Debt collection agencies make it easier for businesses to manage their clients with delinquent accounts. The federal Fair Debt Collection Practices Act as well as individual states’ collection laws regulate the process. Even so, debt collection agencies may be charged with illegal practices.
The Colorado Attorney General’s office investigated and shut down such an agency. The agency was found to have practiced multiple deceptive and abusive debt collection practices. Not only was the agency operating without a license, but they also threatened consumers with being thrown in jail for not paying up immediately. The court ordered the company to pay $491K in consumer restitution, penalties, and attorney fees. The defendants are prohibited from doing business in Colorado or collecting from Colorado citizens again without proper licensure and full legal compliance. Denver District Court Judge Michael J. Vallejos found that the defendants had engaged in a wide range of deceptive and abusive debt collection practices, including fabricating criminal charges against consumers in an effort to frighten them into paying.
According to the Colorado Fair Debt Collection Practices Act, a debt collector cannot harass, oppress, or any person in connection with the collection of a debt. The Act states that debt collectors cannot make false or misleading statements on the following:
- Amount owed
- False representation of being an investigator, law enforcement, or attorney
- False threats of arrest, imprisonment, garnishment, repossession of property or other misleading statements
If debt collection agencies do not conform to the law, clients as well as government entities may charge them with illegal business practices. When the consumer sues the debt collector in state court, the plaintiff must prove violations of the FDCPA. In Colorado, so many citizens filed complaints against the agency that the Colorado Attorney General’s office filed criminal charges.
In this type of litigation, debt collection expert witnesses assist attorneys in determining whether agencies have used illegal debt collector communications with debtors. These tactics may include harassment, false or misleading representation, and unacceptable fees. Debt collection experts are informed on the Fair Debt Collection Practice Act as well as state statutes addressing abusive debt collection practices.