MONEY Debt

Should Debt Collectors Be Able to Use Government Letterhead?

A debt collection company allegedly used government letterhead to contact debtors, which may be illegal.

Debt collectors are legally prohibited from misrepresenting themselves as police or lawyers when communicating with consumers. Of course, that hasn’t stopped some collectors from breaking the rules, and there are plenty of debtors who can tell stories of precisely that.

The question of what exactly qualifies as misrepresentation is at the center of a lawsuit filed Dec. 1 in U.S. District Court in San Francisco. The suit alleges that debt collection company CorrectiveSolutions violated the Fair Debt Collection Practices Act (FDCPA) after using letterhead of various prosecutors’ offices when contacting debtors. The complaint calls into question the process surrounding CorrectiveSolutions’ alleged practice of representing themselves as law enforcement to consumers and threatening legal action for failing to pay the debt. The tricky part of this case, however, lies in the fact that CorrectiveSolutions is under contract with several California’s district attorney offices for the expressed purposes of interceding on the government agency’s behalf. The legal dispute focuses on the way they intervened.

It’s all tied to California’s Bad Check Restitution Program. The program allows people who bounce checks and the businesses who received the checks to settle the case out of court through what’s known as a diversion program. In this diversion program, an offender can avoid prosecution by paying the amount the bad check was written for, plus fees, in addition to taking an 8-hour bad-check-offender class at the offender’s own expense. Through this program, people and businesses who receive bad checks can submit a complaint, along with evidence, to the mailing address listed on the DA’s website.

Under California Penal Code 1001.60, the DA is permitted to contract private companies, like CorrectiveSolutions, to help execute this program. However, district attorneys may refer cases to the program only if the check writer is believed to have violated state laws, like intentionally defrauding the recipient. A lawyer with the DA’s office is required to review the cases to ensure they meet various criteria. For example, if a business wants a bad-check writer pursued for violating the law, they must first make attempts to contact the debtor three times before the case qualifies for the program, according to Teresa Drenick, assistant district attorney in Alameda County.

The lawsuit contends that prosecutors have allowed debt collectors to use DA letterhead without first vetting the claim that the debtor violated the law. The American Bar Association recently condemned the general practice of allowing debt collectors to use prosecutors’ letterhead, as it makes the prosecutor “party to deception” and violates Bar Association rules, the association’s Committee on Ethics and Professional Responsibility wrote in an opinion issued Nov. 12. The opinion does not specifically reference California or the district attorneys’ offices mentioned in the lawsuit.

Credit.com reached out to the district attorneys’ offices in the five counties mentioned in the lawsuit (Alameda, Calaveras, El Dorado, Glenn and Orange counties), but only two responded. Joe D’Agostino, assistant district attorney in Orange County, said they’re studying the Bar Association’s opinion.

“The program is run in a method that matches what the statute is,” D’Agostino said, referencing California Penal Code Section 1001.60, which describes the district attorney’s ability to contract the bad check diversion program to a private party. “The Bar Association’s opinion came down fairly recently, so we’re studying it. We always want to follow the rules and follow the procedure.”

Drenick, the assistant DA in Alameda County, wrote in a email statement to Credit.com that CorrectiveSolutions sends the DA’s office a list of cases each month, which is reviewed by the office to ensure the debt is legitimate and would meet legal requirements for pursuing a criminal case. Then, CorrectiveSolutions is given approval to contact the debtor using the DA’s letterhead. She did not specify whether or not an attorney reviews the bad check diversion cases, as the statute requires, and she did not respond to a request for clarification.

“If we agree to allow the case to go by way of diversion, we authorize CorrectiveSolutions to send the check writer a letter on behalf of our DA Bad Check program advising that their check was returned for insufficient funds and offering them the option of participating in the diversion program to avoid criminal prosecution,” Drenick wrote. “It is a well thought-out diversion program. Last year (2013) our program returned $69,132.01 to local businesses as payment on dishonored checks through the Bad Check program. … There is no ‘rental’ of our letterhead; rather, a statutorily-authorized diversion program that helps local businesses collect on bad checks while giving the check writers an opportunity to avoid a criminal conviction/record.”

