Unlike his neighbors' homes, Craig Cunningham's house in Northeast Dallas looks abandoned. The grass is dried out. The concrete slab under the front door is lopsided and cracked. The green exterior has faded to a toxic-looking shade. Yellow Pages pile up near the front door, and the black mailbox is stuffed full. Maybe the home has been foreclosed on. That wouldn't be a surprise in this economy.
But no, that's not the case. Inside, the 29-year-old Cunningham hunkers his 6-foot-2-inch frame on a dumpy couch. His heavy arms extend from his sides, palms up, so two Chihuahuas, Angel and Chuay, can curl under them. Although it's 10 a.m. on a weekday, he's wearing slippers.
He 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.
Patrick Lunsford, who edits InsideARM, a trade magazine for the debt collection industry, knows the term. "There is a sub-group out there that does actually advise people on how to bait [collectors]," he says. "That's something that really gets under the skin of, well, obviously, collectors."
Cunningham beats the debt collectors at their own game. He turns their money-making practice into a financial liability. He is a regular guy who has become a radical enemy of the banking system.
In 2005, two foreclosures pushed Cunningham near financial ruin. Like many Americans, he fell enchanted by the siren's song of easy credit and borrowed more than $100,000 to bet on risky, high-yielding investments, such as stock in the now vilified sub-prime mortgage industry. Then, while stationed with the Army in El Paso, he attempted to become an absentee landlord and got zero-percent-down sub-prime mortgages to buy low-income four-plexes in Houston and Dallas. With the interest earned on his high-yielding stocks he was paying back his low-interest credit card debt; now, he was using the mortgages to borrow even more.
Then, the bottom fell out. Investors like Cunningham fell the fastest. He sold his Houston homes, but his Dallas properties were foreclosed on. The collection calls started. He was running scared.
Desperation took him online in a search of anything that could save him from his own $100,000 in bad choices. One afternoon while sitting on his couch in his El Paso home, he found a way to fight back. He stumbled across hundreds of other distraught consumers like himself on credit message boards, each with some different version of the same story of bad choices and greed. And, he found a new way to deal with his debt: He could hide behind the law.
His new online friends pointed him to a number of federal and state statutes protecting consumers like him against overly aggressive and abusive debt collectors and a credit system stacked against the little guy. If you knew your rights, he learned on the message boards, you were very likely to catch a collector violating them. Then you could sue.
Cunningham armed himself with this knowledge, and the next time a debt collector called, the trap was set.
It didn't take long. Cunningham had canceled a home alarm service with ADT Security after two months, and the company had billed him a $450 early termination fee, which he disputed. ADT sent his account to Equinox Financial Management Solutions, a third-party debt collector. The collection agency sent him a letter asking that he call back immediately. He dialed, armed with a voice recorder.
"Can you garnish my wages if I don't pay?" he asked.
"Yes," the voice on the other end of the line said.
"Can you put a lien on my house?"
Wrong answers. Turns out, Texas consumer rights laws are some of the most consumer-friendly in the country. And according to a federal consumer protection law, the Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from threatening legal action that would violate state laws. In this case, garnishing wages or putting a lien on Cunningham's house would violate the Texas Debt Collection Act.