Debt Collection Horror Stories

Debt collector horror stories abound: There are threats to dig up the dead relatives of those who couldn't pay their funeral bills, promises to imprison debtors or take their children into custody -- even warnings that pets will be killed.

Under the Fair Debt Collection Practices Act, collectors are prohibited from threatening violence, using profane language, calling incessantly, inflating a debt and implying they are attorneys. And they can't tell consumers they will arrest them or garnish their wages or property unless they actually plan to take that action and are legally able to do so through a court order. Many states have their own rules governing debt collector practices as well.

These are some of the latest outrageous allegations of abuse:

Threatening to take away children: Last week, the Federal Trade Commission shut down a Texas-based debt collector, Goldman Schwartz, for using deceptive and abusive scare tactics to force people to pay their payday loan debts. Among the alleged offenses: collectors called consumers incessantly, saying "we can take you to jail" or "we'll send the sheriff's department to your job and take care of this the hard way," even though they had no legal basis to do so.

Collectors went so far as to tell consumers that when they go to jail, police or child protective services would take their minor children into government custody, according to the FTC. Goldman Schwartz hasn't responded to the complaint filed by the FTC, and its attorney declined to comment on the case.

Posing as a law firm: To scare consumers into paying, Goldman Schwartz also allegedly posed as a law firm or claimed to work with law enforcement authorities -- even charging unauthorized attorney's fees that it referred to as "juice."

One consumer, who asked to remain anonymous, filed a complaint against Goldman Schwartz claiming its collectors pretended to belong to a law firm one day, and the next day said they worked for local law enforcement. After calling her incessantly over a $300 payday loan debt -- which she said she already paid -- a collector even called her workplace and told her coworkers he was going to come arrest her and they would have to pick her out of a lineup.

Pretending to have legal authority has become a popular tactic among debt collectors. In a separate lawsuit filed by the Pennsylvania Attorney General that's still pending, a debt collector, Unicredit, was charged with decorating an office to look like a courtroom and holding fake court proceedings. The attorney for Unicredit's vice president said "he was not personally involved" in the activities that the lawsuit alleges, and the president's attorney did not respond to a request for comment.

Threatening to dig up dead bodies: Another collection agency, Rumson, Bolling & Associates, was fined more than $700,000 last month for taking harassment to a whole new level. One of the worst offenses listed in the FTC's lawsuit: collectors allegedly threatened to dig up the bodies of debtors' deceased children and hang them from a tree or drop them outside their door if they failed to pay their funeral bills. The defendant's attorney, Christopher Pitet, said the company's owners did their best to ensure collectors complied with the law -- so if any wrongdoing was done, it was done by employees and was against company policy.

Promising to hurt pets: The harassment didn't stop at dead bodies, according to the FTC. Collectors at Rumson, Bolling & Associates also allegedly threatened to kill a debtor's dog. Specifically, collectors told a woman they would have her dog "arrested ... shoot him up and ... eat him," before sending the police to her house to arrest her, the FTC claimed.

Collecting debts owed to other companies: Along with all the harassment, the FTC has seen a new collection scheme pop up: scam artists are stealing customer information from payday loan websites and then disguising themselves as debt collectors and going after the loans customers take out, said Tom Pahl, an assistant director at the FTC.

 In one case, a phony California-based debt collection outfit run by a man named Kirit Patel allegedly collected more than $5.2 million in debts that were owed to payday loan companies -- or weren't owed at all, according to the FTC. The defendant's attorney, Andrew Steinheimer, said Patel was duped into opening the company by someone else and was unaware of any wrongdoing.

The case was referred to the Justice Department, and a federal grand jury indicted Patel last year. If convicted, Patel will face up to 20 years in prison or a fine of $250,000 (or both).

"[These debt collection agencies] continue to taint the professionalism of the vast majority of collectors that do it the right way -- respectfully and in compliance with federal and state laws," said Mark Schiffman, a spokesman for debt collection trade association ACA, which represents more than 3,000 debt collectors.


Warren Buffett's Best Stocks of 2013 Helping Him Beat DJIA/S&P500

2013 is yet another year getting off to a great start for stocks, and Berkshire Hathaway Inc. (NYSE: BRK-A) is actually outperforming the broad stock market so far in 2013. As of Tuesday, the S&P 500-tracking SPDR S&P 500 (NYSEMKT: SPY) is up about 6% and the DJIA-tracking SPDR Dow Jones Industrial Average (NYSEMKT: DIA) is up about 7%. With a 1% gain on Tuesday, Berkshire Hathaway Inc. (NYSE: BRK-A) A shares are up 9.3% and the Berkshire Hathaway Inc. (NYSE: BRK-B) B-shares are up by about 8.7%.