The future of this practice seems to depend on prosecutors’ reactions to the Bar Association’s opinion and the outcome of this litigation in California. Meanwhile, consumers may remain subject to the debt-collection tactic that the lawsuit is calling into question. CorrectiveSolutions did not respond to multiple requests for comment from Credit.com.

If your state doesn’t have a diversion program like California’s, writing a bad check can still come back to haunt you. If you bounce a check, the recipient may sue you over the unpaid sum, which may result in a judgment on your credit report — a credit score killer. (You’re entitled to free credit reports once a year under federal law). Debt collection can be confusing and intimidating for consumers, even when collectors follow the guidelines in the FDCPA. If you’re dealing with a debt collector, make sure you know your consumer debt collection rights, and form an action plan for paying off your debt.

More from Credit.com:

MONEY College

A New Jersey Woman Sued Her Parents for College Tuition – and Won

The parents of a 21-year-old New Jersey woman have been ordered to pay $16,000 a year in college fees for her, even though they haven’t had a relationship with her in two years.

But don’t expect them to pay up anytime soon.

“They can hold me in contempt of court. They can do whatever they want. I’m not going to pay,” Caitlyn Ricci’s father, Michael Ricci, tells WPVI-TV. “I’m not going to give them any money until my daughter has a relationship with me and we start to heal our family.”

The standoff – which recalls a similar New Jersey case earlier this year, in which 18-year-old Rachel Canning sued her parents – came to a head in November, when a judge ruled for Caitlyn and told her parents to help fund her out-of-state tuition at Temple University.

The family was back in court this week, with Caitlyn filing a motion to hold her parents in contempt of court after refusing to pay.

“It is nice to see that she is alive and doing well, but it is hurtful because she wouldn’t look at us,” Caitlyn’s mother, Maura McGarvey, says. “When I got emotional in the courtroom and when Michael got emotional in the courtoom, she doesn’t have any emotion.”

Caitlyn has been estranged from her divorced parents for almost two years. They claim she moved out voluntarily after they clashed when she refused to follow the rules. Caitlyn has been living with her grandmother, who funded the lawsuit.

“A lot of people call her a spoiled brat because she wants her parents to pay 100 percent of her college. And in fact, she is not asking for that, never has been,” Caitlyn’s attorney said.

This article originally appeared on People.com.

TIME Crime

Don’t Threaten UVA Rape Accuser, Lawyer Warns

UVa Fraternity
The Phi Kappa Psi fraternity house at the University of Virginia in Charlottesville, Va., on Nov. 24, 2014 Steve Helber—AP

Amid online intimidation of the woman known as Jackie

A lawyer for the University of Virginia student who was quoted in a Rolling Stone story describing a gang rape at a fraternity party issued a warning Wednesday against threats and extortion attempts.

The magazine apologized last week for “discrepancies” in the account given by the woman, who was identified as Jackie. The Washington Post and other news outlets also raised questions about details of the story.

The lawyer, Palma Pustilnik of the Central Virginia Legal Aid Society, issued a statement thanking members of the news media who have treated the story with “tact and sensitivity.”

Read the rest of the story from our partners at NBC News

TIME Transportation

Portland Sues Uber and Orders It to Cease Local Operations

Uber At $40 Billion Valuation Would Eclipse Twitter And Hertz
The Uber Technologies Inc. logo is displayed on the window of a vehicle after dropping off a passenger at Ronald Reagan National Airport (DCA) in Washington, D.C., U.S., on Wednesday, Nov. 26, 2014. Andrew Harrer—Bloomberg/Getty Images

The lawsuit came three days after the ride-sharing service's launch in the city

The city of Portland, Oregon filed a lawsuit against Uber on Monday, alleging that the ride-sharing service did not conform to its administrative regulations.

“The lawsuit seeks declaratory relief that Uber is subject to and in violation of the City of Portland’s Private for Hire Transportation Regulations and Administrative Rules,” the Portland Bureau of Transportation said in a statement on its website.

The city’s transportation head Leah Treat has reportedly issued a cease-and-desist order to the San Francisco-based company, and the lawsuit requests the court to order Uber to stop operating in Portland until it has complied with “safety, health and consumer protection rules.”

