A single lawsuit, even for a minor technical violation of the FDCPA, can cost an agency $5,000 to settle - and that may not include several thousand dollars paid to the agency's attorneys to investigate and initially defend the lawsuit. More complicated cases, with allegations of emotional distress and actual damages, may cost an agency upwards of $60,000 to resolve or litigate. The typical class action could easily reach in excess of $100,000 when all is said and done.Credit reporting a delinquent account is one of the most powerful collection tools available to an agency. However, it comes with many pitfalls for the unwary. FCRA cases result in higher settlements and higher jury verdicts because, unlike most FDCPA cases, FCRA cases are accompanied by allegations of significant credit harm stemming from the violation. Although plain tiffs can claim emotional distress for receiving a harassing phone call, for example, FCRA plaintiffs could claim that as a result of the violation, they had to pay 1 percent more on a $300,000 home mortgage for 30 years - and those numbers add up.How do you defend that suit? The collector doesn't speak to anyone that way, but the collector has no specific recollection of ever speaking to that consumer. In a he-said/she-said scenario, the agency is not going to be able to get the litigation dismissed by a judge who will not substitute her judgment for the jury. This case is on a sure course for a trial before eight jurors who probably have a poor opinion of collection agencies already. On the advice of counsel, you settle for $8,000 because it's cheaper to have the case go away then to press your case to conclusion before a jury and end up paying $4,000 to the plaintiff and $30,000 to her lawyer.
Five Simple Steps to Reduce Lawsuits 22 I July 2010 Collector I n this troubling economic climate, there is one area in which every agency is seeing an upswing— consumer lawsuits. Already through the first quarter of 2010, statistics indicate of using an attorney as a sounding board for every word is disheartening. Giving a letter to a lawyer each time it is changed prior to using it seems like another unnecessary delay. The problem Trade Commission have determined that this action must be taken regardless of the manner in which the agency learned of the dispute. It does not matter if the agency learned about that a record number of lawsuits will is, of course, that a lawyer is going to the dispute through a phone call or in be filed this year against agencies for end up reading the letter anyway—the a letter from the consumer. A letter violations of federal and state consumer consumer’s lawyer. from the consumer’s lawyer triggers laws, particularly the Fair Debt One phrase, one sentence or even the obligation, as does the receipt of an Collection Practices Act (FDCPA) and one word may be the difference between automated consumer dispute verification the Fair Credit Reporting Act (FCRA). an FDCPA and FCRA compliant form from consumer reporting agencies. This trend is not likely to decrease for letter or a violation. Keep in mind that Once an agency learns of a dispute, some time. lawyers are experts at massaging words, without regard to how plausible or This increase can be primarily and every judge is a former practicing believable it is, the agency must notify attributed to the rise of a distinct lawyer. If you mail one letter containing every consumer reporting agency to consumer plaintiff’s bar that is the wrong word, it’s more than likely which it publishes that account that aggressively targeting potential clients. you mailed at least 10,000 more— it should be marked disputed. The The “fee shifting” nature of these allowing even the most novice consumer “dispute” tag should not be removed by statutes, along with their reliance on lawyer to cultivate the riches of a class- the agency unless and until the tradeline strict liability principles to ensnare action settlement. is no longer being reported by the agencies for mere technical violations,
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