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FTC Holds Panel Discussion on Reforming Lawsuit Portions of the FDCPA

December 11, 2009

As San Berdardino fair debt collection attorneys, we have watched with interest as the Federal Trade Commission, the federal agency responsible for regulating debt collectors, has considered how to reform the Fair Debt Collection Practices Act. After a February report recommending that the FDCPA be modernized, the FTC held three roundtable discussions to discuss reforming the law, bringing together courts, consumer advocates and players in the debt collection industry. The last of these panels was held Dec. 4 in Washington, D.C., InsideARM reported Dec. 7, and focused on debt collection litigation issues. Among the subjects of discussion the article noted were proposed changes to the statutes of limitations for debt collection, and reforms in how consumers are notified of debt collection lawsuits against them.

The discussion on serving claims started with an agreement by all parties that most consumers don't participate in debt collection lawsuits. This makes default judgments -- in which a court allows one side to win because the other never showed up -- very common. Consumer advocates said some of this is because of debt collectors who intentionally misdirect the summons; other failures to respond may stem from problems understanding the documents and transportation issues. A representative for the collections industry added that some consumers blow off lawsuits because they know they owe the money and don't want to face a court hearing. Another panelist suggested that summonses be sent through traceable means like private carriers, so there's a way to track whether documents got to the right place.

Another area of disagreement was statutes of limitations, which are the deadlines by which debt collectors must sue. If the debt is older than the statute of limitations for the consumer's state, the consumer no longer has to pay it -- but if consumers do pay, the payment automatically restarts the "clock" ticking down the deadline. Consumer advocates and judges said collection agencies frequently tried to collect on out-of-statute debt; the debt collection industry disagreed. Consumer groups suggested that the clock should only restart if the consumer explicitly agrees, but an FTC representative dismissed that suggestion, pointing out that no consumer would agree.

As Santa Ana debt collection abuse attorneys, we agree that no sensible consumer would agree to restart the clock -- if they knew that was what they were doing by paying. Unfortunately, even well-educated people don't always understand their rights. The debt collection industry takes advantage of this every day by requesting payments they have no right to receive, and more than a few consumers pay up. That's why we agree with the consumer advocates quoted in the article who want to ban collections on out-of-statute debt entirely, or at least provide notification that the clock will be restarted an explicit part of the process. We also like the implication that the FTC is considering more aggressive means to stop the practice of intentionally providing inadequate notice of a debt collection lawsuit. In many cases, the first consumers hear about these claims is after the lawsuit is over and their money is being taken away.

Howard Law LLP represents people who were taken advantage of in this and other ways by unscrupulous debt collectors. When dealing with debt collectors, consumers have a powerful tool in the Fair Debt Collection Practices Act. This federal law, and state laws like it, requires certain behaviors from debt collectors, including verification of the debt on the consumer's request. Perhaps more importantly, it also prohibits many other behaviors, such as the use of abusive or obscene language, threats, lies, contacting third parties or demanding unjustified amounts of money. Some collection agencies get away with routinely breaking this law because consumers don't always realize they have these rights. But when they do, they are entitled to sue the abusive debt collector for up to $1,000 per violation, plus all attorney fees and court costs. Our Moreno Valley unfair debt collection lawyers are proud to help stop this illegal behavior by holding collection agencies responsible for their actions.

If you believe you are a victim of a debt collector that broke the law, don't wait to contact Howard Law to learn more about your rights and your legal options. To set up a free, confidential consultation, you can contact us online or call 1-800-872-5925 toll-free.