By Walter V. Robinson and Beth
Healy, Globe Staff |
September 13, 2006
For Maureen Coffin of Stoneham, it started on
July 21 -- the insistent calls from debt collectors
demanding she pay $900. For what, they never said.
Since May, Deborah A. Donovan of Weymouth has
received at least 25 calls -- many of them abusive,
she says -- and two letters asking her to pay $4,900
for a delinquent Sears credit card.
Eileen R. Myers of Harvard had a longer nightmare
-- 18 months of annoying phone calls and letters
from five successive debt collection companies
insisting that she pay a delinquent Capital One
credit card bill.
In all three cases -- and thousands like them,
specialists say -- the posse is chasing the
innocent. Maureen Coffin was being asked to pay for
a debt owed by a Lorraine Coffin . Donovan's
tormentors, it turns out, only discovered last week
that the Sears cardholder is Deborah Doyle -- not
Donovan. Capital One Financial Corp ., one of the country's largest
credit card issuers, hired debt collection firms to
go after Eileen R. Myers. The name of the actual
debtor: Eileen A. Myers .
Debt collection, as the Globe Spotlight Team
reported in a recent series, is a major growth
industry: Tens of millions of consumers are being
pursued by armies of collection agents and lawyers
for hundreds of billions in delinquent debt, much of
it sold and resold to one debt collector after
another. The debtors are, the series found, often
subject to exorbitant fees and roughhouse treatment,
even in courtrooms, where judges and clerks
frequently favor debt collection lawyers.
But there is parallel phenomenon, with its own
unchecked growth: cases of mistaken identity, in
which the abused consumer owes nothing at all.
After the Spotlight series, hundreds of people
called or e-mailed the Globe to complain about debt
collectors. Many said they had been pursued for
debts owed by others with identical or similar
names; or asked to pay debts for ill or deceased
relatives; or besieged by debt collectors for the
misfortune of having phone numbers once held by
people who defaulted on their debts.
In some cases, the mistakes border on cruelty. In
October 2003, Marjorie and Allan Slotnick of
Brockton received a demand from a debt collector
that they pay a 1995 Southwestern Bell phone bill,
for $484, purportedly owed by their son. But Adam
Slotnick was killed in the Northridge, Calif.,
earthquake in January 1994 -- a year before the debt
was incurred. The Slotnicks sent the debt collector
a copy of their son's death certificate, thinking
that would be the end of it.
No such luck. The debt collector resold the debt.
On July 18, another debt collector, Merchants Credit
Guide of Chicago, sent a demand letter to the
Slotnicks -- this time for $982. The Slotnicks sent
off another copy of the death certificate, but not
before Allan Slotnick had a telephone encounter with
a collector who hung up on him. ``He refused to
listen. He just wanted the money," Allan Slotnick
said.
``It's very upsetting to get this kind of a
reminder of our son's death after all these years,"
Marjorie Slotnick said.
Regulators and specialists in consumer debt say
the number of mistaken-identity cases is growing.
William Lund , chief of Maine's Office of
Consumer Credit Regulation , which has taken
aggressive action against some debt collectors, said
the incidence of collectors chasing the wrong people
has increased dramatically in the last five years.
Lund blamed the problem on the growth of the
debt-buying industry, hundreds of companies that buy
old debt, often with outdated, insufficient, or
inaccurate information about debtors. Last year, for
instance, debt-buyers purchased $66.4 billion from
bank credit card issuers alone, up from $4.4 billion
in 1995.
Knowing that debtors move frequently, debt
collection firms commonly rely on databases to
locate and go after people with the same name in the
same general geographic area, according to Lund. Too
often, as the Globe determined in several cases,
such identifications are wrong.
But when consumers proclaim their innocence, the
result is often an angry impasse. The collectors,
citing federal privacy laws, will not share
information about the debt with consumers who claim
not to be the debtor. And debtors, asked to prove
their innocence, are seldom willing to do so by
sharing their Social Security numbers with
strangers, especially unpleasant debt collectors.
``It's an unfortunate and abusive game that is
played," Lund said.
Deborah Donovan is a case in point. Allied
Interstate Inc ., a national collection agency that
works for creditors, was trying to collect on a
Sears credit card debt that is owned by a subsidiary
of Sherman Financial Group, a major player in the
debt-buying industry. The account wrongly identified
Donovan as the debtor. Allied's own
database-verification effort did not catch the
error, according to Gregory E. Harmer , the general
counsel for Allied.
As a result, Donovan, who is disabled, suffered a
summer-long headache. In April, she received a
demand letter. The calls started in May. ``I told
them I never had a Sears card," Donovan said. The
Allied debt collector then demanded to know her
Social Security number. Donovan refused. ``The woman
was very abusive. She said, `We're going to keep on
calling you and keep on sending you bills until you
tell us,' " Donovan said.
Allied Interstate's collectors were also
badgering Maureen Coffin on behalf of another
creditor, Midland Funding, though the suspected
debtor was a Lorraine Coffin who lives in another
area code. ``They were very aggressive and
belligerent," Maureen Coffin said. ``They told me I
was Lorraine Coffin. . . . They said, `You have to
be because we have this telephone number and you owe
$900.' "
``What alarms me," Coffin added, ``is that a lot
of elderly people may be intimidated by these kinds
of calls and say, `Maybe I forgot, and maybe I
should pay.' "
Cases of mistaken identity, Harmer said, ``are a
problem, and are an issue for every debt collection
agency."
