Charter Spectrum Threatens To Ruin Potential Customers Over Debt They Don't Owe

from the class-act dept

There's a reason U.S. cable and broadband companies have some of the worst customer satisfaction ratings of any companies, in any industry in America. The one/two punch of lagging broadband competition and captured regulators generally mean there's little to no meaningful penalty for overcharging users, providing lackluster services and support, and generally just being an obnoxious ass.

Case in point: a new Charter (which operates under the Spectrum brand) marketing effort apparently involves threatening to ruin the credit scores of ex-customers unless they re-subscribe to the company's services. It basically begins with a letter that threatens ex-users that they'll be reported to debt collectors unless they sign up for service. It proceeds to inform them the letter is a "one-time courtesy" allowing them to sign up for cable or broadband service before the debt collector comes calling:

"A well-established credit history will more likely allow you to qualify for lower mortgage rates, better chances for obtaining credit cards and approvals for home rentals,” the letter says, suggesting that Schklair’s finances could be in serious trouble unless he returns to the Spectrum fold. "You have worked hard to build a great future for yourself and your family,” it says. “We look forward to welcoming you back.”

Maybe it’s just me, but that has a Sopranos-like ring of “You’ve made a nice life for yourself. Be a shame if something happened to it.”

The catch: the people being targeted with this latest dumb marketing ploy say they don't owe Spectrum any money:

"I asked if he owes Spectrum any money.

“No,” Schklair replied. “It’s been years since I was their customer, and they’ve never said anything about my not paying any bills.”

No notices of missed payments?

“No.”

No warnings about adverse reports to credit agencies?

“No, nothing like that.”

Leave it to a U.S. cable company to think up a marketing strategy that involves threatening the livelihoods of folks who don't actually owe it any money. My assumption is this kind of threat is levied heavily against lower-income communities where the constant fear of debt collection prods folks who may not even owe Spectrum to re-subscribe for fear of getting into trouble. Charter being Charter, of course, it tried to frame this as an "effort to reconnect":

"A Spectrum spokesperson confirmed the letter’s authenticity and called it “an opportunity to reconnect” with the cable company."

83 million Americans currently live under a broadband monopoly, usually Comcast and Charter. Between a lack of competition and captured regulators there's fairly consistently zero real repercussions for idiotic behavior like this, which is why historically things don't really change much. Increased competition in streaming TV has helped drive some improvements on that side of the coin, but the largely broken U.S. broadband market is a problem we don't seem intent on seriously addressing anytime soon--in part because we refuse to even acknowledge the core problem (monopolization and the corruption that protects it).

Filed Under: broadband, competition, cord cutting, debt collection, threats
Companies: charter spectrum

Supreme Court Makes Debt Collection Robocalling Illegal (Again)

from the round-and-round-we-go dept

While the US government often makes a lot of noise about their efforts to crack down on robocalls, the reality is they never actually do all that much. While the FCC often goes out of its way to advertise "record" fines levied against smaller companies and scammers, the vast, vast majority of those fines are never actually collected. The Pai FCC has claimed to have made great strides fighting the menace, despite the fact that most of its recent and well-hyped countermeasures are neither new nor effective.

One big reason for our failures is that the government often likes to turn a blind eye to the fact that the biggest and most annoying robocallers aren't scammers, but legitimate companies and debt collectors, many of which call customers (that they know can't pay) upwards of dozens of times a day. In testimony a few years back, consumer advocate Margot Freeman Saunders offered a breakdown of which organizations and companies are the most prodigious robocallers:

The Telephone Consumer Protection Act (TCPA) of 1991 prohibits the majority of robocalls, but Congress, in its infinite lack of wisdom, in 2015 amended the law to add an exemption for debt collectors trying to reach you on your cellphone. The problem is that debt collectors, as Saunders noted in her testimony, utilize many of the same tactics (spoofing, etc.) as shadier robocallers, and are certainly no less annoying and unscrupulous in their tactics. In many instances they're simply attempting to extract blood from a stone, but the government and FCC routinely like to pretend otherwise.

This week, in a bit of good news, the Supreme Court struck down that exemption entirely (pdf), making it illegal again for debt collectors to embrace robocalling.

