Bamboozled: An overdue bill or a scam? Collections agency targets girl, 13, with questionable demands

A Morristown family receives a collections notice for a bill that's already been paid, and the demand for payment may not comply with collection laws.

Heather and Tim Dobbs pay their debts.

The Morristown couple is trying to teach their daughter Kate to do the same.
So when Kate received a letter saying she was past due on a bill, something didn’t seem right to the family.

Plus, Kate was only 13.

"When Kate opened the letter she was very upset," said Heather Dobbs. "She thought that she was in trouble and that they were going to ruin her credit in the future."

The letter, dated April 1, was from a company called Publishers International. It claimed Kate was overdue on a $119.95 magazine purchase from July 17.

"The amount charged was than [sic] returned by your bank as a disputed charge on your behalf," the letter said, and it offered the last four digits of a credit card held by Tim Dobbs. "If the amount is not paid in full 10 days from the date of this letter we will be forced to serve you with a summons including attorney fees. We will also report it to the IRS as earned income to you. Attorney fees included are $1,500.00 minimum. Avoid this by sending your check in full dated 10 days from the date of this letter."

The letter was signed Mark Weinstein, in-house counsel for Publishers International.

The family thought the letter wasn’t right. They looked, and yes, there was a charge for $119.95 to Publishers International on Tim Dobbs’ credit card, but credit card company records showed the amount was never disputed and was paid.

The family said they didn’t remember the order, and Kate said she never placed an order without her parents’ permission.

"The only time [Kate’s] name has been on any magazine invoice was through a school magazine sale, which was paid directly to the school," Heather Dobbs said. "I looked online and it seems to be a scam."

She made that determination after seeing similar complaints on online message boards.

So they ignored the letter.

Then Kate received a second letter, dated April 25, from Umbrella Recovery Team, which appeared to be a collections agency. The letter demanded the payment and threatened reporting the debt to the IRS.

"Should you refuse to pay this we will attempt to claim the funds and any fees back in a U.S. Court of law," the letter said. "Should payment not be made in 10 days we will add an additional fee of $153.55."

"Please, for your sake, pay this bill or contact us immediately to set up some type of monthly installment payment plan," the letter said.

It said a few other things worth noting.

After the "Umbrella Recovery Team" signature, it said: "Please make all check or money orders payable to Publishers International."

It also said: "WARNING: A conviction of a bounced credit card or check payment is classified as larceny with a potential sentence of up to five (5) years in prison. SEND PAYMENT IMMEDIATELY!"

The collections letter didn’t sit well with Heather Dobbs.

"Until I received the second letter, I really did think it was a scam," she said. "After the second letter I got nervous because I researched the collection agency and it was a legitimate collection agency."

"That’s when I called you because I didn’t know how best to handle the situation," she said.

But whether or not Umbrella Recovery Team is legitimate remains to be seen.

WARNING SIGNS

Bamboozled took a look at the web site for the collections agency, Umbrella Recovery Team, which Heather Dobbs said looked legit.

The home page is neat and full of tabs to other pages on the site, but clicking doesn’t lead you anywhere. When you click the "contact us" tab, the web page offers no contact information at all.

That’s unusual for any business.

Also unusual is that the collections letter said the customer should make the check payable to Publishers International. Bamboozled, and some consumer law attorneys we contacted, had never heard of a collections company that said a customer should make a payment to anyone but the collections company itself.

The letter from Umbrella Recovery Team was missing some statements that are required by law, including the process a consumer should follow to dispute a bill, and a notification that the debt is assumed valid unless the consumer notifies the collector within 30 days of receipt of the notice that the debt is disputed.

Gerri Detweiler of Credit.com said she found many instances in the letter where Umbrella didn’t comply with collections law, including the reference to the IRS.

To report a cancelled debt, they would need to use 1099-C, not a 1099-A. And, this form is not required for amounts under $600, she said.

"We’ve been seeing this threat from a few debt collectors recently and I’ve been asking consumer law attorneys whether this may be an illegal threat under the Fair Debt Collections Practices Act (FDCPA)," Detweiler said. "No definitive response yet but it does appear questionable."

