Although cases of bad debt are in decline, the number of lawsuits filed over unfair, aggressive, or otherwise questionable collection practices are on the rise.
This is according to a recent study of nearly 900 consumer credit lawsuits.
Recent credit card reform has helped to protect consumers from aggressive marketing and collection practices but that does not mean that everything is peachy-keen. As a matter of fact, despite evidence of a decline in bad debt accounts, it seems that consumers are still not happy with the way that their lender is treating them.
This is apparent in the 890-or-so consumer credit lawsuits that were filed in May of this year throughout the 90 federal court districts in all of the 50 United States as well as the District of Columbia.
This statistic, recorded by the Transactional Records Access Clearinghouse, a data gathering and research organization that is based out of Syracuse University, suggests that consumers are not happy with all of the positive changes.
Remarkably, these numbers only reflect an increase of 12.4 percent over the month before. What is, perhaps, even more remarkable is that these numbers are actually slightly lower from the same survey taken the previous year. Still, the number of consumer complaints and lawsuits has continuously and consistently risen every single month since the beginning of 2012. To put things in perspective, though, more than 6,000 cases in total have been filed in federal courts across America against credit card companies.
Jonathon Harris, a staff attorney for the Public Justice Center, suggests that the increase could be due to the fact that
The debt collection and credit reporting industries are growing quickly, and unfortunately, so is the frequency of unscrupulous debt collection practices, along with the reporting of inaccurate consumer information and misuse of such information.
As part of this nonprofit legal advocacy group based in Baltimore, Harris believes “Consumers are becoming more savvy and are learning ways to stand up for themselves.”
Of course, this bears a burden on the industry, as pointed out by Mark Schiffman, director of public affairs for ACA International. His company represents more than 5,000 third party collection agencies, assets buyers, creditors, and their attorneys, as well as other, similar entities across the globe. Schiffman says,
First and foremost, we are concerned about consumer lawsuits and will not make excuses for bad behavior, and those who do violate the law deserve to be held accountable.
At the same time, though, it seems that this consumer awareness has boomed a cottage industry of attorneys who simply want to represent clients who are suing collection agencies and credit card companies. In fact, Schiffman says,
It’s very lucrative for these attorneys, while consumer ultimately aren’t receiving much be way of relief money. Long and short, these cases are often settled vs. the cost of going to court, which can be far more expensive, making it an easy way for consumer attorneys to make money.
It helps, though, to understand the law. Indeed, most of the lawsuits cited in the study made allegations regarding violations of the Fair Debt Collection Practices Act (which helps to regulate the civility of actions taken by debt collectors) or the Fair Credit Reporting Act (which helps to promote accuracy, consistency, privacy, and use of consumer credit reports).
According to Harris, “Some of the most serious violations of [the FDCPA] include constant harassing phone calls, overt illegal threats to consumers and continuing to contact the consumer after he or she has requested verification of the debt.”
He also states that
Some of the worst violations of the FCRA include the mixing of files between different consumers, allowing negative information to stay on a consumer report [for too long], failing to correct other inaccuracies, and not providing proper notification to consumers when using a consumer report.
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