Lawyers Taking Issue With Debt Collection Practices
October 7, 2002
The Fair Debt Collection Practices Act was passed in 1977 to combat collection abuses. But in the last decade, it has generated thousands of federal lawsuits taking issue with the wording of collection letters.
So many suits have been filed that one judge denounced them as a "cottage industry" for nitpicking lawyers exploiting the act to reap many tens of thousands of dollars in fees.
- Some of the suits rest on such weighty matters as whether the words "Speed-O-Gram" or "Priority-Gram" add deceptive urgency to a collection letter.
- Rulings in such cases have been inconsistent and unpredictable.
- Successful plaintiffs in these cases get $1,000 -- but their lawyers can collect $40,000 or $50,000 if the defendant chooses to fight.
- Plaintiffs' lawyers obtain leads for the suits by scouring the dockets in small claims courts for collection actions and by questioning of people seeking to file bankruptcy actions.
Source: Adam Liptak, "Law to Protect Debtors Can Be a Windfall for Lawyers," New York Times, October 6, 2002.
Browse more articles on Government Issues