CLAIR JOHNSON Of The Gazette Staff | Posted: Monday, August 3, 2009 7:20 pm

D.A. Davidson & Co. of Great Falls has settled a federal class-action lawsuit over clients’ information that was compromised by a computer hacker.

Chief U.S. District Judge Richard Cebull has given preliminary approval to a proposed settlement agreement that could affect an estimated 226,000 current and former customers. About 40 percent of the customers, or 90,000 people, live in Montana. A hearing for final approval is set for Nov. 12.

The data security breach occurred about Dec. 20, 2007, when a D.A. Davidson database of confidential personal and financial information of current and former clients was hacked by someone using sophisticated techniques. The company learned of the problem on Jan. 16, 2008, and immediately contacted law enforcement and other regulators and hired a forensic security consultant to investigate.

Although D.A. Davidson was prepared notify its clients and former clients of the breach almost immediately, it delayed notice for several days at law enforcement’s request, the settlement said.

The hacker did not gain access to the company’s operating systems or account information. No trading accounts were affected, the company said.

The settlement is the result of more than a year of negotiations between the parties from two initial lawsuits and one filed in May in federal court.

Under the deal, D.A. Davidson will continue to make available at its own expense a credit monitoring program that monitors customers’ credit reports daily and alerts them of indicators of possible identity theft. So far, nearly one-fourth of the class members, or 50,000 people, have enrolled in the monitoring program.

The settlement also makes available up to $750,000 to reimburse class members who can prove losses, with a limit of $10,000 per member. For those enrolled in the credit monitoring program, the agreement makes up to $250,000 available for reimbursement of expenses not covered by the program.

Class members will need to file a claim to prove their losses or expenses, but the procedure is less stringent than would be required if the claims were litigated, the agreement said. The claim procedure also includes a streamlined dispute resolution arrangement.

Scams du jour

This bill-collection practice is illegal, but that didn’t stop Chrysler Financial from cold-calling me on a rare June afternoon when I was home on a workday after working an early shift.

Like most telemarketers, she asked for me by name, “Is Jan Falstad there?”

Always suspicious of telemarketing calls, I asked who was calling. She gave me a name and said she was trying to “get a message” to one of my neighbors.

Incredulously, I realized that this Chrysler caller was trying to use me to help them collect a debt. When I asked her if that was her motive, she denied it and said, “We’re just trying to get him to call us back.”

I told the caller I had no business relationship with Chrysler, that I was on the federal “Do Not Call” list and that meant her call was breaking federal law.

Finally, my anger rising, I said that I had no intention of helping Chrysler collect a debt and hung up.

Calling friends and neighbors to try to embarrass someone into paying a debt is a common, but illegal, practice under the Fair Debt Collection Practices Act, according to Billings attorney John Heenan.

Under this federal law, creditors can contact third parties only to verify the debtor’s contact information, like address and telephone number. Usually they already have that information, Heenan said.

“At that point it becomes per se harassment or deception,” he said. “They’re contacting you to embarrass him and to co-opt you into the debt-collection process, which invades your own right to privacy.”

But Amber Gowen, spokeswoman for Chrysler Financial at headquarters in Farmington Hills, Mich., said her company sometimes has to ask for help to try to reach a debtor.

“It is our policy that when we do talk to a third-party, we are extremely careful not to violate anyone’s privacy or divulge information that we are precluded by law from sharing with others,” she said. “This action is legal and permissible and a common practice in the industry.”
http://www.billingsgazette.com/business/article_e4d11b52-68f7-11de-81e1-001cc4c002e0.html

FROM THE NEWSPAPER REPORT (http://www.billingsgazette.net/articles/2009/04/18/news/local/27-man.txt)

Man sues collector’s lawyers, wins lawsuit

By CLAIR JOHNSON
Of The Gazette Staff

A Laurel man with a disabling brain injury and no money told debt collector lawyers that the time limit for seeking payment had expired and that a suit had been dismissed before. But a North Dakota law firm sued him anyway, trying to collect a credit card debt on behalf of the creditor.

This time Timothy McCollough got mad. He hired a lawyer, got the suit dismissed and then sued the North Dakota law firm for violating debt collection laws.

$311,000 in damages

A federal jury agreed with McCollough and on Thursday awarded him $311,000 in damages after a three-day trial before U.S. Magistrate Judge Carolyn Ostby.

Billings attorney John Heenan, who represented McCollough, said the verdict sends a message: “Debt collector lawyers need to follow the rules in Montana.” McCollough stood up for the thousands of people getting sued by debt collection lawyers and who don’t know how to defend themselves, he said.

Attorney Fred Simpson of Missoula, representing Johnson, Rodenburg and Lauinger, the debt collector law firm, declined comment.

