Debt collectors frequently bother and intimidate people who don’t really owe them money. A stunning court verdict in Missouri will strongly discourage this behavior. The jury decided that Portfolio Recovery Associates must pay an individual almost $83 million for aggressively trying to collect credit card debt that she didn’t owe. This collection agency also needs to pay a $250,000 fine.
The firm demanded that a woman in Kansas City pay $1,000 that was actually owed by another person. The correct debtor has a similar-sounding name. Not content to harass her family with phone calls for over a year, the agency took her to court in early 2013. Even after a judge dismissed the lawsuit, PRA threatened further action.
Response to Verdict
In reaction to the $83 million court decision, the plaintiff expressed thanks to the jury and hoped that this decision would prevent PRA from harassing other people who don’t actually owe money. The collection agency reacted by terming the verdict "outlandish" and calling for a judge to reverse it. The award and fine are equal to roughly half of PRA’s net revenue in 2014, according to public radio.
Back in 2010, the New York Times reported that the Federal Trade Commission took action against a debt collector in Minnesota for incessantly contacting people about questionable debts. The agency had to pay a substantial fine. At the time, analysts falsely believed that collectors would improve their practices in response to this regulatory action. The latest verdict’s large award is more likely to make a real difference.
How it Happens
While it’s true that everyone makes mistakes, many collection agencies maintain policies that cause errors to occur far too often. Some collectors have hired staff members who were expected to sign and supposedly review thousands of affidavits every week, according to the NY Times. This doesn’t give them any time to confirm the accuracy of personal information.
One affidavit-signer in New Jersey reported signing about 2,000 documents per day in 2007. While it actually takes a considerable amount of time to verify contact details and financial data, she only had one minute to sign every four affidavits. An executive at her firm claimed that daily signings had reduced to the hundreds by 2010.
Like mortgages, debts are often bought and sold by many different firms. This degrades the quality of data about individuals and the cash that they owe. Collectors purchase debtor contact information from credit card companies, banks and utilities. They use it to make repetitious phone calls and initiate lawsuits. Complaints about false debts are often ignored.
A July 2010 report from the FTC revealed that financial institutions share some of the blame. Banks sometimes sell debts that come with erroneous or outdated contact details. They also tend to leave out information about how the debt was created. Nonetheless, these problems are unlikely to generate much sympathy among people who have been hounded by collectors for cash they never owed.
The New York Times revealed that Chase sold a batch of approximately 23,000 questionable debt accounts for $26 million in 2009. Staff members at the bank alerted supervisors that thousands of accounts listed the wrong debts or contact details. Employees were told to ignore the problems and quickly prepare the information to be sold.
Fortunately, there are many actions that citizens can take when debt collectors falsely demand cash. These measures may help bring an end to the harassment and prevent harm to credit scores. One basic step is to request that they send printed documentation of the debt. If the information is false, mail a letter to the collector and request that they stop calling.
If you need help with this debt validation process and fighting off debt collectors in general, you can contact us today and find out how our professional services can help you. Over the years, we have helped hundreds of people like the woman above, fight abusive debt collectors and stop them dead on their tracks.
The good news is that the above-mentioned $83 million verdict will probably make collectors think twice about harassing people who have warned them to stop calling about illegitimate debts. When problems persist, it makes sense to contact a professional agency that specializes in cases like this. Collection agencies can easily threaten people on the phone, but their shoddy documentation rarely holds up in court.