'Sexual-Scandal Blackmail' Alleged to Collect on Car Loan

PHOTO: Larnell Pillow in Chicago claims a lender trying to collect on his car loan deliberately broke up his marriage by disclosing to his wife that he had a girlfriend.
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A Chicago man who fell behind on his car payments claims that his lender deliberately tried to ruin his marriage then threatened a "sexual-scandal blackmail" scheme to collect, causing his wife and children to leave him.

Borrower Larnell Pillow now is suing Prestige Financial Corp of Salt Lake City, claiming intentional infliction of emotional distress. He claims an agent for the lender deliberately left a phone message that his wife intercepted, mentioning his secret girlfriend.

The agent's malicious phone call to his wife, Pillow says, "turned my world upside down. I'd lost my job. Then I lost my wife and kids. It's just a domino effect."

It all began innocently enough with his auto lender, Prestige Financial, which specializes in borrowers with poor credit. Pillow, 42, told ABC News that his relationship with Prestige was "beautiful. Everything was current."

So friendly was his relationship with his local agent that the two men shared family information. This information, says Pillow, was candid--to the point that Pillow, a married man, confided to the agent that he had a girlfriend "on the side," whom he now calls Jane Doe. Every now and then, he says, Jane helped him make payments on his car. She thus became known to the agent. Pillow says he expressly told the agent never to mention Jane Doe to Pillow's wife.

Then Pillow lost his job as an overhead crane operator and fell behind on payments. The agent, to bring pressure to bear on Pillow to pay, eventually phoned Pillow's home, leaving a voice message that mentioned Jane Doe, using her real name. Pillow's wife intercepted that message.

Shortly after, Pillow's wife left him, taking with her the couple's two kids.

Asked where his marriage stands today, PIllow says his wife hasn't yet filed for divorce. "I'm trying to get her to come back home."

Pillow says that when he protested to the agent about the phone message, the agent allegedly responded: "Now we know a pressure point to use on you." It's for this reason that David Boyd, Pillow's attorney, calls the agent's actions "sexual-scandal blackmail."

Unscrupulous debt-collection practices are nothing new. The Federal Trade Commission says it gets more consumer complaints about debt-collectors than about any other industry—despite the fact that 1978's Fair Debt Collection Practices Act (FDCPA) was intended to protect consumers from abuse.

"The law is frequently ignored," explains Delicia Reynolds, legislative director with the National Association of Consumer Advocates. "A lot of us joke that the debt collection industry is based on violation of the law."

So common are abuses that law enforcement finds itself overwhelmed, she says. And so significant are the profits to be made from illegal strong-arm tactics that a collector may reasonably view the cost of potential prosecution as insignificant. In Reynolds' words: "It's more profitable to break the law than to comply."

Another problem, say experts, is that the FDCPA did not anticipate new technologies that make it easier now for collectors to harass borrowers. They can and do use Facebook, for example, and other social media, to threaten consumers and to contact their families and employers.

Other technologies make it harder for law enforcement to locate unscrupulous collectors, who use voice-over-Internet phone services to make their calls all but untraceable. Some collection companies, to escape prosecution, have moved offshore and operate, say, from offices in India.

Even against this backdrop, however, experts say Pillow's case qualifies as extraordinary.

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