The 1977 federal law to protect consumers from abusive debt collectors, better known as the Fair Debt Collection Practices Act (FDCPA) has molded a profitable business opportunity for some lawyers.
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Some lawyers are using the law as a tool for lawsuits which results in some cases avoiding litigation in favor for quick settlements.
Colorado has become one of the nation’s favored locales for federal consumer credit lawsuits, increasing by 63 percent last year, second only to Texas, whose numbers doubled.
The state ranked sixth for the number of lawsuits filed against debt collectors in 2010.
One attorney in particular for the state of Colorado, David Michael Larson, averaged more than five FDCPA cases per week last year, nearly all of his cases have been settled quickly or obtain default judgements.
His winning cases usually result in a pay out for the harassed of $1,000 for statutory damage while it’s been reported that he usually brings in $3,750 for himself in a case.
Soon, a judge took notice to the 382 FDCPA suits filed by Larson in the two year time span between 2002 and 2007. In 2008, Wiley Daniel, U.S. District Judge found the similarity in the cases troubling and claimed that each of Larson’s cases “alleged that the plaintiff(s) suffered from ‘economic loss, loss of self-esteem and peace of mind, and has suffered emotional distress, humiliation, and embarrassment.”
Much of what is at issue stems from a federal law that, while intending to protect consumers, leans so far in their favor that virtually any infraction can lead to a successful lawsuit, no matter how innocent the mistake, experts say.
Charity Olson, a Michigan attorney, claims that it’s not hard to file 150 of the same complaints “with mild variation” and succeed in each of them.
Apparently a number of cases filed now are based on a “he said, she said” basis since few collection companies keep their recordings for enough time, if any recordings at all.
The statute has to change, to show real harm and damage done, Olson said. Merely being annoyed should not be actionable. It’s a colossal instance of malpractice, and the consumers are no better off. It’s the latest in slip-and-fall.
While the underlying debt almost always remains the same it is surprising to some to see that the debt is only dropped less than 10 percent of the time. – Source