Such mistakes, according to Harmer and other
industry officials, involve just a small percentage
of cases. But it is a percentage of an enormous
number. Allied Interstate, for example, is one of
hundreds of debt collection companies pursuing
Massachusetts consumers. Yet Allied alone has
396,819 delinquent accounts in Massachusetts,
according to Harmer, with 28,244 added just last
month. That means Allied has one account for every
16 people in Massachusetts.
Harmer assured the Globe that Allied, by computer
link, had alerted the Sherman Financial subsidiary
to the Donovan error. But something went awry.
Resurgent Capital Services, another Sherman
subsidiary, reassigned her case to Frederick J.
Hanna & Associates , a Marietta, Ga., debt
collection law firm. Last Tuesday, the Hanna firm
called her seeking payment of the same bill.
David Alster , the operations manager for the
Hanna agency, said during a conference call with
Donovan and a Globe reporter last Wednesday that
Donovan had been wronged. During the conversation,
Alster did a further database search, using the
actual debtor's Social Security number, and
discovered that her last name is Doyle. He said he
was at a loss to explain how the debt buyer could
have had the wrong name, address, and telephone
number.
In interviews with the Globe, Harmer, Alster, and
a spokeswoman for Resurgent all apologized for the
treatment of Donovan.
Also inexplicable is how Capital One could have
targeted the wrong Eileen Myers -- and paid no heed
to her protestations that she was being wrongly
targeted.
Starting in February 2005, Capital One hired
three successive collection companies to pursue
Myers -- and gave all of them the wrong contact
information. Myers told them she had never had a
Capital One card. The calls persisted, even though,
Myers said, she told them her Social Security number
was different from the debtor's partial number they
provided. In August 2005, Myers wrote a letter to
one of the companies, FMS Inc . of Tulsa. Under
federal law, FMS was required to respond with
evidence the debt was hers. It did nothing.
This year, Capital One sold the debt to yet
another subsidiary of Sherman Financial Group, which
hired a fourth collection agency to collect from
Myers. Within days, she sent another letter of
protest. Nonetheless, Sherman transferred the
account to Resurgent, which resumed collection
efforts.
Resurgent ``deeply regrets" that Myers was
targeted, according to its spokeswoman. Diana Don ,
a spokeswoman for Capital One, said the banking
giant, one of the country's top five credit card
issuers, apologizes ``for any inconvenience" to
Myers. Don would not say how Capital One targeted
the wrong consumer, or why it sold the debt after
its collectors were informed it was a case of
mistaken identity.
In several of these cases, including those
involving Coffin and Myers, it took just minutes for
Globe reporters to locate the apparent debtors,
using common commercial databases. In the Myers
case, the actual Capital One cardholder had once
lived within 15 miles of the innocent Myers. But she
moved to another state several years ago.
``It is clear that Capital One's debt collectors
are not doing simple research. If they cannot find
the Eileen Myers who has evaded payment, then they
think it's fine to pester another Eileen Myers into
paying the bill," the innocent Eileen Myers said.
Even when debt collectors locate the right
person, they sometimes ask the wrong person to pay,
as happened to Mary DePasquale of Norfolk. In May, a
Houston-based collection agency, FMA Alliance Ltd. ,
began a concerted effort to get her to pay $1,300
owed on a Discover Card -- her father's Discover
Card. Philip DePasquale , who is 70, has a small
disability income and lives in a nursing home after
losing a leg to diabetes.
Mary DePasquale explained to the collector that
the debt was not hers. His rejoinder, as she vividly
recalls it: ``Don't you want to help your Dad out?"
She couldn't afford to pay it, she told him. Then,
she said, the collector, who identified himself only
as ``Mr. Chris," told her he had ``checked her out,"
knew the value of her home, and suggested her
pockets were deep enough to satisfy the debt.
``I was outraged," DePasquale recalled, and told
the collector: ``How dare you check me out?"
It was then that she called Discover to complain
about FMA. Discover, she said, apologized. Jeffrey
Palmer , chief operating officer at FMA, declined to
discuss the specifics of the case with the Globe,
but said, ``It would not be our general practice" to
pursue someone for a family member's debt.
But the pursuit of one person for another's debts
is, nonetheless, alarmingly common. Even debt
collectors acknowledge that, with millions of
pending accounts, a bad debt can attach itself to
the wrong person like flypaper.
Eugene Ferraro knows that all too well. Ferraro's
father, Anthony F. Ferraro , is 89 and in ill
health, but remains in his Wellesley home with the
assistance of his sons and a caretaker. For six
months this year, the elder Ferraro kept getting
calls from Elite Recovery Services Inc. The Buffalo
collection firm wanted him to pay $2,252.74 for a
Household Bank credit card -- owed by Anthony E.
Ferraro .
Eugene Ferraro said he had angry telephone
exchanges with Elite Recovery employees and twice
wrote letters -- copies of which he provided to the
Globe -- insisting that the firm stop harassing his
father. It was in an August phone call with Elite
that Eugene finally prevailed: The representative,
Steve Snyder , told him the firm was looking for a
man who was 26 years old, had a different middle
initial, and lived in a different town. Elite
promised, at last, to take his father off its list.
But, said Eugene Ferraro, the agent also told him
that other collection agencies would probably keep
calling his father. ``The guy told me the only way
to stop this is to change his address and phone
number," Ferraro said.
Michael Rezendes of the
Globe staff contributed to this report. 
