Question about collection agency practices.

[Barracuda1968]

I own a small car dealership and used Carfax for 10 years. I decided to go a different route and cancelled my membership per our agreement. I received and email from Carfax confirming the cancellation as of 4/30/19. My last bill was $149.90 which I paid per our cancellation agreement. Carfax cashed the check on 4/26/19. Somewhere is this cancellation a $100 fee was added that I wasn't aware of. I was notified via email of the $100 addition and the email went in a spam folder. I wasn't aware I had the email. On 5/31/19 Carfax sent a $249.90 bill to a collection agency. $149.90 which I paid on 4/26/19 and the $100 fee which I have no idea what it's for. The collection agency sent me a bill for $1499. I emailed them proof that Carfax initially billed me for $249.90 and that Carfax already had $149.90 paid to them leaving a balance of $100. The collection agency lowered their amount to $308. How they got to that number I have no idea. My question is can they just pick a number they want and keep harassing me? I offered to pay them the $100 and they refuse. I'm being threatened with a asset and liability investigation on my business. My take on this is it wouldn't be worth their time to try and sue me for such a small amount. I just want to know what me legal grounds are here. I live in Iowa. Thank you for any advice you can give me.

 

[LdiJ]

I own a small car dealership and used Carfax for 10 years. I decided to go a different route and cancelled my membership per our agreement. I received and email from Carfax confirming the cancellation as of 4/30/19. My last bill was $149.90 which I paid per our cancellation agreement. Carfax cashed the check on 4/26/19. Somewhere is this cancellation a $100 fee was added that I wasn't aware of. I was notified via email of the $100 addition and the email went in a spam folder. I wasn't aware I had the email. On 5/31/19 Carfax sent a $249.90 bill to a collection agency. $149.90 which I paid on 4/26/19 and the $100 fee which I have no idea what it's for. The collection agency sent me a bill for $1499. I emailed them proof that Carfax initially billed me for $249.90 and that Carfax already had $149.90 paid to them leaving a balance of $100. The collection agency lowered their amount to $308. How they got to that number I have no idea. My question is can they just pick a number they want and keep harassing me? I offered to pay them the $100 and they refuse. I'm being threatened with a asset and liability investigation on my business. My take on this is it wouldn't be worth their time to try and sue me for such a small amount. I just want to know what me legal grounds are here. I live in Iowa. Thank you for any advice you can give me.

They might take you to small claims court for that amount. The threat of an asset and liability investigation is just bluster at this point. They would have to sue you to be able to get any information from you on your assets and liabilities.

This might be one of those times when it could be a good idea to go to the Better Business Bureau. Carfax sent that to collections very quickly, they didn't acknowledge the money you had already paid them, and it appears that they never sent you a first or second bill with the $100.00 balance due. They might just be embarrassed enough about that information going to the BBB to pull it back from the collection agency and write it off.

 

[Barracuda1968]

I kind of figured the investigation was bogus. They can take me to small claims court if they want but can they just pick a number and sue or does it have to be the actual debt owed plus maybe a collection fee?

 

[LdiJ]

I kind of figured the investigation was bogus. They can take me to small claims court if they want but can they just pick a number and sue or does it have to be the actual debt owed plus maybe a collection fee?

No, it cannot be just anything they want. They have to provide an itemized list of what they are charging and why. Charging you more than three times what the potential debt is, on a first round of collections, is pretty extreme.

 

[PayrollHRGuy]

They can claim you owe any amount in the world. They would have to prove the debt in order to get a judgment for it.

 

[Barracuda1968]

They might take you to small claims court for that amount. The threat of an asset and liability investigation is just bluster at this point. They would have to sue you to be able to get any information from you on your assets and liabilities.

This might be one of those times when it could be a good idea to go to the Better Business Bureau. Carfax sent that to collections very quickly, they didn't acknowledge the money you had already paid them, and it appears that they never sent you a first or second bill with the $100.00 balance due. They might just be embarrassed enough about that information going to the BBB to pull it back from the collection agency and write it off.

I got that suggestion from another person today as well. I filed a complaint with the Iowa Attorney General today so tomorrow when I have time I will contact the BBB. In 10 years I never received a bill or notice via email from Carfax. It was always USPS. This could have been avoided.

