Lawsuits Against Collection Agencies, Creditors Spike

The number of collection agencies and creditors sued under various consumer statutes spiked to 480 in the second half of July, compared with 389 in the first half, according to data from U.S. District Courts.

The July 16-31 data includes 533 consumer statute lawsuits, up from 409 in the first half of July and from 490 in the second half of June, according to WebRecon LLC, the Grand Rapids, Mich.-based research firm that compiles the totals from the courts.

The jump in July's second half may be a result of seasonal trends that saw a dip related to the July 4th holiday. In the second half of June, consumers sued an estimated 471 different agencies and creditors.

Of the July 16-31 total, an estimated 492 cases cited alleged Fair Debt Collection Practices Act (FDCPA) violations, 71 cited Fair Credit Reporting Act offenses and 23 cited Truth-In-Lending Act violations.

An estimated 549 unique plaintiffs are included in the total, including 152 who previously sued under consumer statutes. Combined, the 152 plaintiffs have filed an estimated 965 lawsuits since 2001.

Year-to-date, plaintiffs have filed 6,725 lawsuits, including 6,267 FDCPA lawsuits. Jack Gordon, WebRecon's chief executive, predicts FDCPA lawsuits will spike this year to nearly 12,000, up from the record 8,287 in 2009.

However, he also has said that the record total would represent a cooling off in the actual growth rate, see story.

Sergei Lemberg is the most active consumer attorney this year, representing 218 consumers in lawsuits. In June, Lemberg criticized the collection industry in a statement to the press, see story, for blaming consumer attorneys for a spike in lawsuits, which he argued are rising because of increasingly aggressive tactics by collectors.

Editor's Note: To comment on this story, contact Darren Waggoner at 815.463.9008 or darren.waggoner@sourcemedia.com.