Unlawful litigation

McCollough sued the firm in 2007, alleging that it violated the federal Fair Debt Collection Practices Act and related state law by engaging in abusive, unfair and unlawful debt collection litigation. The firm tried to seize on McCullough’s disabilities through the misuse and manipulation of the court system, the complaint said. The firm has about 50 employees in Fargo and Bismarck; it has no lawyers in Montana but has several licensed to practice in the state.

Ostby ruled in November that the firm had violated the federal law by demanding attorney fees not allowed by Montana law; by filing and continuing a lawsuit barred by the statute of limitations in Montana; and by serving on McCollough requests for information that were “an abusive, unfair and unconscionable means to attempt to collect a time-barred debt.”

The jury further found that the firm’s actions violated the Montana Unfair Trade Practices Act, were malicious prosecution and an abuse of process.

The jury awarded McCollough $250,000 for emotional distress, the statutory maximum of $1,000 for violating the Fair Debt Collection Practices Act and $60,000 in punitive damages.

The punitive award was the maximum allowed under Montana law, which caps damages at 3 percent of a company’s net worth, or about $2 million in this case, Heenan said.

Ostby will determine attorney fees to be paid to Heenan. Heenan also said he will seek to have the judge triple the $250,000 damage award as allowed by Montana consumer protection laws.

McCullough’s lawsuit stemmed from a credit card debt he owed to Chase Manhattan Bank from the 1990s.

McCullough suffered a head injury in 1990 when he was hit with an iron bar. The injury left him disabled and eventually he began receiving Social Security benefits, which are exempt from collections.

Nevertheless, McCullough testified, he worked with other credit card companies to pay his debts. Chase was the only company that wouldn’t work with him, he said.

The debt was sold to a collection company, CACV of Colorado, which sued him in Yellowstone County in 2005. McCullough responded himself, saying the five-year statute of limitations had expired, he had no money and had been harassed by Chase. The case was dismissed.

Two years later, the North Dakota firm, on behalf of CACV, sued McCullough for $9,800, which included about $6,000 in interest and attorney fees.

Getting served a second time angered and frustrated McCollough.

“I was being shoved around,” he said. “I don’t like bullies. I never have. I got mad. I’m still mad.”

Billings attorney James Patten testified that he reviewed cases in which the North Dakota firm sued. The firm gets default judgments in 90 percent of its cases, which are judgments in its favor when a defendant doesn’t respond, he said. Only about 10 percent of the defendants get lawyers or represent themselves.

Johnson, Rodenburg and Lauinger filed about 2,700 lawsuits against Montana residents during an 18-month period ending about mid-2008.

“I think it’s a factory,” Patten said. “They are mass producing complaints and mass producing default judgments, most of which don’t have the documents to back them up.”

The firm maintained that it had done nothing wrong. But Lisa Lauinger, a partner in the firm, testified that the McCullough case has prompted the firm to change its procedures and that it now requires more documentation from clients before filing suit.

Fortunately, in Montana, insurance companies have statutory duties to act fairly and in good faith towards insureds and non-insureds. If you believe your claim has been improperly denied, or an insurance adjuster is handling your claim unfairly, give us a call or submit your claim confidentially online through the Heenan Law Firm website.

Unfortunately, debt collectors can resort to tactics which are abusive and unlawful. The Fair Debt Collection Practices Act requires debt collectors to Under this federal law, it is illegal for a debt collector to:

• Communicate with your employer, relatives or friends about your debt unless the court has given the collector permission to do so.
• Contact you at work if the collector knows that your employer prohibits personal calls.
• Contact you at inconvenient times or places.
• Falsely represent the character, amount or legal status of a debt
• Threaten to take actions that are illegal or not intended.
• Use obscene or profane language.

Once you are represented by an attorney, all communications from the debt collector to you must stop. Hiring an attorney can therefore be one of the most effective ways to stop debt collector abuse.

Its nothing malicious, its just a good attorney is able to put together a claim in such a way as to maximize the value of the case.  What does this mean?  An attorney gathers the relevant information, researches the applicable law, including the results of similar cases, and puts the information together in a compelling format.  The Heenan Law Firm handles personal injury cases on a contingency fee, meaning you pay a portion of the ultimate recovery. 

It almost always makes economic sense to hire an experienced injury attorney.  Think about it this way- would you rather have 100% of $1,000 handling the case yourself, or receive 2/3 of a $100,000 settlement? 

Unfortunately, I have seen too many times where people try to handle their own claim before seeing an attorney, only to find out they have done something to put their claim in jeopardy, or reduce their potential recovery.  Almost every personal injury attorney will review your case at no charge.  At the Heenan Law Firm, we honestly tell people whether they can recover more by hiring us or handling the case themselves.  In those instances where we don’t take the case, we still take the time to provide people with the tools they need to achieve the best results, at no charge to them.

If you are wondering if you should accept the insurance company’s offer and give up your rights, give us a call first.  We’ll honestly let you know your rights and options.