The letter also threatened to report the debt to the three credit bureaus. But by law, a collection agency cannot threaten such action unless it actually intends to report the debt, and unless it’s actually a client of the credit reporting agency.

Experian, Equifax and TransUnion all told Bamboozled that Umbrella Recovery Team is not a client. Experian said it is notifying its legal department of Umbrella’s use of its name and logo on its web site.

A STEP FURTHER

We checked with the Better Business Bureau, which didn’t have a report on either company. It did, though, turn us on to an interesting fact: a WHOIS search -- which details who has registered a web site -- showed that the Umbrella site was registered to Elliott Smith of Publishers International.

"Also, www.umbrellarecovery.com is illegally displaying a BBB accredited business seal and false `A-’ rating on the rotating graphic on the `About Us’ page," said Melissa Companick of BBB. "The website has no names or contact information, which BBB often considers a red flag for doing business with a company."

Sometime this week, attorneys for the Council of Better Business Bureaus will send a cease and desist letter to Umbrella, she said.

We called Publishers International, and we tried to leave messages for Mark Weinstein, listed as in-house counsel, and Elliott Smith, listed on the web site registration.

Neither name came up in the alphabetical employee search offered by the voice mail, so we left messages at several extensions.

No one returned our calls.

We went through the same process with all the numbers we could find for Umbrella Recovery Team, but we never got a person on the phone.

Both companies had addresses in Palm Desert, Calif., so we made some calls out west.
Records show neither Publishers International nor Umbrella Recovery has ever filed with the state to incorporate or create a Limited Liability Company, or LLC.

If the companies never incorporated or were LLCs, they could still do business as long as they get a business license from the county or the town.

Riverside County had no records of either company, but the city of Palm Desert did. Kinda.

Publishers International’s business license expired in February 2012, said Claudia Jaime of the Palm Desert business office.

"The owner said they were closing the business," she said.

That’s not what the letter received by the Dobbs, dated April 1, seemed to say.
Jaime also said Umbrella Recovery Team never applied for a license.

Palm Desert had three complaints against Publishers International, Jaime said, adding that the addresses for both companies were P.O. Boxes -- something not allowed under city rules.

Unusual, indeed.

A few days later, Jaime reported the city called Elliott Smith -- the man listed on the web site registration as a Publishers International contact. She said Smith at first denied the company was conducting business without a license.

She said she told him about the Dobbs letters, and Smith changed his story.
He said he wouldn’t be doing business in the future. Jaime said she then told him she’d need a corporate dissolution document from the state.

"He lied to me and said, ‘Okay. leave it as it and we will find a new address,’" Jaime said.

Jamie said Smith later reported a new location to her, and he completed a business license application.

"We took the application but we’re not going to put it in the system," Jaime said, noting she would forward it to the city attorney and the local police. "We are not going to renew the license. He will receive a letter from the city attorney that Palm Desert will not allow him to open a business in the city."

Jaime also said she asked Smith for contact information for Mark Weinstein, the company attorney. Smith told her that Weinstein wasn’t located in Palm Desert, she said.

"The attorney was listed on that letter with a Palm Desert address," she said. "He needs a business license as well and he doesn’t have one."

So where does this all leave the Dobbs?

We can’t in good conscience tell the family to ignore collections letters, but we also can’t recommend they pay a bill that was already paid, to a company that doesn’t exactly check out.

We told the family it would be smart to send certified letters with proof of payment to all three addresses for the companies, and she said she would. They also said they will file complaints with the Better Business Bureau, the Consumer Financial Protection Bureau and both New Jersey and California.

"Companies like this should not be able to profit from scaring people," Heather Dobbs said. "I am really glad that I called you, not only for our benefit but for other people who have had to deal with this company. We now have information to show Kate how to be a smart consumer and question bills if they don’t seem right and especially not to be intimidated."

Have you been bamboozled? Contact Karin Price Mueller at bamboozled@starledger.com.