It's a beneficial outcome to a case that started with less noble intentions. The original case stems from an attempt by telemarketers and political robocalling organizations to strike down the TCPA entirely, under the basis that the 2015 government debt exception unconstitutionally favored debt collection speech over political and other speech. But, flipping that case on its head, the Supreme Court voted 6 to 3 that the 2015 Congressional update to the law "impermissibly favored debt collection speech over political and other speech, in violation of the First Amendment. From the opinion, written by Brett Kavanaugh:

"As the Government concedes, the robocall restriction with the government-debt exception cannot satisfy strict scrutiny. The Government has not sufficiently justified the differentiation between government-debt collection speech and other important categories of robocall speech, such as political speech, issue advocacy, and the like." Government-backed loans affected by the ruling include student loans, home mortgages, veterans' loans, farm loans, and business loans."

In a joint statement, Senator Ed Markey and Representative Anna Eshoo praised the ruling as a win for consumers:

"The court rightly found that government debt collectors aren't entitled to a special exception to the TCPA's ban on robocalling. We applaud the court's decision to side with American consumers, protect our right to privacy from these abusive calls, deter countless scams that target our most vulnerable populations, and ensure that our phones will remain usable."

In short, it's a positive outcome to a case that started with the goal of eliminating robocall restrictions entirely. And it does, albeit not entirely intentionally, a nice job deflating the government's often lazy effort to conflate robocalling harassment exclusively with "scammer."

Filed Under: debt collection, debt collectors, robocalling, supreme court

Chinese Innovation: Nude Photo Loan Platform Adds Uber-Style Debt Collectors Feature

from the uberizing-everything-everywhere dept

Back in June, Western media picked up on a sordid tale involving the Chinese company Jiedaibao, a platform which facilitates loans between individual lenders and borrowers. Because of the private nature of the deals, loan sharks came up with a new twist on securing collateral for the money they lend out at exorbitant rates, described here by China.org.cn:

They often ask female students to pose naked with their ID and use these photos as collateral in their practice. If a student defaults on the loan, the loaners will threaten to show the nude photos to her family and friends.

In exchange, the students who agree to send nude photos can have a higher loan amount, ranging from 2 to five times as much. However, the loan interest rate can be as high as 30 percent a week.

Being able to borrow even more money at these ruinous interest rates just means the women get into deeper trouble even faster. When criticized for allowing this sexual and economic exploitation, Jiedaibao initially said:

The usury and nude collateral practices are part of a private trade deal between users. As a result, the company cannot interfere, and assert that users have to shoulder these risks by themselves. However, if these scenarios get worse, they urge users to contact the police.

Perhaps realizing that this didn't really sound too good, the company later tweaked its response slightly, as the Guardian reported:

A spokesman for Jiedaibao condemned the "naked loans" and said the company would work with the police on any investigation of such practices. "This kind of naked loan is actually taking advantage of the online platform to operate an illegal usurious offline business," they said.

Despite that (feeble) condemnation, and the outrage this modern-day usury provoked in China, the abuse seems to have continued. Last month, China.org.cn published another article on the topic, where it noted that some women have been been coerced into prostitution in an attempt to pay off the money they owe to unscrupulous lenders. According to a more recent story in the South China Morning Post (SCMP), Jiedaibao's size -- it has more than 128 million users with a cumulative turnover of about $12 billion -- and lack control over the private deals made using its platform have led to the development of a serious problem:

Without proper credit risk assessments, many of the loans have soured, raising demand for debt collectors. Online chat groups have sprung up offering advice on recovering the money. Tips include repeated calls to debtors, calling debtors' relatives and paying "beggars" to protest near a debtor's home.

To address this issue, Jiedaibao has come up with a rather remarkable new feature for its platform:

Users of its app can apply to recover debts owed through the platform by uploading their ID card number and a photo.

After a "verification" process of about a week, successful applicants gain access to overdue borrowers' phone numbers, addresses and even ID numbers, with commissions of up to 40 per cent of the original loan for recovering the outstanding amounts.

