Collection Agency Reaches $400,000 Settlement with Ohio AG

Ohio Attorney General Richard Cordray announced Tuesday that his office has reached a settlement with a collection agency that will see the company pay about $200,000 to the state and another $200,000 in restitution to Ohio consumers, including direct payments to consumers who filed complaints.

Cordray said that he filed suit in July 2009 against Solon, Ohio-based National Enterprise Systems, Inc. (NES) for “harassing consumers when attempting to collect on debt” after his office had received hundreds of complaints about the firm’s debt collection practices. Some of the practices alleged included calling and harassing consumers’ coworkers and family members, calling before 8 a.m. and after 9 p.m., using abusive language, attempting to collect debts consumers did not owe, failing to verify debts and making unauthorized withdrawals from consumers’ bank accounts.

“Since July, we’ve been working closely with Richard Cordray’s office to come to a fair and swift resolution to this claim,” said NES President and CEO, Ernest R. Pollak. “Our goal here at NES remains the same, to continue to serve our broad base of clients in a cross section of industries in resolving third party debt.”

Pollak said that he recently agreed to the settlement after defending many of the allegations for so long.

“We’ve been defending this for eight months or so,” he said. “To me, it was a business decision I had to make to move forward to put this behind us. Our clients have stuck with us through this thing and they’ve been great, but it has certainly stunted our growth.”

Pollak noted that his company employs 420 people at its campus in Solon, making it one of the largest employers and supporters in the local business community – a suburb of Cleveland.

The settlement included a restitution dispersal arrangement that will see Ohio consumers repaid for their troubles. Cordray noted that some $207,500 of the settlement amount will be paid to consumers in the state.

Included in that is a provision that will directly pay consumers that filed complaints against NES. Cordray said that “consumers who filed complaints prior to the agreement may be eligible to receive $200 or more in restitution.”

Another part of the settlement requires NES to comply with certain rules, including the Fair Debt Collection Practices Act (FDCPA).

“They just wanted us to agree to not violate the FDCPA,” said Pollak. “All of the specific requirements they laid out, we’re already doing. Internally, we continue to emphasize the importance of best practices as they relate to fair and equitable collection techniques and will not tolerate anything less than full adherence to all consumer protection laws including the FDCPA.”

Pollak’s main advice to debt collection agencies is to implement a structured system to record collection calls. “Before this, we were recording some calls for training purposes,” he said. “Now, we’re up to about 90 percent of our calls, and we’ll be recording 100 percent very soon.”

And Pollak said that agencies need to act on information on the recordings quickly. “I don’t care who it is – a top collector or whatever – you can’t turn your head,” he noted.