Editor's Note: The following is a release from attorney Sergei Lemberg. Collections & Credit Risk wants your reaction to his statements about the industry. Your responses will be published, upon your approval. Contact Darren Waggoner at darren.waggoner@sourcemedia.com or 815.463.9008.
Consumer lawsuits against collection agencies are on the rise, but who's to blame? Fair debt attorney Sergei Lemberg is livid that the collection industry points the finger at consumer attorneys and websites, and says the spike is the result of increasingly aggressive tactics by collectors who often violate the federal Fair Debt Collection Practices Act (FDCPA).
"When debt collectors harass consumers, engage in deceptive practices, and prey on consumer ignorance, they must be held accountable," says Lemberg. "Under the law, the only way a consumer can fight back is to sue the debt collection agency that breaks the law."
According to research firm WebRecon LLC, there were 3,701 lawsuits filed between January 1 and May 15 this year for FDCPA violations. The company listed Lemberg as the "most active consumer attorney" of the year, saying that he represented 134 consumers through May 15. Lemberg embraces that label, saying, "I'm passionate about empowering my clients to stand up against debt collection agencies that use illegal tactics and break the law. If that makes me a target of the debt collection industry, so be it."
Lemberg says that the number of FDCPA-related lawsuits pales in comparison to the actual number of FDCPA violations. The Federal Trade Commission (FTC), tasked with submitting an annual report to Congress that includes an overview of consumer complaints related to collection, reported that it received 88,190 complaints about third-party debt collectors in 2009. "The FTC acknowledges that those numbers underreport FDCPA violations, since most consumers never file an FTC complaint," said Lemberg.
When it comes to filing lawsuits, Lemberg says that collection agency filings against consumers dwarf the number of consumer lawsuits against agencies.
"Collection agencies routinely exploit the legal system," he said. Lemberg cites two recent examples. First is the recent study released by the Legal Aid Society in conjunction with other New York City organizations, entitled, "Debt Deception: How Debt Buyers Abuse the Legal System to Prey on Lower-Income New Yorkers."
According to Lemberg, "This illuminating research found that debt buyers filed over 450,000 lawsuits - in New York City alone - between January 2006 and July 2008. Over 94% of the time, they won default judgments against consumers who likely weren't aware they were being sued and only 1% of whom were represented by an attorney. This is far from an even playing field."
Lemberg concluded, "Even though millions of Americans are still suffering from the Great Recession, debt collection agencies have ramped up aggressive tactics and routinely cross the line into illegal behavior. Consumer lawsuits are the only mechanism available for reining in collectors' most egregious behavior. If debt collection agencies want a reduction in lawsuits, they should obey the law."
