Unscrupulous debt buyers and collection agencies (like Dynamic Recovery Solutions and Allied Interstate)are finally meeting widespread resistance, from the people they ruthlessly pursue and a growing number of consumer rights attorneys. In Spokane, Washington, a group of consumer law attorneys have been joining together to represent people being sued (and often jailed) over debts which are often flawed and fraudulent.
The debts are chased down by debt buyers and collection agencies, like Midland Credit Management, an arm of Encore Capital. The companies hire robo-signers (for around $12.50 an hour) to sign affidavits in lawsuits against debtors. One of these robo-signers testified to signing 300 affidavits in an assembly-line-like process daily, and never reading through any of them. These affidavits garnish people’s wages, repossess their property, and sometimes land them in jail—and they’re filled with errors and misinformation. Since 2006, complaints about debt collectors to the Federal Trade Commission have more than doubled.
The current disastrous financial situation, with banks and debt buyers trampling citizens’ rights, traces back to the mid-1980’s, when maneuvers in the private sector thought up a new way to profit—buy giant debt bundles from banks at pennies on the dollar, aggressively collect on them, sell the rest. Tom Pahl, the assistant director of the FTC’s Division of Financial Practices, reports that debt selling has become a “habit” for large banks—federal rules actually encourage it. “It’s not uncommon for debt to be sold two or three times before it’s collected,” Pahl says. For the people behind the debt, this is bad news; their information gets lost, changed, or otherwise comprised during the transfer.
But things are slowly turning towards some kind of fairness. The FTC and the Securities and Exchange Commission are stepping up to penalize larger firms for their blatant abuses; the FTC is examining the entire debt buying and collecting industry, and plans to issue a follow-up report this year.
If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs.