Driver Solutions Draws Scrutiny

Howie Law, PC has recently filed a federal lawsuit seeking class action status against Driver Solutions and its sister company, Pyramid Financial Solutions. The lawsuit alleges that these companies violated state and federal laws including the Fair Debt Collection Practices Act (FDCPA) while collecting consumer debt.

The following is an article from the Indianapolis Star detailing the actions committed by these companies.

If you are a victim of Driver Solutions or another debt collector harrassing you in violation of the law, contact Howie Law, PC for a free case evaluation and to determine whether you are entitled to compensation.

Trucking School Draws Scrutiny
Indianapolis Star – Indianapolis, Ind.
Author: Kwiatkowski, Marisa; Campbell, Alex
Date: Jul 31, 2013

An attorney for a local truck driving school submitted false information on sworn affidavits, possibly denying hundreds of defendants their day in court, a small claims judge alleged Tuesday.

Judge John Kitley Jr., who presides over the small claims court in Franklin Township, is filing a complaint with the Indiana Supreme Court Disciplinary Commission against attorney Brian Alsip. Kitley accuses Alsip of falsely claiming defendants had been properly notified they had been sued by the trucking company.

“I’m convinced they were false,” Kitley said. His conclusions come in the wake of a local attorney’s report, and in the midst of an Indianapolis Star investigation into the trucking company’s practices and the procedures in Marion County’s small claims courts.

Alsip represented Driver Solutions, an Indianapolis-based company with locations in four states.

Alsip told The Star he cannot comment because he has not seen a copy of the complaint. He no longer works for Driver Solutions. The company’s CEO, however, said it followed court procedures and guidelines that were in place in Marion County’s small claims courts.

Driver Solutions, which says it helps more than 4,300 people earn commercial driver’s licenses every year, is facing multiple legal challenges to its debt collection practices.

The company attracts prospective students with offers of company-paid tuition and “great-paying” careers yet has filed more than 12,500 small-claims cases against former students since 2008. Driver Solutions has secured millions of dollars in judgments in the past five years relating to unpaid tuition and interest.

An Indianapolis-based attorney who recently reviewed about 1,650 of those judgments said he found hundreds that were ordered without evidence that the defendants knew they were being sued.

It was possible a defendant would not find out about a judgment until it appeared on a credit report or until wages were garnisheed. Copies of the attorney’s report were sent to the Indiana Supreme Court, small claims court judges, the Indiana attorney general’s office and The Star.

After The Star inquired about several questionable cases, Warren Township Judge Garland Graves vacated one judgment and is considering vacating several others because the defendants weren’t properly notified. He pledged to review other Driver Solutions cases filed since he took the bench in 2011 to ensure proper notice was given.

A spokeswoman for the Indiana attorney general’s office said it is reviewing the attorney’s report and 17 past complaints filed against Driver Solutions to see if an investigation is warranted.

The volume of small claims cases filed by Driver Solutions also drew the attention of consumer advocates, who claim the company’s contract is a violation of federal law.

Driver Solutions’ enrollment contracts require that any legal action be filed in Marion County.

That contract provision is the target of two federal lawsuits brought by former students, who argue that designating a venue in a consumer contract is invalid. The lawsuits, which were filed in Texas and Illinois, also challenged the legality of Driver Solutions’ collections efforts.

There is some dispute over whether Driver Solutions is subject to the Fair Debt Collection Practices Act, which requires a debt collector to file lawsuits against a consumer either in the judicial district in which the consumer signed the contract or in the district where the consumer lives at the time the case is filed.

Charles Delbaum, staff attorney with the National Consumer Law Center, said he thinks Driver Solutions’ practices are a “clear violation” of the debt collection act. Delbaum said the National Consumer Law Center is “looking at” taking potential legal action against Driver Solutions in the future.

Michael Benkert, CEO of Driver Solutions’ holding company, Driver Holdings, declined to comment on the issue because of the pending litigation, but the president of an association of attorneys who represent creditors’ rights said designating a particular court in which to file lawsuits is common practice.

Jonathan Sturgill, president of the Indiana Creditors Bar Association, said selecting a particular court for legal issues is convenient and a practice that is not exclusive to Driver Solutions. Many hospitals, banks, credit cards and credit unions also designate particular jurisdictions for court action in their contracts.

“It’s good business practice,” Sturgill said. “Why would you want to sue people in 50 different states?”

Driver Solutions’ cases accounted for nearly 19 percent of the cases filed in the past three years in Franklin and Warren townships’ small claims courts, a Star review found.

The company has filed most of its small claims cases in Franklin and Warren townships. The number of small claims cases filed in Warren Township was so high that Judge Graves dedicated Mondays to hearing only the company’s cases.

Benkert said the number of cases is an unpleasant byproduct of the circumstances of its students — individuals with poor credit scores, no cash and little education. The business is “90 percent individuals who are used to running from bill collectors,” he added.

“It’s not something we like to do,” Benkert said. “It’s something that’s a function of our customer base.”

Boulden’s report

Attorney Jeff Boulden first learned of Driver Solutions in 2009, when he was on staff at Indiana Legal Services, a nonprofit law firm that offers legal advice to people with low incomes.

Boulden represented a few former Driver Solutions students and became concerned about the company’s collection practices.

After being let go from Indiana Legal Services, Boulden reviewed more than 1,800 Driver Solutions’ small claims cases — a fraction of the thousands of suits the company has filed in the past five years.

Boulden found $12.4 million in judgments, averaging more than $7,000 per judgment. The defendants had home addresses in 40 states, as well as the District of Columbia and Puerto Rico.

The report Boulden sent to the Supreme Court said more than 800 of the judgments were not legitimate.

In May, around the time of the second federal lawsuit, Driver Solutions stopped filing small claims cases in Franklin or Warren townships.

Tom Lane, former president of Pyramid Financial Solutions, the company’s financing arm, left the company in May. He had boasted in his LinkedIN profile about Driver Solutions’ ability to recoup tuition dollars from its students. He said its students are “very transient,” with average credit scores of 480 to 520.

“My department’s success in extracting tuition from this difficult asset class gave birth to the concept that ‘If I can collect money from these guys, then I can collect from anyone,'” Lane said on LinkedIN.

Benkert declined to say whether Lane’s departure was voluntary. Lane could not be reached for comment.

Benkert said he tabbed a chief compliance officer to review Pyramid Financial Solutions’ operations. He also said the company is considering whether to reduce the 18 percent interest rate it charges its students for unpaid tuition.

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