The lawsuit comes three days after Uber’s highly publicized launch in the city and a week after Nevada banned its operations across the state.

Uber was also banned in India’s capital New Delhi on Sunday, days after one of its drivers was accused of raping a passenger, and is facing legal issues in Germany and the Netherlands as well.

TIME Companies

U.S. Hits Deutsche Bank With $190 Million Tax Fraud Lawsuit

A general view of Deutsche Bank on Sept. 5, 2011 in London.
A general view of Deutsche Bank on Sept. 5, 2011 in London. Dan Kitwood—Getty Images

Justice Department has accused the banking giant of using shell companies to conceal profits and avoid paying taxes

The Justice Department has sued Deutsche Bank for fraud over an alleged scheme to avoid paying federal taxes.

The government is seeking more than $190 million in back taxes plus penalties and interest.

The lawsuit, which was filed on Monday in federal court in New York, alleges that Deutsche Bank DB -1.23% engaged in a series of transactions meant to evade federal income taxes — leaving the U.S. government “with a significant, uncollectable tax bill,” according to the Justice Department.

“Through fraudulent conveyances involving shell companies, Deutsche Bank tried to make its potential tax liabilities disappear,”Manhattan U.S. Attorney Preet Bharara said in a statement. “This was nothing more than a shell game.”

The government went on to describe the alleged fraud, which included the German bank’s creation of three separate “shell companies” as well as a series of subsequent transactions involving those companies that federal authorities claim were designed to avoid federal tax laws.

Deutsche Bank responded to the allegation in a statement to Fortune, saying: “We fully addressed the government’s concerns about this 14-year old transaction in a 2009 agreement with the IRS. In connection with that agreement they abandoned their theory that [Deutsche Bank] was liable for these taxes, and while it is not clear to us why we are being pursued again for the same taxes, we plan to again defend vigorously against these claims.”

This article originally appeared on Fortune.com

MONEY Health Care

Why a Popular Way to Control Health Care Costs Is Under Fire

businessman with blood pressure cuff on his arm
Eric Hood—iStock

Employers are increasingly turning to wellness programs to keep workers healthy. But a new lawsuit is challenging whether your boss can force you to get medical tests—or pay more for your health insurance.

Do it or else. Increasingly, that’s the approach taken by employers who are offering financial incentives for workers to take part in wellness programs that incorporate screenings that measure blood pressure, cholesterol, and body mass index, among other things.

The controversial programs are under fire from the Equal Employment Opportunity Commission, which filed suit against Honeywell International in October charging, among other things, that the company’s wellness program isn’t voluntary. It’s the third lawsuit filed by the EEOC in 2014 that takes aim at wellness programs, and it highlights a lack of clarity in the standards these programs must meet in order to comply with both the 2010 health law and the landmark Americans with Disabilities Act.

Honeywell, based in Morristown, N.J., recently got a reprieve when a federal district court judge declined to issue a temporary restraining order preventing the company from proceeding with its wellness program incentives next year. But the issue is far from resolved, and the EEOC is continuing its investigations. Meanwhile, business leaders are criticizing the EEOC action, including a recent letter from the Business Roundtable to administration officials expressing “strong disappointment” in the agency’s actions.

In the Honeywell wellness program, employees and their spouses are asked to get blood drawn to test their cholesterol, glucose, and nicotine use, as well as have their body mass index and blood pressure measured. If an employee refuses, he’s subject to a $500 surcharge on health insurance and could lose up to $1,500 in Honeywell contributions to his health savings account. He and his spouse are also each subject to a $1,000 tobacco surcharge. That means the worker and his spouse could face a combined $4,000 in potential financial penalties.

“Under the [Americans with Disabilities Act], medical testing of this nature has to be voluntary,” the EEOC said in a press release announcing its request for an injunction. “The employer cannot require it or penalize employees who decide not to go through with it.”

Honeywell sees the situation differently. “Wellness is a win-win,” says Kevin Covert, vice president and deputy general counsel for human resources at Honeywell. In time, the company expects to see lower claims costs while workers avoid health problems. Sixty-one percent of employees who participated in the company’s screening last year reduced at least one health risk, he says.

