Adam McFarland

Since January I have been fighting to get a fraudulent account removed from my credit report.  In the time after my initial post about this almost six months ago, I have spent hundreds of hours working to get a $517 collection account for Sprint home phone service removed from my credit report (turns out the guy was from Brooklyn, not the Bronx as I had previously reported).

Over the past six months I have spent time daily doing fun tasks such as:

• Filing online disputes with Experian (3 times) and TransUnion (1 time).  Equifax did not have this charge appearing on my credit report (go Equifax!).
• Filing written disputes with supporting evidence.  These forms usually come after you lose an online dispute, giving you a “second chance” to prove your case.
• Sending certified letters to both the collection agency (3 of them) and to the credit bureaus (1 to each).  Each time I paid about $5 for priority mail with delivery confirmation in case I ever went to court and needed evidence of my mailings.
• Retracing my life for the past few years to gather old bills, pay stubs, my social security card, license, fathers license (to show I’m not a “jr”) and pretty much anything else that I could think of to show that I have never lived in Brooklyn, did not start a home phone account with Sprint in Brooklyn, and that I’m not Adam McFarland “Jr”.
• Talking to our lawyer, who re-assured me that I was doing all that I could.  Essentially no lawyer or company would do much more than what I was doing: file disputes over and over and send supporting evidence to both the credit bureaus and the collection agency.
• Checking my credit report every few days to see if anything has changed.
• Calling the collection company, which I eventually realized was an utter waste of time.  These customer service reps here all sorts of stories all day long.  They have no real power to do anything.  They never let you talk to anyone with real power.  So you pretty much get a bunch of miserable reps whose sole goal is to get you off the phone and be as mean as possible in doing so.  One told me my dispute would take up to 30 days to resolve.  When I called after 30 days I was told it would be 45.  When I called after 45, I was told it would take 90 - 120 days.  Always with a snippy attitude, always with the implication that I was lying.  Enough to drive a man insane.
• Researching this stuff online, which pretty much served no purpose other than stressing me out more.

Finally, finally when I checked my credit report yesterday via Experian’s online console - for which I pay $15/month - the account was gone!  I had almost given up.  When we applied for a business line of credit at our bank earlier this year, the process took about an extra month because the underwriters had to review my situation.   I had figured that whenever I went to buy a house I would have to present the mortgage company with a book of evidence just to get approved.  Alas, it looks like my credit report is back to normal and my score is back to a respectable 747.  Sure, I have some student loans and a car loan on there, but I’ve never missed a payment and the info on there is MINE.

Experian is supposed to notify the other bureaus so let’s hope that they do and this never arises again.  My reports all have fraud alerts on them so *supposedly* nothing can be added without my permission and maybe, just maybe this is all done.  The lessons from this are hopefully obvious:  protect your SS# and credit cards as much as possible, check your credit report often, and if something does go wrong fight like hell until it is removed.  This was a hell of a battle I had to fight for something seemingly simple, but I’m glad I continued forcing the issue and finally wore them down.  It is utterly satisfying and an immense weight lifted off my shoulders moving forward with my life.

Back in February we made the somewhat difficult decision to self-fund our move and expansion by not paying ourselves for three months.  In retrospect, this was a riskier move than I think we all realized.  It’s really, really stressful to see your bank account dwindling without anything to replenish it.  It’s also really, really stressful to work 12 hour days and see nothing in return.  That said, it was the best move we ever could have made.

Taking no pay brought us together as a team - we united around the fact that we needed to work our asses off to get paid again. It also motivated each individual.  While stressful for me, the desperation of the matter made me block out the rest of the world for a while and dial in 100% to the task at hand.

And right around the launch of Tastefully Driven, it all started to pay off:

• We no longer had to commit time to moving and expanding
• Our initial warehouse expenses were gone and replaced with manageable fixed monthly costs
• The marketing we had worked so hard on has resulted in several months in a row of record sales.  We are consistently doing 3-4X monthly revenue from the corresponding month last year, which was on the high side of our estimations.
• We found a great new accountant to replace the unsatisfactory one we fired during tax season (who by the way seems to have cost us approximately $6,000 last year that we could have avoided….good accountants are valuable, lesson learned)
• We secured a large line of credit with our local bank.  We didn’t need it, but it doesn’t cost anything and ties in with our existing bank account, so it was a no brainer to apply for and have in our back pocket for future expansion if we need it.

