash cows and when the cow doesn’t give enough milk it is sent to the slaughterhouse to be turned into hamburger through rate jacking, credit line decreases or simple unannounced account closures.
I remember the days when bankers encouraged you to have a long term relationship with them. My Debit Card attached to my bank account still reads “customer since 1996″, but my credit cards no longer do. American Express still does that, but after a rate jacking and 4 credit line decreases in six months on an account that was never delinquent by one dollar or one day that account was closed within 14 months of its opening. Amex made no attempt to keep me as a customer and actually paid thousands of their customers to go away. The other credit card companies are in the same boat. Citibank made no attempt to salvage our relationship, neither did GEMB.
It is easy to ascribe this to the current credit crisis, and that is probably a correct assumption, but what is happening to the concept of “loyalty”? Loyalty is a component of trust, and the credit industry is built on trust. Lenders trust borrowers to repay and borrowers trust lenders to be honest with them and to honor their commitment to lend. Stories are legion of people at checkout counters across the land attempting to use a credit card that they thought had plenty of available credit only to find there is none after a quick and unannounced decrease in credit line. I am not talking about accounts that are delinquent in payment – I am talking about accounts that are current, have always been current and in many cases actually have no balance owed at all.
Lenders say “it’s a business decision” and they are correct. But that goes both ways, and this is where I am sure the collectors will argue with me. How many of us have heard collectors cajole us towards repayment based not on the “business decision to repay” but on the “moral” argument – you have a moral commitment to repay. It’s as if one side of the transaction is an amoral “business decision” when made by a lender and the other is a “moral imperative” when made by a consumer. “Yes, we raised your interest rate to 30% and cut your credit limit to $5 above your balance with no advance notice, tripled your payment, changed your due date and there is nothing you can do about it even though you have been a customer of ours for thirty years and have never made a late payment, but your payment is now five minutes late. Here’s your late charge and we dinged your credit.”
OK, so it may not actually be THAT draconian, but many people feel it’s pretty close to that, and many are angry. How angry? I see a storm coming that the lenders are powerless to stop and may end up hurting them big-time.
If credit is reduced to simply an amoral “business decision” what happens when BOTH sides of the transaction see it that way? The moral imperative to be honest goes out the window and only what is expedient and can be “gotten away with” will happen. Let’s discuss someone I know and we will call her Jenny. I personally know about dozen people who fit Jenny’s profile and the number is growing daily.
Jenny is in her late 50’s. She has a six-figure credit limit spread among a half a dozen credit cards. Her utilization is about 20% and makes her payments consistently above the minimum and on time. Her FICO’s are all in the mid 700’s. She has a six-figure household income, owns her home and has three paid for cars. Her children are all grown and she is preparing for her retirement. She has two pensions fully vested and a solid investment portfolio.
She has also had $75,000 in credit lines reduced in the past year and has had four credit cards closed unannounced. She feels she plays by one set of rules and the lenders play by another. She is right – she plays by the “moral imperative” set of rules and the the lenders are playing by the “business decision” set.
That is about to end.
Her plan: To retire at age 62 – as soon as she can collect her pensions and Social Security and move to the Philippines. She will sell her paid for home to her child before doing anything. By that time her investment portfolio will be in the low six-figure range, and her combined pensions and Social Security will allow her to live like royalty in the Philippines. Did I mention that she plans to hit all her credit cards up to the maximum before she leaves, and not pay them back? She won’t need them in the Philippines, she will have enough cash for whatever her heart desires. She doesn’t care what happens to her credit rating in the US, she will be in the Philippines. Or Brazil. Or Singapore. Or Korea. Or Mexico, Belize, Costa Rica or anywhere else in the world, even Nova Scotia. “It’s not personal, it’s business.”
Collectors will skip trace her, maybe they will find her, maybe they won’t. If they do, what can they do? Her pensions and Social Security will be Direct Deposited to a bank in the Philippines. Her assets will be in Treasury Bills. The Treasury will mail her a check every six months for the interest. None of which can be touched by bill collectors. Is she alone in making these plans? No, I know of a dozen like her and several who have already done this. The numbers will grow and with each one the lenders will get hit hard. In Jenny’s case for $100,000. The new morality is “it’s just business.”
Lenders – you created this environment. I hope you enjoy it.