Good News and Bad News about Debt Collection Practices

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Let's start with the good news -a debt collection agency, West Asset Management, must pay a record $2.8 million settlement to settle FTC charges that they repeatedly violated the Fair Debt Collection Practices Act. 

Dishonorable debt collectors have been known to rely on a number of underhanded, deceptive and sometimes illegal actions when attempting to collect debts.  Some debt collectors have actively harassed those that they were trying to collect from, despite consumer harassment being against the law.  As the economy struggles to recover from recession, debt collection efforts have started making the news; some of this news coverage is actually very good news for consumers who have been harassed by debt collectors in the past.  Unfortunately, not every bit of news concerning debt collection practices is favorable for consumers.

The Federal Trade Commission is cracking down on some unscrupulous debt collectors, handing out major fines for violation of the Fair Debt Collection Practices Act. The FTC ruled that the debt collection agency West Asset Management had violated the FDCPA on multiple occasions after reviewing thousands of complaints that had been filed against the company.
The company called consumers several times per day, were insulting and rude to consumers on the phone, outright lied to consumers by claiming they would go to jail for their debts, and made withdrawals from the bank accounts of consumers without obtaining permission for the charges beforehand.  In some cases West Asset Management even pursued consumers for debts that didn't belong to them while using these tactics.  For these violations, the company was ordered to pay a settlement of $2.8 million, setting a record for financial settlements in regard to illegal debt collection practices.

The FTC isn't the only one cracking down on debt collectors, either.  There's more good news:

The state of Minnesota has filed a lawsuit against the Encore Capital Group for "robo-signing" affidavits against consumers and pursuing debts that did not belong to the consumers who were being harassed.

The suit names Encore's properties Midland Funding LLC and Midland Credit Management Inc. as perpetrators in the actions, and comes on top of a class-action lawsuit in Ohio against Encore seeking $5.8 million in damages.  The suit was filed soon after a ruling by an Ohio federal judge who determined that the case filed by Minnesota would not interfere with the existing lawsuit.

Midland employees have sworn under oath to signing affidavits without reading them, sometimes signing up to 400 of these affidavits in a single day.  Encore representatives claim that their actions are legal -and blame the consumers for not reading collection letters. They put the burden of proof on consumers claiming they need to prove that they do not owe the money --as opposed to proper procedures: the collection agency proving that the account is valid.  The Minnesota suit seeks to stop the practice in addition to levying fines of $25,000 per violation and additional fines for being in contempt of court orders.

Though these actions are MAJOR victories for consumers, as I noted above, there is some bad news to report too: Court Issues Favorable Ruling for Collection Industry;

The District Court for the Eastern District of Pennsylvania ruled recently that collection calls made to the homes of people who did not owe debts were not in violation of the Telephone Consumer Protection Act, a law designed to protect individuals from harassment over the phone.
 The court also ruled that individuals claiming that debts were classified under personal use by the FDCPA had to provide proof to support their statements instead of the debt collection agency having to provide proof that this was not the case.

The ruling was made in the case of Anderson v. AFNI, Inc., a lawsuit against a debt collection agency which had made 76 phone calls using an automated dialing system to the home of an individual who did not consent to the calls.  The collection agency alleged that they had not violated the TCPA or the FDCPA because as a debt collection agency their relationship to the consumer was business-related and that the debt in question could not be classified as "consumer debt."  Despite the agency's actions being in clear violation of these acts in an attempt to collect what was certainly a consumer debt; the court did not see it that way and ruled in favor of the collection agency.

These recent news reports show the importance of understanding your rights when dealing with debt collectors.  It's equally important to hold those accountable for breaking the laws designed to protect us responsible. Often that means turning to an experienced consumer attorney who can move to file a lawsuit.

My friends over at Alabama Consumer Law Blog recently published another informative blog that highlights: Abusive Debt Collection Causes Four Social Maladies: Breakup of marriages; Loss of jobs; Filing of unnecessary bankruptcies; and Invasions of personal property as recognized by Congress. See also Why we Sue Debt Collectors where they articulate that legitimate and honorable debt collectors are a good part of society and play a key role in our economy and serve a good purpose. But --dishonorable collectors who use threats that humiliate and harass consumers break the law and tear down our society instead of building it up. This is not only unfair to consumers --but it's unfair to the honorable and legitimate debt collectors who play by the rules. This is why the FDCPA was passed. 

For more info on protecting your rights under the Fair Debt Collection Practices Act see a few of our earlier blogs. 
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