Now This is An Interesting Phenomenon

The Dallas, TX alternate weekly, the Dallas Observer, has the story of a guy with hundreds of thousands of dollars in debt from the collapse of the real estate bubble (and short sighted greed, but I repeat myself) who is now earning money by suing debt collectors who contact him and forget to cross their "i"s and dot their "t"s:

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He [Craig Cunningham of Northeast Dallas ] leans forward to lift some paperwork out of a plastic tub on the coffee table. The phone rings, and he answers with a soft voice. It's just a friend, and soon he hangs up. He's waiting for a particular type of phone call—one from a representative of a debt collection agency or a credit card company, whom he'll try to ensnare like a Venus fly trap. It's not unlikely that Cunningham's next call will be from a bill collector, since he's between jobs—except for being in the Army Reserve—and owes $100,000 in debts.

While most Americans with unpaid bills dread the collector's call, Cunningham sees them as lucrative opportunities. Many collection and credit card companies, intentionally or not, violate little-known consumer rights laws, and Cunningham's favorite pastime is catching them doing so and then suing them. In fact, it's a profitable side job.

Call it ironic, but the only house on the block that appears to be the foreclosed end to some sad financial story is in fact the home of one of the debt collection industry's emerging and persistent threats. Cunningham calls himself a private attorney general—someone who files private lawsuits in the public interest. Debt collectors call him a credit terrorist.

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I do not think that he is a terrorist, but I do think that Mr. Cunningham is a slime, not because he's using the small print to make money from, and avoid debt, that is, after all, the game, but because he went and used things like student loans in his attempts to juice his credit score [go to the full article] in an attempt to become wealthy without really working.

I know that some would argue that becoming wealthy without work or other productive activity is the American way, but it's slimy, and if it is the American way, then the American way over the past 30 years has become slimy and parasitic.

The way that he gets money is that the the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA) and the Telephone Consumer Protection Act (TCPA), which forbid debt collectors from violating federal or state laws, and provides for statutory damages for each instance, so if a collector threatens to garnish wages in Texas, where it is illegal, they are liable, even if the caller is in Butte Montana or Bangalore, India.

So, for example, when a collection agency started leaving pre-recorded messages on his mobile, a violation of the, and refused to stop when he asked, while refusing to show that the bill (a tiny Comcast bill), both violations of the TCPA and FDCPA, and the collection agency has

CMI has countersued Cunningham, and even asked the court for a protective order from Cunningham: "Plaintiff Craig Cunningham (herein "Plaintiff") has filed suit against a business, Credit Management, LP (herein "CMI"), and twenty-seven (27) of its employees in their individual capacities," reads the motion for a protective order filed in Northern District of Texas in December 2009. "Defendants move for a protective order to protect Defendants from the annoyance, oppression, undue burden and expense of objecting and responding to improper, repetitive and irrelevant discovery requests."

In December, Cunningham was called in for a six-hour deposition, the longest he's ever sat through, at which the lawyers printed out pages of his online comments to accuse him of acting like a lawyer. Plus, CMI insists that they didn't violate any laws and that Cunningham is acting in bad faith. Although the company already offered Cunningham money to settle the case, Cunningham refused, asking for much more than the "industry standard," as Cunningham calls it, of $3,500.

"If they don't pay a bunch of money, if they don't feel pain, they will not change," he says.

A big win in his case against CMI could go a long way toward clearing Cunningham's debts—if he ever chose to pay them, that is.

"I took outsize risks, and I got burned," he says. "When myself and some other fellow small investors were losing their assets, nobody cared."

Up until now, everything was about making easy money for Cunningham. Now, it's about justice—or at least what he sees as justice.

He's right about that point: All those people who scream about how the small print, and the rule of law, matter for the small debtor, seem to think that it's somehow evil to expect large debtor and their agents.

I see courts being more amenable to claims like Cunningham's in the future, and that is not a bad thing.

H/t The Big Picture.