All of this led us to the decision to start paying ourselves again early.  So yesterday, almost a month earlier than planned, I walked into the bank and cashed my first check.  Sure, I’m making exactly what I was a few months ago but it just felt so much better to cash this check, mostly because I know we’ve weathered our storm and are able to cover all expenses, pay ourselves, and profit - something we thought might take a lot longer to achieve.  We could have paid ourselves a raise, but we decided to play it conservative and do this for a few months just in case sales unexpectedly dip.  Come mid-summer, I expect we’ll be able to give ourselves another raise, which will be significant because it’ll give us each a little breathing room financially on a personal level.

Sometimes business risks like not paying yourself can backfire.  This one could have been the start of us falling apart if warehouse costs were more than expected and sales were less than expected.  Thankfully, a lot has gone right lately and everything paid off.  Looking back a few months, this post is probably the best possible outcome to our situation.  These are the times you live for as a business owner.

One thing we learned quickly when we started adding up the costs of a warehouse was that everything is more expensive when you’re a business. It’s as if every service provider hears “business” and immediately jacks up the price 50%.

As of Monday we had everything squared away except our internet access, which has always been a bitch every time I’ve ever moved. That’s why we got out in front of it and about two weeks ago George put a call in to Time Warner Cable to inquire about getting Road Runner in our warehouse. They told him they needed to send out a technician to see if the building was already wired, and that they would get back to us in a few days. Well, after harassing them several times they finally called George on Monday afternoon:

They wanted $4,000 to run cat5 cable into our warehouse! To be fair, they either wanted $4k OR a contract of any combination of phone, internet, and TV exceeding $300/month for the next five years. Never mind we don’t want phone or TV from them. Oh, and I failed to mention that the same Road Runner that we all have in our houses and pay $50/month for costs ~$200/month for “business class” at comparable upload/download speeds.

Suffice to say, our answer was a resounding NO. Unfortunately we looked at other local internet providers and they were all in the $200-$300/month range, which is still freaking ridiculous for a biz of our size.

So we started to get creative. I’ve always been fascinated with mobile broadband cards so we started looking into the alternative of purchasing an unlimited data transfer card for each of us for $60/month. Then we got the idea: what if we could buy one card and somehow get it to work with our router? I took a quick look on Sprint.com, and in 3G areas like our warehouse the connection speeds were comparable to Road Runner.

Then Mike found this Linksys Router that actually has a PCMCIA slot in it and is designed to work with Sprint Mobile Broadband Cards!

Freaking awesome right! We’re all pretty in tune with the tech world and none of us knew anything like this existed (at least legally anyway).

George and I went to the Sprint Store in the mall on Monday night and got a 3G mobile broadband card for free with a rebate. Then we took our unopened router to Best Buy and returned it for this one, which was actually cheaper than the original router we purchased. Let’s sum up: we’re getting similar service for $0 down and $60/month when Time Warner wanted $4,000 down and $200/month. Ha - take that bitches.

Back in the year 2000 I was an 18 year old freshman in college and living in Albany, NY.

Somewhere 150 miles away in New York City (Bronx to be exact) some guy opens an account with Sprint Long Distance for his home long distance service. He uses the name ‘Adam McFarland Jr.’ and opens the account with my social security number. He runs up $517 in charges and then cancels the account.

In November of 2003 I start getting phone calls from a collection agency looking for an Adam McFarland Jr. At first I just say ‘you have the wrong number’, but after a while I start getting annoyed and ask them why they keep calling. They say they have my number down as the phone number for whomever is on the account. I tell them they’re wrong, and that I’m not a ‘Jr.’ and I’ve never lived in the Bronx. They read off the SSN on the account and it matches mine.

I stop dead in my tracks and tell them I’ve been a victim of identity theft. They don’t believe me (much less common even 5 years ago than it is now). After about 50 more phone call arguments and a call to the police, I provide a packet full of evidence to the collection agency and they drop the case. I contact all of the credit bureaus and put alerts on my credit reports (which last 90 days). Thankfully, it’s kept off of my credit report….

Until November of 2007 when the debt collection agency sold my resolved debt to another agency and that agency decided to get me to pay up by putting it on my credit report, even though they know I have no legal obligation to pay it. Apparently this happens all the time (read this shocking story from Businessweek), and it works because they scare people into paying down debt to save their credit report. Just think about if I was trying to buy a house right now - I’d probably have no choice but to pay the $517 if I wanted to get a mortgage in a timely manner.

So of course, today is the lucky day that I check my credit report and see the very average score of 680. Not bad, but I have near perfect credit and that’s too low. Sure I’ve got some college loans and a car loan, but I’ve never ever missed a payment. My score is usually in the 720 - 750 range. Of course, after digging further I discovered this error and started cursing uncontrollably.

