The State of Connecticut, Department of Banking, takes their jobs very seriously. For years they have gone after debt relief companies. But while the name of this company sounds like a debt relief group, it is a collection agency.
The State says Debt Management, Inc. does business as Capital Recovery Systems. The company has been a licensed debt collector since 2010 from its Massachusettes office.
The Department of Banking says, “On March 22, 2018, the Department, in conjunction with the Maine Bureau of Consumer Credit Protection, commenced a coordinated examination of Respondent, which included a review of Respondent’s operations at its Massachusetts Office for the period from January 1 to December 31, 2017 (“Examination”).
The Examination uncovered numerous, serious and pervasive violations of Part XII of Chapter 669, Sections 36a-800 to 36a-814, inclusive, of the Connecticut General Statutes and the Regulations, including, but not limited to, the charging of impermissible convenience fees, conducting unlicensed consumer collection activity, commingling of trust account monies and making harassing, abusive and false, misleading or deceptive collection calls. Of the approximately 71 collection calls reviewed by the Division during the Examination, over 90% of the calls exhibited practices considered to be harassing and abusive or false, misleading or deceptive to consumers.”
A failure rate of 90 percent is a bit eye-catching.
The State appears to feel part of the issue surrounding the failures of collectors has to do with an inadequate system of compliance.
“Although Respondent has written policies and procedures concerning its consumer collection operations set forth in a “Collections Training Guide”, the Examination revealed that Respondent failed to adhere to such policies and procedures in practice. For example, the procedures require use of a script by collectors in which the consumer is informed of the collector’s full name and company name, the consumer’s identity is verified, the consumer is informed that the call is being recorded for quality assurance and training purposes and the consumer is informed that the communication is from a debt collector and any information obtained by the collector will be used in furtherance of such collection (“mini-Miranda”). However, time and time again, collectors calling Connecticut consumer debtors failed to perform all steps required by the script.
The Collections Training Guide also places certain requirements when a collector leaves a voicemail for a debtor, including verifying that the “number’s recorded greeting states the consumer’s first and last name, and only the consumer’s first and last name, and the name matches the account holder owing the debt.” However, collection staff routinely left messages regarding the collection of debt on the voicemail of individuals who identified themselves as individuals other than the consumer debtors being collected upon. For example, in December 2017, a collector left a voicemail for Susan, a Connecticut consumer debtor, in a mailbox identified as belonging to “Bonnie”, and stated that Susan should contact the “Offices of CRS” regarding a file placed in the office.
At all times relevant hereto, the Collections Manager was physically located at the Virginia Office and was responsible for providing the ongoing training of collection staff at the Massachusetts Office. However, several calls placed by the Collections Manager to Connecticut consumer debtors failed to adhere to Collections Training Guide requirements, including failing to verify the identity of the debtor, failing to state the required mini-Miranda and, on at least one occasion, communicating with the wife of a Connecticut consumer debtor regarding such consumer’s debt and setting up a payment plan using their jointly owned checking account without such debtor’s authorization.”
The State issued a Temporary Order to Cease and Desist collections in Connecticut. The Department of Banking instructed the company “Upon receipt of this Temporary Order to Cease and Desist, Respondent, shall notify all CT Clients of the existence of this Order of Summary Suspension, Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent Not to Revoke Consumer Collection Agency License, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing and that Respondent’s consumer collection agency license in Connecticut has been summarily suspended, pending proceedings for revocation. Respondent, shall provide evidence of such notification to the Department, no later than fourteen (14) days after receipt of this Temporary Order to Cease and Desist.”
You can read the full order here.