Further, Covert says, it’s easy for employees and their spouses to avoid the tobacco surcharge. Smokers can take a 15-minute online tobacco cessation course, while non-smokers can simply call up the health plan and certify that they don’t smoke.

“The way they described the program was quite hyperbolic,” Covert says.

Employers are watching the Honeywell case closely because many have similar incentive-based wellness plans, says Seth Perretta, a partner at Groom Law Group, a Washington, D.C., firm specializing in employee benefits.

Eighty-eight percent of employers with 500 workers or more offer some sort of wellness program, according to a 2014 national survey of employer-sponsored health plans by the benefits consultant Mercer. Of those, 42% offer employee incentives to undergo biometric screening, and 23% tie incentives to actual results, such as reaching or making progress toward blood pressure or BMI targets.

Despite employers’ enthusiasm for wellness programs, “there’s no good research that shows these programs actually improve health outcomes or lower employer costs,” says JoAnn Volk, a senior research fellow at Georgetown University’s Center on Health Insurance Reforms.

The health law encourages employers to offer workers financial incentives to participate in wellness programs. It allows plans to incorporate wellness incentives — both penalties and rewards — that can total up to 30% of the cost of employee-only coverage, an increase over the previous limit of 20%. If the wellness activity aims to help someone reduce or quit smoking, the incentive can be even higher, up to 50% of the plan’s cost.

Under the ADA, employers aren’t allowed to discriminate against workers based on health status. They can, however, ask workers for details about their health and conduct medical exams as part of a voluntary wellness program. What constitutes a voluntary wellness program under the law? Employers, patient advocates and policy experts want the EEOC to spell out what “voluntary” means under the ADA and clarify the relationship between the health law and the ADA with respect to wellness program financial incentives.

“The EEOC has chosen litigation over regulation,” says J.D. Piro, a senior vice president at Aon Hewitt, who leads the benefits consultant’s health law group.

The EEOC is always reviewing its guidance, but there’s no timeframe for issuing further guidance, says spokesperson Kimberly Smith-Brown.

Consumer advocates say it’s critical not to confuse incentive programs with comprehensive workplace wellness.

“The incentives are meant to engage employees,” says Laurie Whitsel, director of policy research at the American Heart Association, “but they’re not the comprehensive programming we’d like to see employers offer.” It’s really important to have a culture of health, Whitsel says, including an environment that supports a healthy workplace, from a smoke-free work environment to healthy food in the cafeteria.

Patient advocates voice another concern: That wellness program financial penalties may be so onerous they actually limit people’s access to the medications and primary and preventive care they need to get and stay healthy.

“When penalties become that high, it really is a deterrent to affordable, quality health care,” says Whitsel.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

MONEY College

Would Your Tuition Bills Go Up If College Athletes Got Paid?

141128_FF_AthletesCost
Drake Johnson (#20) of the Michigan scores against Indiana on November 1 , 2014 in Ann Arbor. Leon Halip—Getty Images

As the college football season heats up, the action far from the field could eventually raise the costs of fielding teams.

Wins by college athletes in courtrooms and boardrooms could end up in losses for their non-athlete classmates.

High-profile legal cases and NCAA policy changes are likely to boost the cost of fielding big-time athletics programs. And students—even those who never attend a single college basketball or football game—may have to foot the bill, higher-education finance experts say.

How the Game Is Changing

The most sweeping changes to college sports could come from an antitrust suit against the NCAA pending in New Jersey, in which attorney Jeffrey Kessler contends that college athletes should be paid as much as the market dictates—a salary, essentially. A win for Kessler, who filed the suit on behalf of former Clemson football player Martin Jenkins, likely would spark bidding wars among universities for top recruits by eliminating limits on such payments.

The case is likely to go to trial next fall.

“I do believe that if the Kessler case wins, that could break the bank for the NCAA as we know it today,” says William Kirwan, chancellor of the University of Maryland system and co-chairman of the Knight Commission on Intercollegiate Athletics. “This would become like a mini NFL draft. It would become a free market.”

Other factors also promise to change the rules of the game.

