Debt Collector Scam Reaches New Low: The Unicredit Bogus “Courtroom” Scam

02 Nov Debt Collector Scam Reaches New Low: The Unicredit Bogus “Courtroom” Scam

It isn’t easy for consumers to protect themselves these days, from robo-signers, foreclosure-rescue scams, and all manner of abusive collection tactics, but the Unicredit scam may take the prize for sheer audacity. It seems that Erie, Pennsylvania debt collection agency Unicredit not only set up a fake courtroom, complete with phony judge, with which to bamboozle and intimidate, but it dressed up employees like sheriff’s deputies to “serve” faked court papers on consumers. The Pennsylvania Attorney General has brought charges against Unicredit:

This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection,” Corbett said. “Consumers also allegedly received dubious ‘hearing notices’ and letters – often hand-delivered by individuals who appear to be Sheriff Deputies – which implied they would be taken into custody by the Sheriff if they failed to appear at the phony court for ‘hearings’ or ‘depositions’.

According to the lawsuit, fictitious court proceedings were used to intimidate consumers into providing access to bank accounts, making immediate payments or surrendering vehicle titles and other assets – sometimes dispatching Unicredit employees to consumers’ homes in order to retrieve documents or have consumers sign payment agreements.

Corbett said Unicredit allegedly used civil subpoenas to summon consumers to an office in Erie, which included an area referred to by Unicredit employees as “the courtroom.”

The fake courtroom allegedly contained furniture and decorations similar to those used in actual court offices, including a raised “bench” area where a judge would be seated; two tables and chairs in front of the “bench” for attorneys and defendants; a simulated witness stand; seating for spectators; and legal books on bookshelves. During some proceedings, an individual dressed in black was seated where observers would expect to see a judge.

Like other financial shenanigans, in this case it is the state’s attorney general who is taking the lead in prosecuting this debt collector.

The Unicredit scam, as outrageous as it is, differs mainly in scope from tactics that are commonly used by creditors and collection agencies, whose stock in trade is to mislead, exaggerate, and intimidate. In my practice, and despite laws that prohibit such unfair debt collection practices, it is not unusual for a client to bring me a document from a finance company that has been made up to look like an official court document, or at least, it does to someone who has never seen the real thing before. (Ironically, many times the actual court summons and complaint are made up to look as UNofficial as possible, with cover letters and non-essential “notices” covering up the really significant documents.) In fact, the largest civil penalty to date levied by the FTC on a debt collector (Academy Collection Service, Inc.) included allegations that consumers were illegally threatened with arrest. Like Unicredit, they are trading on the consumer’s lack of experience with legal process, and the respect that most people have for that process. And while I haven’t seen the pseudo-courtroom scam before, the pseudo-law enforcement official is nothing new. Debt collectors will use someone wearing what appears to be a uniform, or a badge, who lends the appearance of a law enforcement official to what is really nothing of the kind. So how do you protect yourself from such scams and tactics? A lot is common sense, but here are a few ideas.

If you are young enough, try to remember your ninth grade civics class. There was a lot of important stuff we should have learned there, but most of us didn’t. First of all, remember learning that there are no debtors’ prisons in this country? Well, in plain language, that also means that you can’t be jailed simply for owing someone money. There are a couple of exceptions to that–child support is one, and if you are the scam artist, you may be put in jail for that. But if you borrow money, and just can’t pay it back, that’s not a criminal offense. So, if your creditor is threatening to put you in jail, or to “send the sheriff out,” or some other veiled threat of a similar nature, you are being played. Another thing you should have learned in ninth-grade civics is that you are entitled to a hearing before your money or property is taken. So, if someone is genuinely suing you, you will be notified of the suit, and you will be given a chance to respond to the suit, and raise defenses if you have any. If someone tries to get you to buy into the notion that there is some legal action pending that you have to take care of right then and there, stop and ask yourself whether you have been given notice and an opportunity to respond. If not, you may be the target of a scam.

It’s not always easy when you are scared and someone is breathing down your neck, but again, that is a debt collector’s stock in trade. The more urgent he makes everything sound, the more likely you won’t slow down to think, and ask yourself some practical questions. For example, how likely is it that law enforcement in your community has the time and resources to ride around with the repo man, or the debt collector? Where I live, not very. Someone might hire an off-duty officer to serve papers, and law enforcement will serve court orders, but if there is no court action pending, why would an officer be involved? So ask–you can do it respectfully, but don’t be intimidated out of asking the officer who he is, and why he’s there. I’ve never met a real law enforcement officer who didn’t promptly identify himself, and even welcome the opportunity to explain his purpose. It has also been my experience that real law officers take a very dim view of others misrepresenting themselves as officers, and don’t mind reassuring you. I also don’t know any real officers who don’t carry cards with their contact information, so all you really have to do is say “do you have a card you can give me.”

You can also educate yourself by watching a this video prepared by the FTC to educate consumers about what is and isn’t acceptable under the law. The FTC also makes information available to allow you to understand your rights, and to file a complaint against an abusive debt collector. You may also have the right to bring a civil action yourself to redress debt collector abuses.

The most important and most practical advice is to go see an attorney. If you’re being threatened with legal action, an attorney can tell you what really can (and can’t) happen. If you’ve already been intimidated or scammed into giving up something you shouldn’t have, an attorney can tell you how to redress the situation. An attorney can also help you come up with a plan for addressing persistent credit problems, explain your options, and tell you what you can do about it. Knowledge is power, and it is the best, and most effective weapon you can have in protecting yourself from scam artists of all kinds–even the ones you owe.

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Däna (pronounced "Donna") Wilkinson, has been a bankruptcy lawyer in South Carolina for 20 years. She is certified as a bankruptcy specialist by the South Carolina Supreme Court.
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