We have looked at the year-to-date performance of Warren Buffett's portfolio holdings of Berkshire Hathaway Inc. (NYSE: BRK-B) to see which stocks he has that are helping to drive gains so far in 2013.  We looked through all of Warren Buffett's top stock holdings to identify the biggest winners. What is so interesting today is that the actual Berkshire Hathaway shares are outperforming about 90% of the actual stock holdings that make up the Buffett and Berkshire investment portfolio.

We have included the purchase or sale transaction history of each pick. We have also provided color and the implied upside to the Thomson Reuters consensus (mean) price target objective.

Phillips 66 (NYSE: PSX) remains a relatively new holding for team Buffett but was kept steady last quarter at 27.1 million shares worth more than $1.65 billion. It is also Buffett's top stock in 2013 so far with gains of more than 15%. We expect that the way Mr. Buffett talked so positively about this oil refinery that he may add to the position ahead. We expect upside to the 1.6% dividend yield and this trades with more implied upside as the $61.30 price is short of the consensus analyst price target of $66.38.

Procter & Gamble (NYSE: PG) has been on fire in 2013 and shares have been hitting new 52-week highs and this DJIA consumer products giant is up about 13.5% so far in 2013. What is interesting is that Mr. Buffett had been lowering his stake and it had fallen by nearly half of its share amount down to 52.8 million shares. That number may be even lower ahead as Buffett tends to keep selling stocks he starts selling out of. If the position is somehow static, that position would be worth more than $4 billion. This hit a 52-week high on Tuesday above $76.50 and the consensus analyst price target is $78.75 with a 3% dividend yield as of now.

We have two runner-ups which we are not formally counting as Buffett's best performing stocks even though they have been in the holdings before. United Parcel Service, Inc. (NYSE: UPS) is technically the third best position in the Team Buffett portfolio, but there is just one small problem. This had been almost entirely eliminated down to 59,400 shares from 261,900 shares last quarter and versus 1.429 million shares two quarters ago. That being said, this 9% gain year to date is almost immaterial for Berkshire's $242 billion market cap. Ingersoll-Rand (NYSE: IR) is yet another one which would have been great had Buffett remained on its side, but he has sold out of that position in late 2012 as well. That is too bad as this was up 8% year to date in 2013.


Barclays to Slash 3,700 Jobs Amid Cost Cutting

Barclays is axing at least 3,700 jobs and pruning its investment bank as its new boss put his stamp on the troubled British bank by aiming to cut 1.7 billion pounds ($2.7 billion) in annual costs and raise standards after a series of scandals.

The plans form part of an overhaul which Chief Executive Antony Jenkins hopes will convince a sceptical public that he can change a bank which has been dogged by controversy, including a $450 million fine for rigging Libor interbank lending rates.

"I understand the cynics and the sceptics out there, but cynics and sceptics never built anything. It will take years before people actually change their impression of us. I'm not daunted by that at all," Jenkins told BBC radio.

Jenkins is taking a harder line on pay and Barclays said it had cut the average bonus for its investment bankers to 54,100 pounds for last year, down 17 percent on the year. It will pay 1.85 billion pounds in bonuses, down 14 percent on the year.

Barclays said the job cuts will include 1,800 in corporate and investment banking and 1,900 in its European retail and business banking. Finance Director Chris Lucas said 1,600 of the investment bank cuts had already been made.

Jenkins plans to focus investment in Britain, the United States and Africa, and reduce the bank's presence in continental Europe and Asia.

That will include a scaling back of the investment bank's equities and advisory businesses in continental Europe and Asia. It will refocus its retail businesses in Italy, Spain, Portugal and France on mass affluent customers.

Jenkins, 51, has said he expects his plan, dubbed "Project Transform", to take five to 10 years to rebuild Barclays, and has told staff they should leave if they do not want to sign up to the new standards.

Barclays shares were up 4 percent by 0930 GMT, the best performer in a flat European banking index.


Jenkins aims to cut the bank's cost base to 16.8 billion pounds in 2015, excluding one-off costs to achieve that of 2.7 billion over the next three years, and lift its dividend to achieve a 30 percent payout ratio.

The bank will pay a dividend of 6.5 pence per share for 2012 from 6p in 2011, which analysts said was encouraging given that UK regulators are telling banks to conserve capital.

