New York AG in $165,000 Settlement with Buffalo Collection Agency Owner

New York Attorney General Eric T. Schneiderman Thursday announced a settlement with the operator of several debt collection companies in the Buffalo area for illegally collecting on payday loans, violating the privacy of consumers by soliciting their personal information through employers, and sending letters that purported to be from an attorney in order to collect. The man will pay $165,000 in restitution and penalties and be ordered to substantially change his business practices.

“Across the state, we’ve worked aggressively to ensure that debt collectors who exploit desperate consumers and break the law pay a price for their behavior. In this case, we’re pleased that consumers who paid on payday loans will receive full restitution and that Joseph Bella will receive heavy penalties,” said Attorney General Schneiderman. “With this action and many others, my office will continue to fight to protect New Yorkers from illegal business practices and stop companies that seek to prey upon consumers facing tough economic times.”

Schneiderman’s press release noted that since November 2008, Joseph Bella has operated various debt collection companies in the Buffalo area, including Check Systems, LLC; Interchex Systems, LLC; Goldberg Maxwell, LLC; Mullins & Kane, LLC; Morgan Jackson, LLC, and National Check Registry, LLC. The AG found that the companies had repeatedly violated the federal Fair Debt Collection Practices Act (FDCPA).

Bella operated several of these companies on a one-at-a-time basis for very short periods, usually for less than six months. He would then shut the companies down and began operations under a new name.

Bella’s debt collection companies routinely sent Verification of Employment forms to the employers of consumers. Federal law, however, strictly prohibits debt collectors from communicating with employers except to obtain location information about the employee. Bella’s debt collection companies illegally sought information about consumers, including their consumer’s Social Security numbers, hourly wages, dates of hire, and information on whether their consumer’s wages were being garnished. The form improperly implied that the Bella debt collection companies would garnish the wages of consumers even though they had never obtained judgments against the consumers and, therefore, had no authority to do so.

Bella’s debt collection companies also routinely violated the law by sending letters to consumers under the name of an attorney, M. Robert Madia. Madia, however, did not have any direct personal involvement in the sending of the letters; had not reviewed the consumers’ files before the letters were sent; had not determined that the letters should be sent, and did not know the identities of the consumers to whom the letters had been sent. Indeed, despite the fact that Bella terminated Madia in November 2012, as late as February 2013, one of his companies continued to send letters to consumers from Faith Galloway, Legal Assistant, that, according to the letters, were copied to the terminated Madia.

Finally, Bella’s companies collected on, or attempted to collect on, payday loans from New York State residents. Payday loans are a type of short-term borrowing in which an individual borrows a small amount at a very high rate of interest, often 450 percent or more. These loans are also called cash advance loans or check advance loans. Payday loans are illegal in New York State.