Some may applaud Jiedaibao's idea of creating an Uber-like crowd of private debt collectors, but the scope for abuse is clear. And those suddenly finding themselves on the receiving end of these amateur debt collectors are unlikely to be so enthusiastic about Jiedaibao's innovative approach.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: china, debt collection, debt collectors, gig economy, nude photos
Companies: jiedaibao

Class Action Filed Against Rightscorp For Shaking Down People With Robocalls

from the heading-down,-down,-down... dept

We've written a few times about Rightscorp, the company that has tried to set itself up as a sort of "friendlier" copyright troll, acquiring a bunch of copyrights, sniffing out IP addresses connected to sharing of content associated with that copyright, and then trying to demand payments. The main "difference" with Rightscorp is that it usually demands lower, potentially more palatable sums than traditional copyright trolls, and it's trying to "partner" with ISPs to send notices on its behalf, rather than suing people. Most ISPs, so far, have refused to do this. And so far, Rightscorp has been something of a joke -- thinking it had discovered a subpoena loophole that had been slammed shut by the courts years ago (every few years a new copyright troll thinks it's found this same loophole) and talking about hijacking browsers. The reality is that it's a company with a sketchy past that seems to have reverse-mergered itself into being a public company that has seen its stock drop precipitously and still hasn't shown much ability to actually make any money from shaking down file sharers.

And now, it's facing a class action lawsuit from Morgan Pietz, the lawyer who was one of the main lawyers who helped unravel and bring down Prenda.

The complaint seeks class damages against Rightscorp for violations of the Telephone Consumer Protection Act, the Fair Debt Collection Practices Act, California’s Rosenthal Act, and Abuse of Process. The complaint alleges unlawful robo-calls, as well as other unfair debt collection practices, and that Rightscorp has abused the legal process by issuing DMCA Section 512(h) subpoenas that it knew were objectively baseless.

Here's the same thing in more detail from the legal filing itself:

Rightscorp is regularly engaged in the business of collecting on alleged obligations of consumers to pay money (i.e., debt collection) for purported copyright infringement claims, such that it is subject to the Fair Debt Collection Practice Act (15 U.S.C. § 1692 et seq.) (“FDCPA”) and the Rosenthal Fair Debt Collection Practices Act (Cal. Civ. Code §§ 1788 et seq.) (“Rosenthal Act”). However, Rightscorp has repeatedly and systematically failed to comply with the provisions of the FDCPA and the Rosenthal Act. Among other wrongful conduct: Rightscorp has engaged in telephone harassment and abuse (15 U.S.C. § 1692d); made various false and misleading representations (15 U.S.C. § 1692e); engaged in unfair collections practices (15 U.S.C. § 1692f); failed to provide validation and required notices relating to the debts (15 U.S.C. § 1692g); and furnished emails and letters knowing they would create false beliefs on the parts of consumers that their Internet Service Providers (“ISPs”) were participating in the attempt to collect on the purported debts when in fact the ISPs were not participating (15 U.S.C. § 1692f).

Further, to identify potential consumers to target, Rightscorp has willfully misused this Court’s subpoena power by issuing at least 142 special DMCA subpoenas, per 17 U.S.C. § 512(h), to various Internet Service Providers (“ISPs”). These subpoenas, which were issued on this Court’s authority, but procured outside of an adversarial proceeding and without any judicial review, are so clearly legally invalid as to be a sham and abuse of the legal process. After an ISP moved to quash one of these 142 subpoenas in the Western District of Texas, on September 10, 2014, Rightscorp withdrew that subpoena rather than risk judicial review of its plainly unlawful use of this Court’s subpoena power. See In re Subpoena Issued to Grande Com’n. Net’s., LLC, W.D. Tx. No. 1:14-mc-00848, ECF No. 3, 9/10/14; see also id. at ECF No. 1, 9/5/14 (ISP’s motion to quash). Nevertheless, since then, throughout the later part of September and through until the filing of this action, Rightscorp has continued to issue dozens of new, legally invalid DMCA subpoenas on this Court’s authority (see, e.g., In re Subpoena Issued to US Internet Corp., C.D. Cal. No. 2:14-mc-864-UA, 10/14/14).

Should be an... interesting lawsuit to pay attention to.

