Every year, there is at least one type of litigation that takes center stage because it is either the most prevalent or it is the most talked about. In 2014, it looks like debt collector harassment litigation is at the top. This is because there have been a lot of lawsuits filed against debt collectors using unethical and illegal tactics to recover debts. While this is something that has been around for a long time, states and consumers are starting to hold debt collectors accountable for their actions.
These lawsuits are being filed throughout the Twin Cities, the entire state of Minnesota, and the country. They are being filed against financial institutions, banks, third-party debt collectors, and others because consumers are alleging that they are being harassed and sometimes for debts that don’t even belong to them.
Minnesota has been in the news regarding debt collector harassment because the state has accused a debt collector of adding illegal fees to the amount of money that they have attempted to collect from consumers.
It was reported that the Minnesota-based debt collector was attempting to collect money on old bank overdrafts and bank fees that were owed to U.S. Bank and Wells Fargo, but the contracts that the consumers had with those banks did not allow interest to be charged on the overdraft fees. The debt collector allegedly added nearly 22 percent interest on the dollar amounts that were owed. Under Minnesota law, unless the customer has signed a document that authorizes the higher interest rate to be charged, the interest rates are capped at six percent.
In a statement from the state, it was said that companies have the right to collect debt that is legitimate, but they should not charge people for interest and fees that they do not owe or try to get the courts to award judgments against individuals for interest that they do not owe.
In the meantime, there are some rather large and well-known financial institutions facing lawsuits regarding their debt collection practices. JP Morgan Chase is among the large institutions with lawsuits against them. The Mississippi Attorney General has alleged that the company illegally targeted consumers in Mississippi for late credit card debt that the consumers either already paid or did not owe at all. When consumers had paid in full, the bank allegedly harassed those individuals, stating that they did not pay. Not long after, California also filed a lawsuit against the bank for the same exact reason.
If a creditor is found to have harassed a debtor, they can be subject to fines and even restitution to the debtor that was harassed. The Fair Debt Collection Practices Act is in place to protect consumers and hold debt collectors accountable when they do harass debtors. Violation of this law that is designed specifically for the fair treatment of consumers definitely puts a debt collector on the radar after they have violated it once.