By Kenneth Long on August 17, 2011

Would you be willing to pay $3 each month just because you used your debit card to pay for a purchase? Wells Fargo and Chase are testing that possibility. An AP-GfK poll in June 2011 shows that as many as 6 in 10 would consider switching payment forms to avoid paying the monthly fee.

Wells Fargo and Chase are testing whether consumers will acquiesce to $3 fees to be charged in any month where you utilize your debit card for a purchase. Chase began testing "in a small market back in February" and continues testing according to spokesman Thomas Kelly.

Wells Fargo has announced testing to see how well the $3 monthly debit card fee is accepted by its Georgia, Nevada, New Mexico and Oregon customers. Those tests are scheduled to begin October 14, 2011.

Avoiding Monthly Debit Card Fees

If you are indifferent about the fee or feel that it is justified due to the banks' need to recoup lost debit card fees from the fee cap, then you can do nothing and pay the fee. Many consumer advocates recommend simply moving on to another bank. However, this can be complicated if you have direct deposit and automatic monthly payments made by ACH debit or charged through your debit card. Additionally, there is no guarantee that the bank you switch to will not announce similar measures a week after you switch!

One consideration is to explore credit union membership. Many credit unions have zero or negligible fees for many financial products, including checking accounts and debit cards.

Affected customers that do not agree to the fee may choose to close their accounts, protest the fee by requesting a waiver or find out how to avoid checking account fees. Chase released information on how its customers may avoid checking account fees. Wells Fargo checking account fees may also be avoided by meeting certain requirements. Most fees may be avoided by meeting certain minimum balance requirements, although there are additional ways to qualify for fee waivers.

Reason for Debit Card Fees

Ever since the Durbin amendment was added to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, banks have been struggling to replace the lucrative debit card interchange fees that have been paid by merchants. Although the Federal Reserve has since relented and is allowing a slightly higher fee than the original ceiling, it still squeezes banks.

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Wells Fargo alone believes this loss of fee income could total $250 million a quarter. This is just one of many fees that banks are considering in order to replace lost revenues.

As is often the case, poor results from a test can reverse such decisions. Chase previously tested ATM fees as high as $5 at certain locations in Illinois and Texas, only to cancel the test just over a month later. Protesting such fees, threatening to leave the bank or actually closing your account are all strong reactions that may influence whether Wells Fargo and Chase cancel the tests or expand them to all of their customers.

By Kenneth Long on August 12, 2011

Are you receiving threatening phone calls about collection accounts you do not recognize? Are the callers especially abusive? You may not know it, but you could be a victim of more than just a collection law violator. You could be the target of the rapidly growing fake collection agency scam.

If you truly owe a debt, then you should make every reasonable effort to repay it. You will want to resolve the debt on your terms, not theirs. However, if you do not owe the debt, then you cannot allow yourself to be victimized.

Many collection calls use intimidation or threats to coerce you into repaying a debt. These actions are illegal. Many debtors have successfully sued debt collectors for FDCPA violations and won.

When the agency is not an agency at all, it can be difficult to determine whether or not the collection attempts are legitimate. There are some clear cut ways to make sure that you are dealing with a bona fide collection agency or attorney who is legally entitled to pursue collection of a real debt.

First, you will need to request verification of the debt. Upon request within the first 30 days of collection activity, a debt collector must supply you with proof that you owe the debt in which they are pursuing repayment for. Any legitimate debt in which you are denied your right to receive validation for could be cancelled if the collector fails to meet your validation request. So far, fake collection agencies have not gone so far as to send fake validation notices, but it is likely that this will occur in the future as these scammers become more brazen.

Second, you need to confirm that the collection agency is responsible for the collection of your debt. You could legitimately owe a debt, yet the debt could be assigned to a different collection agency. A scammer could, upon receipt of your credit report attempt to pursue repayment of a real debt owed by you that they do not have the rights to collect for. Contacting the original creditor to confirm the identity of the debt collector (name, address and phone number) should precede any payments to a debt collector to ensure that your payments will be properly credited.

Finally, check with regulators to ensure that the debt collector is legitimate and licensed to practice debt collection in your state. Even some legitimate debt collectors fail to obtain licenses in some states that they collect debts in. A scammer will certainly not be licensed in your state, nor will they have assigned any required surety bond with the state. The Secretary of State will be able to confirm whether the firm is compliant.

Since the fake collection agency scam is becoming so widespread, it is essential that you carefully note any and all contact from debt collectors. Write down phone numbers, save emails and file letters in a safe place. Never fall for any "official" sounding name, such as Federal Crimes Investigative Unit, United Financial Crimes Division or any other name that is designed to scare you.

Similar versions of this scheme involve criminals contacting consumers using a payday loan scam. They claim to have tracked down the person and threaten to call their employer, neighbors or family to embarrass them (all illegal actions).

Never send money until you know for certain that you are dealing with a fully licensed debt collector who has been legally assigned your debt. Otherwise, you could be out the money you sent and still owe your legitimate creditors.

By Kenneth Long on August 10, 2011

A debt settlement giant just backed out of a two day trial in Maine. Instead of continuing on, Credit Solutions of America decided to agree to a consent judgment that bans them from signing up new clients in Maine.

Attorney General William J. Schneider announced the settlement with CSA which concludes his office's investigation into violations of the Maine Unfair Trade Practices Act. CSA must pay $150,000 in investigative and court costs.

Credit Solutions of America claimed it could settle debts for 40%-60% of what consumers owed. Out of 561 Maine clients, only 6 settled their debts for 40% of what was owed.