"We take this as a positive for the UK banks - the fact that a bank was allowed to increase its dividend in a backdrop where the Bank of England has been talking about capital holes in the UK banks," said Chira Barua, senior analyst at Sanford Bernstein.

Jenkins, a retail banker who was picked at the end of August to run the bank after his predecessor Bob Diamond was forced to quit, will unveil more details on his plan to media and investors later on Tuesday at London's Edwardian Royal Horticultural Halls.

He will reduce the balance sheet by cutting legacy assets. Barclays held 387 billion pounds in risk-weighted assets at the end of December, but that would be equivalent to 464 billion under stricter capital rules coming into force, and Jenkins said he aims to reduce that to 440 billion by the end of 2015.


Much of his focus has been on changing standards and culture that have been criticised as too lax after the bank's Libor fine, the mis-selling of products to millions of customers and investigations into whether Barclays provided enough disclosure in fundraisings from Middle East investors.

The Financial Services Authority and Serious Fraud Office are investigating certain commercial arrangements between Barclays and Qatari investors related to two 2008 fundraisings.

The bank confirmed it will close its controversial but profitable tax advisory business.

Jenkins' plan to keep but scale back the investment bank was expected, as it contributes more than half of group earnings.

Unveiling the strategic plan alongside annual results, the bank reported a 2012 pretax profit of 246 million pounds, down from 5.9 billion in 2011 due to the cost of compensating customers and losses on the value of its own debt.

However, the bank said its adjusted pretax profit for 2012 was 7.05 billion pounds, up 26 percent on the year and in line with the average forecast by analysts.

Pretax profit at the investment bank rose by 37 percent to 4.1 billion pounds, stronger than expected. Income in the investment bank was down 2 percent from the previous quarter, but up 13 percent on a year ago, with fixed income, equities and advisory arms all up.

The bank said it had a good January. "We've had a good start to the year, pretty much across the board and all businesses so we move into the rest of 2013 with confidence," Lucas told reporters on a conference call.


Grammys Ratings Second Best in 20 Years

Sunday night's Grammy Awards drew 28.12 million viewers, a 29.5 percent drop from the record-breaking CBS telecast in 2012. (Viewers between 18 and 49 also dropped 27 percent.) The decline was no surprise – last year, the extraordinary circumstances of Whitney Houston's unexpected death a day before the show led to a hastily arranged tribute starring Jennifer Hudson. Still, the numbers for this year's 55th annual ceremony were strong, as the live broadcast from the Staples Center in Los Angeles landed its second-best TV ratings since 1993.

Albums may not sell the way they did 20 years ago, but the record industry's star power remains surprisingly resilient, and the broadcast nicely mixed established names with rising talent and drama both manufactured and poignant. The world's two best-selling pop stars, Taylor Swift (in a circus-like opening performance of "We Are Never Ever Getting Back Together") and Adele (whose acceptance speech for Best Pop Vocal Performance for a live version of "Set Fire to the Rain" was far briefer and less all-encompassing than last year), were present, of course. So were veterans such as Mumford & Sons, Justin Timberlake and Kelly Clarkson.

But the show's most intriguing performances came via big-time debuts – Miguel (who dueted with rapper Wiz Khalifa in black-and-white jackets), Frank Ocean (who performed "Forrest Gump" and won Best Urban Contemporary Album), Fun. (which performed "Carry On" and won both Song of the Year and Best New Artist) and Gotye (who won Record of the Year). Making a case for the future health of rock were the Black Keys (who won for Best Rock Song and Best Rock Album and killed it with the Preservation Hall Jazz Band and Dr. John on "Lonely Boy") and Jack White (who provided old-fashioned rebellion with an apparent f-bomb during "Love Interruption").

Subplots, amplified by Twitter and Facebook, were also plentiful – Katy Perry's cleavage openly flaunted the Grammys' (perhaps savvy) pre-show memo mandating that stars cover up;  Chris Brown pointedly remained seated during a standing ovation as his rival, Ocean,  accepted his award; Brown and Rihanna, once embroiled in domestic violence, sat with each other; and online GIFs replayed Swift cheerily bopping to Mumford and other acts.

As with last year's broadcast, the "in memoriam" section was sadly robust. Two of the show's most emotional highlights were tributes to the Band's Levon Helm (starring Elton John and an overwhelming Mavis Staples) and the closing hip-hop homage to Beastie Boy Adam "MCA" Yauch (with Public Enemy's Chuck D, host LL Cool J and Rage Against the Machine's Tom Morello). If Ocean, Miguel, Fun., Black Keys and Gotye develop to their potential, perhaps future Grammys won't need death for ratings success.