Saturday, October 13, 2012

JPMorgan Chase's Tactics to Squeeze Student Loans Debtors #p2 #tcot

In addition to some $9 billion[PDF] in taxpayer-subsidized Federal Family Education Loans and untold millions in private student loans, JPMorgan, the country's biggest bank by assets, has a private equity arm, One Equity Partners. In turn, One Equity Partners owns NCO Group, a debt collector that makes millions of dollars a year from the federal government to collect on students who've defaulted on their loans. And that taxpayer money is paying for some pretty abusive practices.

In 2009, Jason Fagone at Philadelphia Magazine reported on one woman's experience with NCO as it tried to collect the $9,000 that her husband, at the time on active duty in Iraq, owed for school. At the time, Tara Burkholder told Fagone, she was working for free as a student teacher and had $92 in her checking account and a daughter to care for.

"The NCO lady told Tara it was time for her to give up on her dream of being a teacher, and get a paying job immediately: 'Honey, sometimes we have to do things that we need to do.' The lady also told Tara that NCO had contacted her husband's commanding officer in Iraq, and that if she didn't pay back the loan, her husband would be dishonorably discharged from the Army."

Burkholder's story is hardly the only one. In the past three years, according to areport [PDF] from the National Consumer Law Center, there have been 1,116 complaints to the Better Business Bureau about abusive practices from NCO. Last February, the company settled with attorneys general from 19 states, paying $575,000 to quiet complaints about its collection practices and setting aside $50,000 per state to reimburse consumers who have wrongly paid NCO for debts they didn't actually owe. That's right, people were being pushed to pay and in some cases paidback money they didn't owe in the first place.

In 2004, before it became a JPMorgan subsidiary, NCO Group paid the largest settlement to date to settle charges from the Federal Trade Commission that it violated the Fair Credit Reporting Act (FCRA). It paid $1.5 million after the FTC accused them of using later-than-actual delinquency dates on debts it was collecting, which meant that people with debts were stuck with those debts on their credit report for longer than is legal.

Fagone noted that he found reports of deception, of allegations that NCO collectors lied, berated family members, disclosed private information, threatened to garnish wages. One blogger who sued NCO wrote that the collector told his wife that they'd sell her home. NCO denied using these illegal tactics.

But in Texas this summer, the burger chain Whataburger sued NCO because of its collection efforts toward one of its employees, saying that the calls to the employee's workplace "amount to a campaign of harassment" against Whataburger that is "unreasonable" and "reckless." The company issued a cease-and-desist letter after repeated calls, more than 50 in all, started coming in to its toll-free number in search of an unnamed employee. The calls kept coming, in violation of the Fair Debt Collection Practices Act, and Whataburger wants $1,000 in damages per call.

A San Antonio lawyer who defends debt-collection cases told the Houston Chroniclethat debt collectors regularly call debtors at work, attempting to make people fear for their jobs.

"Combining banks, private equity and debt collection creates a toxic beast designed to plunder taxpayer dollars and impoverish young people while draining billions out of higher education," Stephen Lerner, who directed the Service Employees International Union's campaign against private equity, told AlterNet. "The worst players in the economy joined together to feed off of every possible level of student debt."

1 comment:

  1. To my mind it`s a good news. I think that students just can’t pay more than they pay today. Price for college tuition hold stay the same, otherwise youth will just drown in debt! Studying in college should be much more affordable than it is today. Many students don’t know what to do because they have to choose between their future career opportunities and getting in debt. Everything wouldn’t be so bad if all the graduates would have a chance to get employed and work on decent job. But unfortunately, many of young people visit online payday loan lenders only to make payments on their loans and don’t know anything about their future.