Hang-ups and Charge-offs: Experts Explain Debt Collection Compliance

Consumer protection attorneys are testing the argument that debt buyers who acquire charged-off consumer debt, and then “retroactively” charge interest on it, are in violation of the Fair Debt Collection Practices Act. This has sparked class action lawsuits across the country, particularly in Illinois, Kentucky and Ohio.

So what should debt collectors do about this potentially scary trend? Katrina Christakis, partner at Pilgrim Christakis LLP, explained in our May Ask the Attorney webinar that there is good news: None of these class actions have gone the distance and received any kind of court ruling.

“But they survive the motion to dismiss for a couple of reasons,” Christakis said. “One is that the plaintiff has alleged at least a couple of facts; one is that the debt was reported as a certain amount and sold to the debt buyer in that amount, and that no further billing statements were sent positive charge-off that show the continuing accrual of interest on that charged-off amount.”

But if debt collectors look at the overall issue as it relates to FDCPA, there is no official regulation or court ruling that says they’re in the wrong.

You can read more about our attorneys’ answers to the industry’s most pressing compliance questions in To the Point – Collection Call Compliance. We’ve condensed the questions asked at our May Ask the Attorney Webinar into a user-friendly, four-part guide covering: dos and don’ts of collection calls, phone scrubbing, first-party collectors and the CFPB, and critical notice language.

You’ll learn:

• What are some of the big dos and don’ts when calling debtors? What is the industry– particularly first-party collectors and lenders – doing to combat the challenges of contacting consumers on their cell phones?
• How often should you scrub your cell phone list to ensure that the cell phone number is still registered to that consumer before auto-dialing? Can you do an effective out-of-statute scrub if a client only provides a charge-off date? And if so, what would you recommend?
• How does the CFPB register and recognize first party collectors? Is this going to change?
• What are some best practices and sample language for out-of-statute and bankruptcy notices?
• …and more!

We’ve also included two appendixes with the full text of all court cases and regulations cited by our attorneys during the webinar.

Also, don’t miss the next Ask the Attorney webinar on Wednesday, October 30, 2013.