The Debt Collection Robin Hood
By: Brian O'Connell

Here’s the story of one fed-up consumer who learned how to hit collection agencies where they hurt most — in the pocketbook. It’s all about catching creditors when they make a mistake, usually in aggressive bill collecting mode.

The Web site DallasObserver.com did the digging. In January, the site profiled Northeast Dallas resident Craig Cunningham, a self-proclaimed “private attorney general” who has struck a blow for consumers in debt far beyond the Texas border.

Since 2005, Cunningham has collected $20,000 in fines and penalties from collection agencies he beat in court over improper bill collection tactics, causing some collections professionals to not call him a private attorney general, but a “credit terrorist.”

Here is the backstory, and it’s a whopper. According to the Dallas Observer, the 29-year-old, Cunningham owes about $100,000 in debt, a major chunk of it in credit card debt. He is also facing foreclosure and is unemployed, the Web site reports. Most of his phone calls come from collection agencies, a burden that Cunningham struggled with until he figured out one key countermeasure — he could turn the tables on collections agencies and get them to pay him.

Cunningham began turning on collection agencies back in 2005, when he faced two foreclosures and an avalanche of debt. He had borrowed $100,000 to buy some rental property in Houston, and invest in the stock market — in the highly volatile and soon-to-be-collapsed sub-prime mortgage securities market.

When the real estate market blew out, Cunningham was left holding the bag on his rental properties, and soon both were foreclosed. Other debts piled up and soon his phone was ringing off the hook from aggressive bill collectors looking for Cunningham to fork over the cash he owed. His back to the wall, he began scouring Internet credit message boards, and found that he could leverage federal and state laws in his favor against overly aggressive bill collectors.

The key was baiting the collections agent on the other end of the line and waiting for the agent to say something incriminating that crossed the line into what the law considered abuse. He began taping calls and soon had his first lawsuit against a security alarm company looking for $450 from an early termination fee.

According to the Dallas Observer, the conversation with the company’s collection agency, Equinox Financial Management Solutions, went like this:

"Can you garnish my wages if I don't pay?" he asked.

"Yes," the voice on the other end of the line said.

"Can you put a lien on my house?"

"Yes."

Wrong answers. Turns out, Texas consumer rights laws are some of the most consumer-friendly in the country. And according to a federal consumer protection law, the Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from threatening legal action that would violate state laws. In this case, garnishing wages or putting a lien on Cunningham's house would violate the Texas Debt Collection Act.

Cunningham took the debt collection agency to court and won a judgment and a $1,000 payment. He spent more time digging into the language on key consumer protection laws like the FDCPA, the Fair Credit Reporting Act (FCRA) and the Telephone Consumer Protection Act (TCPA).

Soon after he filed 15 successful lawsuits involving:

  • Pre-recorded calls to his cell phone (a TCPA violation).
  • The failure of collection agencies to look into his claims that his file was inaccurate (a violation of the FCRA).
  • Abusive practices by collectors (a violation of the FDCPA).

With Americans behind on $2.5 trillion worth of debt at the start of 2010, according to the Federal Reserve, expect an army of Craig Cunninghams to emerge from the debt debris of the past few years and strike back against hostile bill collectors.

Collection agencies won’t like it one bit, but increasingly angry consumers who are tired of the phone calls and the veiled threats may see it differently.

They might want to make room for one more hero on Mount Rushmore.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

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