A federal judge in August ruled in favor of former college athletes, led by UCLA star basketball player Ed O’Bannon, in an antitrust suit against the NCAA that could lead to back payments for as many as 100,000 former athletes and additional scholarship money for future ones.

The ruling came less than five months after the National Labor Relations Board concluded Northwestern University football players were, essentially, university employees, and could unionize.

Some schools have already hinted they would pay athletes thousands of dollars more per year after NCAA officials—independent of any lawsuits—said they might allow universities to cover athletes’ entire cost of attendance.

Who Will Foot a Bigger Bill?

Only a handful of NCAA Division I schools have self-sustaining athletics programs—just 20 of the nearly 130 schools in the top-flight Football Bowl Subdivision, for example—so most universities subsidize those departments, even in a pre-Kessler, pre-O’Bannon world. At public institutions in particular, part of that subsidy is drawn from student fees.

According to the Knight Commission, growth in athletics funding at Division I schools outpaced academic spending from 2005 to 2012. Students at some schools pay $1,000 in athletics fees alone.

Changes to how student-athletes are paid could lead some schools, stuck with nowhere else to turn, to raise other students’ fees. Universities and colleges could also scale back their athletics programs to cut costs. That “would be the rational approach,” Kirwan said. “But when it comes to college athletics, rationality doesn’t often prevail,” he said. “There are so many societal pressures.”

Research shows that some students don’t even know their fees are already paying for athletics. At Ohio University, for instance, 41% of revenue from the general fee of $531 per quarter for full-time students in 2010 went to intercollegiate athletics, but 54% of students didn’t know it, according to a survey by the nonprofit Center for College Affordability and Productivity, a Washington, D.C. think tank.

Dividing the $765 per year they paid for athletics through the fee by the number of games the average Ohio University student attended, the center calculated that students were paying the equivalent of more than $130 per athletic event they actually watched in person.

Eighty-one percent said they opposed raising the amount of their fees that went to the athletics program, or wanted it reduced.

If the Kessler lawsuit succeeds, “The institutions that rely primarily on student fees are going to have to make a decision about whether they’re going to try to keep up,” says Amy Perko, executive director of the Knight Commission. “When you have schools with $5 million for their entire athletic budget trying to compete with schools that have $5 million coaches, it’s going to strain at some point.”

The Pressure to Stay in the Game

Even some schools in the “Big 5” conferences—the SEC, ACC, Big 12, Big Ten, and Pac-12—where football and basketball bring in big bucks will have trouble maintaining their programs if bidding for athletes takes off, experts said. Schools on the fringes of big-time sports success, such as UC Berkeley, Rutgers, Northwestern, and Indiana, would have tough decisions to make about whether to pass on costs to students, says Murray Sperber, a UC Berkeley professor who has written several books about the role of college sports.

The most likely outcome, Sperber says, would be for at least some of those universities to drop out of the big-time sports world by eliminating athletics scholarships or otherwise scaling back sports programs rather than risking protests by paying athletes and charging students more. But some colleges in mid-tier conferences will probably choose to stay in the bidding game, he says.

“You think of it as a big poker game where the stakes keep going up,” Sperber says. “The students in trouble potentially are those at schools beyond the Big 5, because they’ll have to decide whether to stay in the poker game.”

No Price Tag on School Spirit

Students at some big-time Division I schools said athletic success is important not just for the campus but also for the community. The University of Kentucky basketball program, for example, is part of the school’s and the state’s identity, says Jacob Ingram, president of that university’s student body.

“One of the things the state of Kentucky identifies with most is the Big Blue Nation,” says Ingram, a senior from Nicholasville, Kentucky. “What a great way to leverage our brand and share the rest of what the university has to offer.”

At Rutgers, which is in its first year in the Big Ten, the athletics department has taken on new importance with its climb into the Big 5 ranks. Few students seem to mind paying for that prominence, says senior Brian Link, and even fewer would want to see the school to roll back the affiliation.

