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Debt Collector Settles Lawsuit Claiming It Threatened Prosecution of Debtors

November 10, 2009

As Santa Ana unfair debt collection attorneys, we were pleased to see another report about a debt collector facing penalties for serious wrongdoing. According to a Nov. 3 article from the Associated Press, American Corrective Counseling Services agreed to pay $2.55 million to settle a class-action lawsuit by thousands of Pennsylvanians who say they were lied to by the agency. The company is in bankruptcy and has also been sued by national consumer protection group Public Citizen in three other states for violations of the Fair Debt Collection Practices Act.

According to Donald Driscoll of the Community Justice Project in Pittsburgh, the debt collector paid county prosecutors in Pennsylvania to resolve bad check cases out of court. It then sent letters to bad check writers, telling them they had committed crimes -- but could avoid jail if they paid inflated fees and the cost of a "mandatory" finance class. Driscoll said one victim was an elderly woman who had bounced a $27.17 check, but -- like most of the victims -- was unlikely to be prosecuted because it was an honest mistake. The letter demanded $242.17 from the woman, who Driscoll said was afraid she'd go to jail.

An attorney for Public Citizen, Deepak Gupta, added that consumers caught up in this scam frequently don't realize that they're talking to someone other than the county prosecutor. Prosecutors usually don't intend to prosecute these people anyhow, he said, and appreciate the extra money they can get from lending their names to the scheme. However, he believes they frequently don't realize that their authority is being used to scare debtors. While American Corrective Counseling Services is in bankruptcy, Gupta said, it has also re-formed as National Corrective Group and follows the same practices.

As Carlsbad debt collection harassment lawyers, we're disappointed that a supposedly bankrupt company can simply re-form and continue its illegal practices without notice or interference from the Federal Trade Commission. Under the FDCPA threatening legal action not expected or not actually contemplated is illegal. Of course, debt collectors may not prosecute anyone -- and the prosecutors involved reportedly had no intention of taking victims to court over small bounced checks. Given this, the collection agency's actions seem like a clear violation of the FDCPA. If regulators cannot shut down debt collectors like these, we hope they are at least keeping a close eye on their activities and tactics.

At Howard Law LLP, we have a growing practice defending consumers who are victims of FDCPA violations. The FDCPA and its California equivalent, the Rosenthal Fair Debt Collection Practices Act, provide numerous protections beyond the prohibition against lying and threatening impossible legal actions. Among other things, collection agencies subject to the FDCPA may not call continuously, embarrass or "out" the debtor or request more money than the law allows. Unfortunately, our Buena Park abusive debt collection attorneys hear about these and other violations very frequently from clients who didn't realize they had these rights. However, we can and will file FDCPA lawsuits against debt collectors using illegal practices, allowing victims to claim back all of the costs of the harassment, as well as all attorney and court costs and $1,000 per violation.

If you believe a debt collector has stepped over the line and you want to fight back, you should call Howard Law to learn more. For a free, confidential consultation, you can reach us toll-free at 1-800-872-5925 or send a message through our Web site.