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Is It A Scam? Common Scams to Avoid

Our law firm, Loring & Associates, is located at Escapees Headquarters in Livingston, Texas, along with Multigenerational Wealth Strategies (MGenWealth), a financial advisory firm. We are in the same building that houses the mail service for Escapees. As a result, we have members come in and ask us to help them determine if mail they’ve received is genuine or a scam.

For example, we recently had someone ask us about a letter that he received, saying he was entitled to $800,000 if he sent $3,000 for a handling charge. Heather Brown, financial advisor for MGenWealth, quickly deciphered that this was a scam. So, even if you are safely RVing on the road, you might still be subject to an occasional scam.

Vehicle Accident Scam

In fact, an RVer friend, Mary, told me about the time she received a frantic phone call from her elderly father. He stated that her nephew, David, had been in a car accident in Canada, and needed their help. He said David was injured in the accident, lost his cell phone and wallet and needed her to wire him $3,500 immediately. 

In a panic, Mary raced to the nearest Walmart customer service, filled out the paperwork and wired the money. Although she was worried about David, she felt relieved that she had been able to help her nephew avert a crisis. Back at her RV, she took time to catch her breath and to process what had happened. 

Once she calmed down, she began to wonder why David had gone to Canada, and why he hadn’t contacted his parents. She thought it was odd that he would lose both his wallet and his cell phone. So, she decided to call David’s phone. To her surprise, he answered. The fear that she and her dad had been scammed was confirmed when David told her he hadn’t been in an accident, and he was in Houston, Texas, not Canada! 

Racing back to Walmart, Mary explained the situation to the same cashier that had helped her earlier. Luckily, the money transfer hadn’t gone through, and her money was returned. 

Although local law enforcement in Canada was notified, the scammer got away—but, thankfully, not with Mary’s money.

Unpaid Debt Scam

In my law practice, I came across another type of swindler. It began in 2001. At that time, my client, whom I will call Richard, had a balance due on a credit card of $285. He was unaware of the debt and failed to pay it. 

In 2008, a third party filed a lawsuit against Richard, alleging that the $285 had grown to over $13,000. The court granted a judgment against him. Poor and unable to afford a lawyer when Richard was notified about the debt, he agreed to the judgment and to pay installments of $100 per month. He had been scared into an arrangement he could not afford and, yet again, failed to pay. 

Then, another debt collection agency bought the judgment from the previous owner. They filed another lawsuit against Richard, claiming he now owed over $170,000 for this unpaid $285 credit card bill from 18 years ago. Surprisingly, this lawsuit is legal. However, instead of suing Richard, the debtor, the new claimant, sued the bank where Richard had an account, containing his only income from social security. He then received notice that his checking account had been garnished.

Garnishing someone’s checking account for an unpaid loan is legal in Texas. However, garnishing the checking account of a person who relies solely on social security as their only income is not legal. But, there’s an exception. If any money in the account has been commingled with the money from social security (such as $25 he was given as a gift), then the debtor/assignee’s/assignee can take those funds and continue to sue for the rest of the $170,000 they are “owed.”

Historically, lenders used the argument that when someone failed to pay their debt, the lender didn’t have “use” of their money and, therefore, should be reimbursed the delinquent amount, plus interest they would have received if they’d had use of the money. In an affidavit accompanying this garnishment notice, the debt collection agency stated that the interest rate allowed is 32.24 per cent per annum. 

However, if the lender had $285 from Richard, back in 2001, it would be hard to prove that they could have invested it in anything that yielded $170,000 in 2018. Another way to think of it is in the value it represented. The value of a dollar in 2001 is $1.42 today. So, at most, $285 in 2001 should be worth $405 today. Certainly not $170,000! In fact, this tactic reeks of usury. Usury is “lending money at unreasonably high interest rates.”

And, it also reeks of fraud. Supposedly, the attorney on the garnishment pleading was working for the debt collector, but when he was contacted, the voice message assured the caller that the number called was the debt collector, not an attorney representing the debt collector. 

Of course, the obvious argument is that Richard should have paid his credit card bill, and it’s fair to say he should be reprimanded for not paying it. However, if the $170,000 bill goes unpaid, what should be the next punishment—debtor’s prison?

Apparently, this is the latest racket, enriching lawyers at the expense of the elderly, scared and vulnerable: find an old debt, buy it from some previous debt collector who bought it from some earlier debt collector, max it out by waiting until the statute of limitations has almost run (there’s a 10-year statute of limitations on unpaid judgments) and then garnish the checking account and take what you can. This is obviously an unfair practice, and our law firm plans to fight the issue. 

Conclusion

The moral to this story: First and foremost, if you receive anything in the mail that sounds too good to be true, it probably is a scam. Do your research or have someone you trust research it for you. 

Second, even if you love your nephew dearly, if he calls in the middle of the night and asks for a large sum of money, stay calm and investigate the situation thoroughly before wiring that money. 

And, third, if you receive notice of an unpaid debt and judgment from years ago that has increased 600 percent, do not accept it as an amount you owe. Seek out the advice of an attorney before agreeing to and signing any documents. If you are wondering what happened to Richard’s case, well, he finally obtained legal counsel and the case against him was found to be nonsuited. This means the lawsuit to garnish his checking account was dropped. However, the judgment still stands and the case is ongoing. 

K. Susie Adams

Author

K. Susie Adams SKP #134068

K. Susie Adams has been a lawyer for over 30 years, spending 15 of those years working as a trial lawyer. She also taught legal writing at the University of Houston Law School. From 2011–2016, she was executive director of Childrenz Haven, the Child Advocacy Center of Polk County, Texas. Susie and her husband, James Frost, reside in Livingston, Texas.

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