“Given the state of where our athletic program is, I think if we have a de-emphasis on athletics a lot of people wouldn’t be too happy,” says Link, from Sayreville, N.J. “That’s where a lot of our school pride comes from—our athletic program. A lot of people in New Jersey root for Rutgers because there aren’t other big-time programs here.”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

TIME NBA

Police Confirm Dwight Howard Child Abuse Investigation

Dwight Howard of the Houston Rockets shoots from the free throw line during the Los Angeles Lakers first regular season NBA game against the Rockets on Oct. 28, 2014 at Staples Center in Los Angeles.
Dwight Howard of the Houston Rockets shoots from the free throw line during the Los Angeles Lakers first regular season NBA game against the Rockets on Oct. 28, 2014 at Staples Center in Los Angeles. Robyn Beck—AFP/Getty Images

"Dwight Howard will continue to act in the best interest of his children and do whatever is necessary to protect their welfare and best interests"

Police in Cobb County, Ga., confirmed to SI.com on Tuesday that there is an active child abuse investigation involving Houston Rockets center Dwight Howard.

TMZ first reported the allegations against Howard, and NBC News reported earlier Tuesday that Cobb County Police were re-opening an investigation of Howard.

A Cobb County Police sergeant told NBC News that the investigation stems from an incident from this summer. Originally, police said they did not have enough evidence to proceed past an initial investigation, but new information came to light to trigger renewed interest from authorities in the case, according to NBC.

In response to earlier reports about child abuse allegations against Howard in Florida, the eight-time All-Star released a statement to The Orlando Sentinel through his attorney rejecting accusations of abuse.

“It is troubling to see a mother use her son as a pawn against his father, which is what is happening in this case,” the statement reads. “Dwight Howard will continue to act in the best interest of his children and do whatever is necessary to protect their welfare and best interests.”

This article originally appeared on SI.com

TIME Parenting

Woman Sues Peppa Pig Producers Over Goat That Shares Her Name

Peppa Pig rides her bicyle in a scene from one of the "Tickle U" series of cartoons.
Peppa Pig rides her bicyle in a scene from one of the "Tickle U" series of cartoons. Cartoon Network/AP

Grown woman says she's been mocked because she shares a name with a children's character

An adult Italian woman who shares a name with an animated goat in the popular Peppa Pig children’s series is demanding €100,000 ($124,500) in compensation from the show’s producers because she’s been “teased” about it.

Gabriella Capra, 40, is suing London animation firm Astley Baker Davies for damages after she was mocked by her presumably adult friends for sharing a name with “Gabriella Goat,” a minor character in a television show aimed at toddlers.

“Capra” means “goat” in Italian, so when the series was broadcast in Italy, “Gabriella Goat” became “Gabriella Capra,” the Guardian reports.

In the show, Gabriella Goat is a friendly Italian goat who shows Peppa Pig around when she and her family visit Italy on vacation. She is also the niece of Uncle Goat, who makes pizza. She bleats, because she is a goat.

Capra says she will donate any damages to charities for abandoned children.

[The Guardian]

 

TIME Food & Drink

Starbucks Says It Has Nothing to Do With a High-Profile GMO Lawsuit

Sandy Roberts
Sandy Roberts, Starbucks strategy manager for global coffee engagement, pours samples of coffee for shareholders and other guests at Starbucks' annual shareholders meeting in Seattle on March 19, 2014 Ted S. Warren—AP

Coffee chain issues denial after rocker Neil Young urges boycott

Starbucks has announced that it has nothing to do with litigation being brought against the state of Vermont over the labeling of genetically modified ingredients (GMOs).

Canadian rock legend Neil Young attempted to launch a boycott of Starbucks on Sunday, accusing it of joining forces with Monsanto “to sue Vermont, and stop accurate food labeling.”

Last spring, Vermont passed a law requiring all products containing GMOs to be properly labeled by July 1, 2016, reports People.

Young’s belief that Starbucks was part of a suit to have the law declared unconstitutional prompted him to declare on his website: “I used to line up and get my latte everyday, but yesterday was my last one.” He then appealed to the public to join him in a Starbucks boycott.

However, it looks like it could all be a storm in a coffee cup. The coffee giant released a statement denying that it is involved in the litigation.

“Starbucks is not a part of any lawsuit pertaining to GMO labeling nor have we provided funding for any campaign,” the statement says. “Starbucks is not aligned with Monsanto to stop food labeling or block Vermont State law.”

Young has yet to respond.

[People]

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