- Bargaineering - http://www.bargaineering.com/articles -

When Debt Collectors Violate the FDCPA

As we learned in this classic abusive debt collection story [3], and Craig’s awesome response, debt collectors are often unfamiliar with the law. Not only are they unfamiliar with it, they routine violate it… which means you get to collect from them.

Want an example? Let’s say you call a collector to check on the status of your dispute. They decide to solicit payment from you… that collector has just violated the FDCPA and they now owe you at least $1,000.

Oh… it gets better.

They Keep Calling After Dispute Letter

Let’s bring this all together. You receive a call from a debt collector and you send them a debt dispute letter [4]. If they continue to call, the debt collector has just the Fair Debt Collection Practices Act [5] (FDCPA) and they owe you not less than $1,000 per person that called.

An Invalid Validation

Ok, say you send off a dispute letter, and they respond with a generic “Yeah, we checked and you owe the money” response as their validation of the debt [6]. The collector has just violated the FDCPA and they owe you at least $1,000.

1-2 Punch: Reporting an Invalid Debt

Ok, this is now the 1-2 punch as it is called. Say a collector receives your dispute letter, reports to your credit, then you dispute the credit reporting and they verify with the credit bureaus before sending you validation. The collector just violated the FDCPA and the FCRA (Fair Credit Reporting Act), and they owe you at least $2,000.

Why? Well, verifying an account is considered collection activity, which cannot take place before they provide validation.

Now, say a collector just reports your account to the credit bureaus and doesn’t call or write, but the reporting is inaccurate, you dispute it, and they verify. The collector now owes you at least $2,000 in statutory damages for violating the FCRA by reporting inaccurate information and the FDCPA for taking action they legally can’t do.

Calculating Damages Under FDCPA

The FDCPA allows for $1,000 per action of statutory damages which has been deemed to be per defendant. If you have multiple defendants calling you dispute and before any validation is received, each person owes you $1,000.

The company that employs them is liable under “respondeat superior [7],” which is latin for “let the master answer.” It’s a legal doctrine that states the employer is responsible for the actions of its employees within the course of their employment. You can just tally up the violations and lay it at the debt collectors door.

According to debt collectors, it costs about $3,500 to settle a lawsuit. $1,000 for the consumer and $2500 for the lawyer. This is on top of forgiving the debt and all negative credit reporting. In the past it was possible for many companies and collectors to hold your credit hostage if you didn’t pay, but you don’t have to be afraid any longer.

If some company reports you to a collector for a disputed debt or they are trying to extract some unfair or unearned fee, let them. Dispute, and as the collector violates the FDCPA, beat them into submission in court.

How About Mega Damages?

Here’s the fun part: Let’s say a collector finds out that you’re applying for a car loan or home mortgage (just so you know, some of the credit bureaus have notification products that inform collectors if you apply for a car or house). The collector slaps puts a collection on your report in the hopes that the mortgage company will require you to pay it before closing.

If that collector reports anything inaccurate or violates the FDCPA in their attempt to collect and it costs you a house… they owe you a new house. That is how you see some of the mega damages (6, 7, and 8 figure awards) for FDCPA and FCRA cases.

Next, we’ll talk about collecting from the collectors and how to make them pay you when they’ve violated federal law.

(Photo: jaytamboli [8])