Breeze (gotta love her) found some info today (see her thread at http://consumers.creditnet.com/stra...read.php?s=&pgnum=1&postid=201421#post201421. Anyway, I am very interested in the responsibility of the OC when CA's act illegally and there was some recent discussion about this with Medine and LeFevre of the FTC. Breeze pointed out one article that deals with this and I thought the main points would be helpful in deciding whether to make the OC aware of the infractions of the CA representing them: * A case has been taken by the FTC and, while it was settled with no admissions of liablility, an order was entered against the OC. Basically, they had to terminate collection agencies who they discovred were engaged in unlawful practices. So, how do they discover this? They give a couple of ways but one that stood out was : *Consumers complaining directly to the OC!!! They, it says "That's when their (the oc's) responsibility really kicks in." I would like to point out that the states that license their collection agencies have listed for public review the violations found, etc and that would also be another reason that the OC would be aware of the possible misconduct of the CA. So, what's the big idea on this? Seems to me that if we make the OC aware of the situation, they become liable... By the way, that was for referred accounts, not sold accounts but they go on to say that the OC has a responsibility to not sell to creditors that they know are using illegal practices. (my wording on most of this, folks)
Bill Bauer at one time also pointed out that oc's could be responsible for ca's violations under the "Law of Agency". I have no idea what this is or where to find it.
I can point you to the concept in the VA insurance code But the concept of agency is pretty well known in business. As an insurance agent, a contract exists between me and the insurance companies who have appointed me (to act as their agent), and based on that relationship, insurance law says that I can act, within the limits of my authority, on behalf of the insurance company. So, if I say "you are now insured" you can rely on that statement, because the insurance company has to do what I said they would do (commonly referred to as "binding"). Also inherent in the concept (at least with insurance, and I imagine it is true in other areas) if I know something, the insurance company knows it. If I have something, the insurance company has it. A mortgage broker has an "agency" relationship with mortgage companies, and a real estate agent/broker has that relationship with a property owner who has engaged their services. and one and on.... So, I am sure the general concept is true, if a contract exists between the creditor and the collection agency. Hence the "agency" part of their name. Make sense? Another part of the concept of "agency" is the implied authority of an agent. So, if it appears that I have some authority, which in reality I do not have, the insurance company can be bound by my actions in spite of the fact that their contract with me does not specify that particular authority. In the insurance business, that kind of action can get your contract terminated rather quickly - I don't know about in the collections business. But I think the concept of implied authority carries over, and that is one of the reasons OC's can be held liable for the activities of CA's. They have, in reality, an implied authority to sue someone, even though they have been told never to sue, for instance. So if they threaten to sue in those cases where in reality they cannot sue, they are abusing their power as an agent for the OC.
Breeze's "find" gave me an idea for a way to help a poster on another forum who was having problems with a re-aged medical collection account.Luckily he still had the original bill. A letter to the CRA's with a copy of the bill, AND to the OC Dr. pointing out the law of agency and requesting the CRA reverify with the Dr. should work wonders,they sure don't want to increase their malpractice insurance rates !
