It’s More Profitable to Violate Debt Collection Laws

It is refreshing when debt collectors are held liable for their violations of consumer debt protection laws, but these consequences are often not enough to deter big debt collection companies from breaking the law to see bigger profits.

 It is not everyday that debt collectors who engage in unlawful activity are held accountable for their actions.  Thus, when it does occur, it is an occasion to be celebrated.  Unfortunately, the celebration and victory may bring little or no relief to the parties who have suffered due to the illegal activities.

Recently, a Georgia debt collections company, Dorsey Thornton & Associates, LLC, entered into a settlement for $15,500,000.00 with the Governor’s Office of Consumer Protection (OCP).  See Press Release Here.  This settlement was achieved in response to the OCP’s investigation into reports that Dorsey Thornton threatened consumers with arrest or imprisonment, misidentification of themselves, other deceptive tactics in pursuit of debt collections, and refusal to send written documentation of debts they attempted to collect.

All of these things, and many others the company is alleged to have engaged in, are violations of the Fair Debt Collection Practices Act and could have cost the company far more had more consumers known how to hold the company accountable for its actions.  $15,500,000.00 is a lot of money for a settlement of this sort, or so it would seem.  However, history shows that even in light of these sizable settlements, they are but a drop in the bucket, or at the very least only a minor deterrent to the continuation of the illegal activities by debt collectors.

For instance, consider that Encore Capital, a San Diego-based debt buyer and one of the country’s largest debt buyers by revenue, reported gross collections of $761,200,000.00 last year alone.  The company’s net income totaled $61,000,000.00 on $467,400,000.00 in revenue.  Without going into too much detail in explaining these numbers, this company was extremely profitable.

So, considering how much money can be made by collections, and how much more money can be made when these debt collection companies engage in fear and intimidation tactics that violate the law, getting caught is a relatively moderate risk.  Paying the price, so to speak, once these companies are caught and held accountable should  not keep their boards of directors awake at night.

Currently, West Virginia’s Attorney General is suing Midland Credit Management and Midland Funding, LLC, both affiliates of Encore Capital.  The suit alleges that robo-signers were used to obtain default judgments in violation of state and federal law.  Although this suit will not take down the company and will likely not result in a sea change in the way Encore or any other collection company does business, some accountability for consumers is always better than no accountability.

As I always do, I close this article by encouraging consumers to be vigilant in dealing with debt collectors.  Know your rights as a consumer.  Do not ever take a debt collector’s word about what you owe and/or whom you owe it to.  Know what is on your credit report and take action to correct and dispute inaccurate information.  Be proactive and stand up for your rights.  Vigilance is the best tool you have to not becoming just another victim.