In operating their advance fee debt settlement scheme, CSA required clients to pay the initial 15% enrollment fee even if their debt was not settled. CSA is responsible for continuing to service the accounts of clients who have already paid for services, but they are specifically prohibited from enrolling any new Maine clients.

Attorney General Schneider stated that “despite CSA’s claims that consumers who enrolled in their program would be debt free in 36 months, the truth is that debt relief is not a quick fix.”

Will Lund, Superintendent of the Bureau of Consumer Credit Protection stated that “more than 98% of Maine consumers who dealt with this company did not get the promised results.” He added the following warning:

“Consumers who do their ‘due diligence’ before committing money, and who check to see if a company holds a valid license, can save themselves a lot of grief.”

Debt settlement companies still overpromise their results and underdeliver on those promises. Clients who should have gone through credit counseling are now finding themselves behind on all of their bills, facing legal action on their own, and have absolutely wrecked credit.

By Kenneth Long on August 9, 2011

Consumers and regulators keep asking, "is Western Sky Financial Legal?" Our answer is, probably not in most areas of the country. Of course, just like any other predatory loan company, it takes years of litigation before they are forced into compliance with state financial service and consumer protection laws.

Instead of providing legal advice about their operations, take a look at the regulatory actions that have been filed against them so far:

Colorado Sues Western Sky Financial

In March 2011, Colorado sued Western Sky Financial and its owner Martin A. Webb. Attorney General John Struthers accused the online payday lender of charging interest rates in excess of those allowed by state statute.

Instead of charging no more than 12%, the unlicensed payday lender charged interest rates of almost 300% according to the state. Also noted was that the firm was wholly owned by Martin A. Webb, not the Cheyenne River Sioux Tribe.

Maryland sues Western Sky Financial

The state of Maryland claims Western Sky Financial and its many related entities violated the Maryland Consumer Loan Law. In addition to claims of charging usurious rates, the state also claimed that Western Sky failed to obtain the necessary state licensing. The state issued a cease and desist order to Western Sky and its owner in February, 2011.

Western Sky Financial, Owner Martin A. Webb and All Related Entities

These legal actions are the tip of the iceberg. Western Sky is finding itself on the radar of several consumer protection officials, including those in New York and West Virginia. Recent actions apply to the following entities:

• Owner Martin A. Webb
• Western Sky Financial LLC, a/k/a Western Sky Funding LLC, a/k/a Western Sky, a/k/a Westernsky.com
• Great Sky Finance LLC, a/k/a Great Sky Finance, a/k/a GS Finance, a/k/a Great Sky, d/b/a GSKY, d/b/a Great Sky Cash (a/k/a GreatSkyCash.com)
• Payday Financial LLC, d/b/a Lakota Cash (a/k/a Lakota Cash LLC, a/k/a LakotaCash.com), d/b/a Lakota Cash LLC, d/b/a Big Sky Cash (a/k/a BigSkyCash.com), d/b/a Big $ky Cash (a/k/a BigSkyCash.com), d/b/a Western Sky Financial LLC (a/k/a WesternSky.com), d/b/a Western Sky Funding LLC, d/b/a Western Sky, d/b/a Great Sky Finance LLC, d/b/a Great Sky Finance, d/b/a GS Finance, d/b/a Great Sky, d/b/a GSKY, d/b/a Great Sky Cash (a/k/a GreatSkyCash.com), d/b/a Red Stone Financial LLC, d/b/a Red River Ventures LLC, d/b/a Management Systems LLC (d/b/a GSKY)

Doing business with Western Sky or any other payday lender is risky and dangerous. Paying interest rates above 20% is never wise, and paying 15 times that in interest is downright foolish. Western Sky and its subsidiaries routinely charge usurious interest rates that exceed the state cap in several states in which it originates loans.

A major legal challenge to the claims of sovereignty is brewing. Until then, it will be up to the individual states to take legal action against Western Sky on behalf of their residents.

By Kenneth Long on August 5, 2011

A recently filed lawsuit alleges that New York debt collector Global Credit & Collection Corp violated the rights of a Louisiana woman while pursuing a debt. Wendy Trahan filed suit in a New Orleans federal court on Monday, August 1.

Trahan claims that the collection agency was unable to file a judgment against her. If true, then they would have been prohibited from threatening to take legal action against her. Legal action could include a collections judgment, wage garnishment, liens or levies of her bank accounts.

Additional violations are alleged to have been committed by Global Credit. They are accused of contacting the debtor's mother and warning against a pending legal matter. She claims they also left a voicemail with her father's employer which claimed that a breach of contract had occurred.

Debt collectors are prohibited by the Fair Debt Collection Practices Act (FDCPA) against certain actions that are abusive in nature. Revealing a debt to a third party is a definite violation. Additionally, collection agencies are prohibited from threatening to take legal action against a debtor if they cannot or do not expect to file a lawsuit.

If these allegations are proven, the court could require that Global Credit provide compensation to the victim, plus attorneys fees to her lawyer. Both are customary under successful FDCPA lawsuits.

Ms. Trahan is represented by attorney Greta L. Wilson of Macey & Aleman, P.C. of New Orleans. Partners Thomas G. Macey and Jeffrey J. Aleman have faced regulatory scrutiny over their debt settlement practice with Legal Helpers Debt Resolution.

According to regulatory actions by the Illinois Attorney General and the Illinois Department of Financial and Professional Regulation, Legal Helpers committed numerous violations of the Illinois Debt Settlement Consumer Protection Act.

Trahan's case should not be affected by the debt settlement complaints against the firm. The case is against Global Credit & Collections, which obtained the debt after it was charged-off by Capital One Services.