Consumer Resistance Continues To Mount Against Bill Collectors, Zombie Debt Buyers

The New York Times reports:

• Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.

• In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.(1)

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• Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors. Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.

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• [58-year-old accountant and ex-bill collector Steven] Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called Debtorboards.com, where people share tips on topics like keeping a paper trail and recording calls from collectors. He said the site received two million hits in 2009, a 60 percent increase over the previous year.

• “Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others). Of course, debt collectors are hardly pleased with the litigation trend.

For more, see Learning How to Fight the Collector.

(1) The story points out that the U.S. Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law. See Supremes Reverse Lower Courts; Say Attorney Screw-Up When Pursuing Foreclosure Action Is Indefensible As "Bona Fide Error" Under FDCPA.