By Amy Bryer Business Reporter & Columnist
Consumer attorneys have created a cottage industry in recent years — advertising on the Internet, TV and even bathroom stalls — trying to convince consumers to use the Fair Debt Collection Practices Act (FDCPA) to sue collection agencies, collection law firms and creditors.
Now, collection industry companies have an opportunity to use that same legislation to their advantage through a simplified online, video-based, training process that can arm their employees with knowledge and prevent these expensive frivolous lawsuits.
FDCPA lawsuits against collectors quadrupled in six years to as many as 1,000 a month in 2011 and each lawsuit can cost a consumer collection service $15,000 to $20,000 to defend, said Robert Pinchuck, president of Columbia Law List.
“FDCPA consumer litigation attorneys are suing the collection agencies and everyone up the chain associated with the debt,” Pinchuck said. “These lawyers are making a good living at this, but it clogs the courts and is costly to the economy as millions of dollars get spent defending meritless suits.”
Pinchuck and Jack Gordon both credit and collection industry veterans have created a new certification process to train collection industry employees how to avoid violating the FDCPA and still successfully collect the debt.
The Web site — FDCPAcertification.com — instruction includes both video and reading materials, provides quizzes to track progress, and a final exam. The cost is a small fraction of the price of other existing FDCPA training programs.
Small and large debt collection companies are getting pummeled by nuisance lawsuits that often come from the same consumer multiple times, said Jack Gordon, fellow co-founder of FDCPAcertification.com and CEO of WebRecon, a firm that tracks consumer litigation.
“Certain provisions of FDCPA make it almost guaranteed that a consumer can come out financially ahead just by filing enough of this type of lawsuit,” Gordon said.
Robert Pinchuck has been in the credit, debt-buying and collections business for more than 35 years and he agrees that the debt-collection law and the growing number of attorneys seeking FDCPA clients makes it too easy for consumers to file suits against collectors.
“A lawsuit 25 years ago was rare, but now it’s so easy for a consumer to find someone to say, ‘Would you rather pay the $5,000 you owe or have an attorney’s assistant interview you for 20 minutes and file a lawsuit on your behalf and you can take away some cash and have the debt wiped clean?’” said Pinchuck,.
The Internet is full of Web sites that will walk consumers through the possible ways a debt collector may have violated their rights. Some sites even provide lessons on entrapping a collector in a violation, Gordon said.
“The average consumer has so many online resources now, if he doesn’t like anything about a debt collection communication, there’s a lot of people ready to say, ‘What happened to you is illegal and you can sue for lots of money for your pain and suffering,’” Gordon said.
“The people doing the debt collecting better make sure they’re handling it correctly because, in most cases, it’s a simple lawsuit for the consumer,” Gordon added.
FDCPAcertification.com equips collection companies and law firms with their own tool to educate collectors to reduce and potentially prevent many creditor litigation lawsuits.
Companies in the collection service industry have a lot of pressure to train employees quickly so they can start making calls to debtors as soon as possible. This certification course provides consistent, easily accessible information about the FDCPA in layman’s terms, Pinchuck said.
“Every new hire can get the same basic knowledge that augments training the company may be doing internally and the collection company doesn’t have to yank other employees off the phones to do the training,” he said. “This course also should be used to recertify existing employees on a year-to-year basis.”
The FDCPA law and its subsequent case law are easy to violate by a collector because the rules outline numerous ways a consumer can cry foul. Lawsuits have been filed against agencies because the consumer received a call outside permissible hours when the consumer traveled into a different time zone. Collectors also have been baited into saying or implying things to the consumer that violate allowable language even if there was no intent or reason to say those things.
“There’s a lot of nuances to the FDCPA that make the agency unwittingly susceptible to a violation,” Gordon said. “With enough meritless lawsuits being filed against agencies, they need to minimize the numbers of lawsuits that may actually have some merit.”
The certification course offered through FDCPAcertification.com will teach collectors how to collect without violating the law with the most minor infraction, and thus limit court cases, said co-founder Robert Pinchuck.
“One of the best ways to prevent a lawsuit is to prevent the consumer from getting upset,” Pinchuck said. “Our course will show you how to deal with consumers compliantly and that provides the best chance of preventing a lawsuit.”
Amy Bryer has been reporting for newspapers in Colorado since 1995 and spent seven years as a business reporter and columnist at the Denver Business Journal — part of the American City Business Journals national chain of newspapers and Web sites. She is a freelance writer and media consultant in Denver.