Bookmark
E-mail to a friend
Printer friendly versionTop 9 reasons why collection agencies get sued
Collection agencies are often sued for alleged violations of the Fair Debt Collection Practices Act, Fair Credit Reporting Act as well as a variety of state laws regulating the conduct of debt collectors.
The following list contains the top 9 reasons why collection agencies in the U.S. are sued today:
- Harassment and abuse
The FDCPA lists six specific acts as being illegal under the heading of harassment or abuse in subsection 806. One of these six acts is repeated telephone calls to any person.
Under the FDCPA certain behavior that is not expressly identified may also be illegal under the Act as harassment or abuse of a consumer.
- Attempting to collect a debt after a failure to verify a debt
The FDCPA requires that the first letter a debt collector sends to a consumer must contain a validation notice. This notice provides that if a consumer writes the debt collector within 30 days (1) requesting proof of the debt or a copy of the judgment or (2) the name and address of the original creditor then the debt collector must cease all communications with the consumer until such time that this request is satisfied.
- Credit report disputes
Where a consumer advises a debt collector that the consumer disputes a debt it is an FDCPA violation for the debt collector to fail to have this dispute noted on the consumer’s credit report.
- Violations of the Fair Credit Reporting Act
The federal Fair Credit Reporting Act regulates the use of consumer credit reports.
- Threatening legal action where none is intended
The FDCPA prohibits debt collectors from making threats, express or implied, to take actions they do not intend to make. Therefore, it is illegal for a debt collector to threaten or merely imply that it will sue a consumer for non-payment in circumstances where it does not sue the consumer within 60 days.
- Contacting a consumer who is represented by counsel
Subject to certain exceptions, the FDCPA prohibits a debt collector from communicating with a consumer where the debt collector has been properly advised that the consumer is represented by an attorney.
- Failure to cease communications when required to do so
Under the FDCPA a debt collector must cease communications with a consumer after receiving written notice from a consumer that either (1) the consumer disputes the debt or (2) the consumer does not want to receive any further communications from the debt collector.
When a consumer files for bankruptcy it is illegal for a debt collector to communicate with a consumer.
- Unauthorized disclosure to third parties
Under the FDCPA a debt collector is only permitted to discuss a debt with a consumer, the consumer’s spouse or the consumer’s attorney.
- Engaging in unfair practices
Subsection 808 of the FDCPA designates certain acts as being illegal as unfair practices.
A number of these unfair practices arise where a debt collector adds incidental expenses to the consumer’s account other than those the consumer may have originally agreed to in writing.
Under the FDCPA it is an unfair practice for a debt collector to send a consumer a postcard or send mail to a consumer using an envelope that in any way identifies the sender as a debt collector.
It is an unfair practice under the FDCPA for both secured and unsecured creditors to make false statements regarding repossession of property.
Other acts not specifically listed in subsection 808 may also be illegal under the FDCPA as being unfair practices.