I immediately filed a dispute with Experian, and now I’ve got to sit and wait up to 45 days for a result. The debt says it’s ‘closed’ on my report, but it still is a MAJOR red flag to have a delinquent account on your credit report….especially when I never opened the account in the first place. Experian estimates that my score will go back up to 740+ with the account removed - exactly where it should be. However, I most definitely will not pay the $517 to the collection agency to get this removed from my report - I would rather pay $2k in lawyer fees to get the collection agency in trouble for this shady crap.

I’m also going to suck it up and sign up for LifeLock. The unfortunate fact of the matter is that some scumbag out there has my SSN and could use it against me again. It’s worth the $ for the piece of mind.

This has been one hell of a week for me/us financially, and quite frankly it’s becoming a bit draining. Thankfully the BoA situation worked itself out. Let’s hope that this will be resolved in an equally timely manner.

At 12:34:28 PM this afternoon George sent us all a message via Skype:

good news fuckers, time to party - reopened 40k line

What ensued in our chat room was an onslaught of remarks that were an equal mix of extreme joy and extreme slandering of Bank of America and everyone who works there.

I don’t think I’ve ever been happier in my life. It was only about 28 hours since this fiasco began yesterday, but losing an important $40k line of credit sent my mind into a tailspin:

• How would we account for the missing money?
• Would we still move in to the warehouse that we’ve tentatively agreed to (still no lease….waiting for that too)?
• If we did move in, but couldn’t afford product expansion, SHOULD we move in?
• Should we take no salary for a while to raise the money? Would that create a divide among the partners. What if someone couldn’t take it and wanted to quit?
• Should we try to get a round of Angel/VC funding, and give up some control. And if so, how much time would we have to spend (i.e. waste) raising money.
• At what point do we call our lawyer? Should we try to sue Bank of America if they won’t return our calls?
• Could this be one of those unfortunate events that sets a company back for 6 months…or maybe even years.
• Were we EVER going to be able to make the next jump as a company that we need to make by moving out and expanding?

And that’s just the stuff I can shoot off the top of my head right now

The official reasoning from Bank of America was that it was a computer glitch that shut our account down. OK, fine, whatever. I’m sure it happens, but you couldn’t have re-instated it YESTERDAY when we were harassing you on the phone all day? What if this lasted through the weekend? Would they have even called us if we didn’t pester them?

Regardless, we’re back on track after a really, really scary day.

I want to make sure I thank those who expressed their concern via email and comments, and especially thank that one person who emailed me flat out offering us a cash loan that would be wired to us same day (you know who you are). This was a pretty big deal for us, and it’s always nice to have friends who show that they care.

And for all of the stress and anxiety and worrying about the fate of our company: attention Bank of America, and I mean this with all of the deepest sincerity I can muster: SUCK MY BALLS.

(yes, I am a Michigan fan)

Small business finance is a tricky thing.  Contrary to popular belief, more startups are funded on debt than on equity and Pure Adapt falls into that category.  We value our stock immensely and would prefer to intelligently manage our debt as opposed to giving up equity.  Up until this morning, that process had worked out well for us.  At any given point we generally have about as much revolving debt as the value of our Detailed Image inventory - which is pretty good considering if we liquidated we’d be in the positive (not including the value of our sites, client list, etc….not bad for a 1 year old company).

George has a meticulous plan that he’s been adhering to that takes advantage of low interest rates on our lines of credit and credit cards by shuffling money back and forth.  Yea, it takes some effort, but we pay almost no interest on our debt.  Again, this is pretty good.

A few days ago we cleared up our largest line of credit - a $40k line with Bank of America - in anticipation of using that money to move in to our warehouse (almost signed a lease) and cover other expenses during Detailed Image’s slow time.  We’re OK with DI being a little slow because we can knock off our move, do some development work on the cart, and launch a new e-commerce site before it gets busy in spring time.

Unfortunately, as soon as we paid off the Bank of America line they closed our account. No email, no letter, no phone call, no nothing.  So of course, George went to use some of the cash today and it wasn’t there.  This line goes back to when George and Greg formed Detailed Image in 2005 and we have never ever missed a payment in 2+ years.  We also have had pretty high balances at times so they’ve made some decent interest off of us.  And we were planning on using the line in the coming months.  Not only have we proved we can pay down a high balance to nothing, but we were planning on building up another high balance.  Essentially we’re the perfect customers for them!  And they shut down the account for no reason?

George called several times only to be told “we cannot give you information regarding your account.  A specialist will call you back within a day”.  Wonderful.  Very helpful.  A great way to treat a loyal customer. Why wouldn’t you call us BEFORE closing such a big account?   Don’t you realize that you can crush a small business by taking away $40k in available credit unannounced? 

One way or another we’ll be fine, but this is definitely a pretty big roadblock.  Gotta love being a business owner - never a dull moment.