subject: Fighting Abusive Debt Collectors at the State Level [print this page] Fighting Abusive Debt Collectors at the State Level
When a debt collection agency steps over the line, the law most often used to combat the problem is the federal Fair Debt Collection Practices Act. The FDCPA enumerates the behaviors that are unacceptable - practices such as calling late at night or early in the morning, harassing consumers at their places of employment, and threatening people with arrest. The law is a good one, in that it provides consumers who have been victims of abusive debt collectors with an avenue of redress. According to the FDCPA, a consumer is entitled to up to $1,000 in damages, along with attorney fees, if the court finds that the collection agency has violated the law.
Often, though, people are curious about state laws, and how states regulate debt collection practices. The truth is, most states don't have separate fair debt collection laws; they generally rely on the FDCPA to regulate debt collectors. A few states (such as California and Texas) have separate laws that in many ways mirror the federal law, but that can provide consumers with separate causes of action under state law. This means that, if you're harassed by debt collectors, your attorney can use both state and federal law to bring them to justice.
In most instances, though, state regulation of debt collection agencies is limited to licensing laws. In other words, a state's business laws require debt collection agencies to, for example, register with the state, obtain bonds, or otherwise conform to common business practices. In the past year or so, some state Attorneys General have really stepped up to the plate, using the state laws at their disposal to put a stop to unfair debt collection practices.
Two Attorneys General have been dogged about running unscrupulous collectors out of town. New York Attorney General (now Governor) Andrew Cuomo made it his mission to put an end to collector abuse, and shut down many agencies operating out of the Buffalo, NY, area. Similarly, West Virginia Attorney General Darrell McGraw has used his state's business licensing requirements to clamp down on debt buyers and others who engage in unsavory practices. He has reached settlements with several debt collection agencies, which have agreed to pay fines - and sometimes even wipe out consumer debts or refund consumers' money.
Other state Attorneys General seem to be taking notice, and are also beginning to put the screws to debt collectors who prey on consumers. Pennsylvania Attorney General Tom Corbett, for example, sought an injunction against one debt collection agency that allegedly set up an office to look like a courtroom, and used fake court documents to convince consumers to hand over financial information. And Texas Attorney General Greg Abbott got a restraining order against a payday loan collector that sent letters to consumers with forged signatures of state officials and fake county and state seals.
So, although most of the time consumers can use state laws to sue debt collectors, state Attorneys General are increasingly recognizing that collection agencies often engage in unconscionable practices, and are determined to use the laws at their disposal to root out the bad players.
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