 

[Barracuda1968]

They can claim you owe any amount in the world. They would have to prove the debt in order to get a judgment for it.

That's the answer I was looking for. I gave them solid proof of the cancelled check and the email I found in the "Spam" folder seeking $249.90 yet this guy still wants to play games. I offered to pay the $100 just to get rid of this but he want's $308.

 

[Barracuda1968]

No, it cannot be just anything they want. They have to provide an itemized list of what they are charging and why. Charging you more than three times what the potential debt is, on a first round of collections, is pretty extreme.

It was $1499 in the first letter. The dropped to $308 after a few emails.

 

[adjusterjack]

Collection agencies often add potential attorney fees even though they have not yet incurred them. If your agreement with Carfax included an attorney fee provision you could end up paying their attorney fees if you got sued and lost. They ask for outrageous amounts and make threats in an effort to scare you into paying a smaller amount.

I suggest you study Carfax's Service Terms and compare it to the Service Terms that existed when you opened the account. I don't see anything in there about a $100 cancellation fee.

https://www.carfaxfordealers.com/service-terms-and-conditions

 

[Zigner]

As a business-person, and with the knowledge that time=money, how much of your time are you willing to put in to this in order to save $208?

 

[Barracuda1968]

So what do I do now other than contact the BBB? I made the offer to pay the remaining balance

Collection agencies often add potential attorney fees even though they have not yet incurred them. If your agreement with Carfax included an attorney fee provision you could end up paying their attorney fees if you got sued and lost. They ask for outrageous amounts and make threats in an effort to scare you into paying a smaller amount.

I suggest you study Carfax's Service Terms and compare it to the Service Terms that existed when you opened the account. I don't see anything in there about a $100 cancellation fee.

https://www.carfaxfordealers.com/service-terms-and-conditions

Here is the fee section of my contract.

4. Fees. Customer will pay all fees for use of VHS at the prices in effect for Customer at the time of such
use. In the event of early termination of this Agreement by Customer, Customer will pay all fees accrued
through the date of termination plus the difference between the CARFAX published price and any
discounted promotional pricing (including free service) Customer was provided under this Agreement.
Customer will pay all taxes applicable to this Agreement in accordance with federal, state, and local
laws and regulations. CARFAX may modify the prices for use of the VHS. Customers located in the U.S.
must pay in immediately available U.S. dollars. Customers located in Canada must pay in immediately
available Canadian dollars. In the event Customer breaches any provision of this Agreement, including
but not limited to failure to make payments in accordance with the terms of this Agreement or
termination of this Agreement by CARFAX pursuant to Section 1, all fees become immediately due and
payable, including but not limited to the monthly minimum obligation (as identified on the application )
per location, if applicable, for the unused months of the Term. In the event CARFAX agrees to reinstate
Customer's access to the VHS that was previously terminated for Customer's breach of this Agreement,
Customer will pay a $50 reactivation fee to CARFAX and Customer shall not thereafter be entitled to
any discounted promotional pricing (including free service) in effect prior to such termination. Customer
further agrees to pay an interest rate of eighteen percent (18%) per annum, or the maximum allowed by
law if less than 18%, on amounts more than thirty (30) days past due, as well as collection fees where
not prohibited by law. Customer also agrees to pay $25 for each check returned by Customer's financial
institution to CARFAX. Customer understands that it is liable for all fees (including any penalties or fees
which may arise from any misuse or unauthorized use of Customer's account) arising out of the use of
Customer's account number(s) and password(s). Customer will ensure that only authorized
representatives of Customer are given Customer's username and password to access the VHS.

 

[Barracuda1968]

As a business-person, and with the knowledge that time=money, how much of your time are you willing to put in to this in order to save $208?

I see your point but I didn't get where I am today by getting manipulated and pushed around. It went from $1499 to $308 in 45 minutes. I have another 45 minutes in me.

 

[PayrollHRGuy]

when I have time I will contact the BBB.

That will be a waste of your time.

 

[LdiJ]

That will be a waste of your time.

I don't think so. Some places actually do care whether or not they have a decent rating with the BBB. Its the embarrassment factor, not them having any "teeth".

 

[PayrollHRGuy]

I'm willing to bet Carfax isn't one of them and if they are they will simply pay the bribe fee to BBB.