Filed Under: copyright trolling, debt collection, lawsuit, robocalls, shakedown
Companies: rightscorp

German Mass Copyright Letter Sender Using Debt Collectors To Pressure People To Pay Up

from the looking-more-and-more-like-extortion dept

We've seen the various mass copyright infringement factories popping up all over the world, often using similar strategies: suing or threatening to sue thousands of individuals based solely on an IP address. The whole "business model" is based not on traditional copyright infringement statutory awards, but on convincing people to pay up beforehand to avoid being sued. The model feels quite similar to what's normally considered extortion ("pay up or we harm you"). Someone recently sent us a copy of what's alleged to be a contract being used by a German law firm, Schutt, Waetke Rechtsanwalte, which has been involved in such mass threats for many years. You can find references online going back to at least 2005 of this law firm sending out such pre-settlement letters to thousands of Germans. I contacted the firm to see if they would confirm or deny the legitimacy of the contract, and they would not respond. So, perhaps take the details with a grain of salt, even though the firm has been connected to these sorts of pre-settlement jobs for a while.

What's interesting about this particular contract is that, not only does it display the specific terms of the deal, but it's quite upfront about the fact that they hand this project off to debt collectors to put the pressure on people who don't pay up -- even though there's no official "debt." This is incredibly underhanded. The details of the deal is that the "client" (copyright holder) gives power of attorney to Schutt, Waetke, which then works with a company called Excubitor, to find the works online. Once Excubitor finds works, they send the data to Schutt, Watke, which then works to identify them via ISPs. Once identified they're sent a letter in which a "settlement" is demanded "as payment of compensation and reimbursement of disbursements and attorneys' fees." Here, the contract is explicit:

The Attorneys will use the assistance of DEBT COLLECTION AGENCIES for processing, administration and handling of procedures.

I don't know enough about German law, but I do wonder how this can possibly be legal. How can you simply declare unilaterally someone has to pay you something and then immediately have a debt collection agency take up your cause? I don't see how there's any debt until either the individual has agreed to pay up or a court has ordered it. Involving debt collectors so early on seems highly questionable. Later on, the contract explains in more detail that anyone who doesn't pay in full, will automatically be handed over to a debt collector:

Under normal circumstances and in so far as not otherwise agreed on a case by case basis, all cases which do not entail a settlement of payments in full by th eparty who received the warning will be handed over to DEBT COLLECTION AGENCIES immediately after the expiry of the allotted payment period for further extra-judicial recovery (debt collection) and then to LO in the name and on behalf of the Client for the asertion of claims for payment in enforcement and recovery proceedings.

Again, I'm trying to understand how this can possibly be legal, but if some German legal experts can chime in and let us know if it's really legal to unilaterally declare someone owes you money, based on no agreement or contract, and then hand it off to a debt collector, that would be great.

As for the economics of this all, the settlement demands are for €700. However, it doesn't seem like a very good deal for the copyright holder. First of all, Schutt, Waetke demands an upfront fee of €161 (plus taxes) per individual case, which the law firm will apparently just take out of any settlement money received, rather than invoicing the client directly. I'm assuming this is to get around the issue, discussed about a year ago, about how some of the German law firms were breaking the law by doing some of these deals on a purely commission-based setup. On top of that, 27% (plus taxes) of any money recovered goes to Excubitor, the firm that's hunting down the infringing files online. On top of that, it says that the debt collection agencies get 20% (plus taxes). Then another 10% of payments are put into a "kitty" for the attorneys to use at their discretion for various costs, and an additional €1 goes to Excubitor for each name they identify. Apparently at the end of the contract, if there are no outstanding expenses, this money can go back to the client. The contract also notes that if the fees are insufficient to handle identification of users or of going to court, the client can be on the hook for that as well.

So, even if we ignore the "plus taxes," out of the €700 potentially received, €161 goes to the lawyers, €189 goes to Excubitor and €140 goes to the debt collectors. If my understanding of the contract is correct, that's €490 of the €700 already gone (and if you add in the "plus taxes," it's even more than that). If you then include the additional "kitty" costs, that's another €71. That appears to leave just €139 (minus taxes, so drop that number even lower) for the copyright holder. And that's only if they get a settlement. If they don't they're still out at least €161 based on what the contract seems to suggest.

So if this is accurate, then the copyright holders stand to make very little and could end up losing a significant amount if most recipients don't settle. Seems like an odd deal to make.

Filed Under: copyright, debt collection, germany
Companies: schutt waetke