Debt Collectors in Maryland to Find It Harder to Sue Consumers
Consumers in Maryland whom debt collectors pursue because they believe they have fallen into debt have just caught a break from the Maryland Court of Appeals.
The Washington Post ran a story this past weekend that said the State of Maryland’s highest court, the Court of Appeals, has ruled that debt buyers are now obligated to show more proof that consumers actually incurred the debt before it will allow the dept buyers to sue the alleged debtors.
According to the report, the ruling requires debt collectors to prove the debt of consumers through “a bill or print-out showing purchases, payments or other actual use of a credit card or account by the consumer.” Companies now need to prove their ownership of the debt as well.
An attorney with the Public Justice Center in Baltimore, Jonathan F. Harris, was quoted in the Post as saying, “It is critical that courts ensure that the correct party is suing the correct consumer on the correct debt, and these rules will help to do that.”
Maryland is only one of a number of states that have adopted stricter laws that require proof of debt owed before legal action can ensue. Not only have scores of consumers complained that they do not owe the debt the collectors claim they do, but the legal suits between the parties have bogged down the courts.
The reason debt collectors have been so aggressive in perusing consumers who may be behind in their bill paying is that it is a lucrative business. According to a recent article in the Baltimore Sun, “When debt buyers purchase defaulted accounts from credit-card firms and other creditors, they pay a cut-rate price for what usually amounts to ‘only minimal information regarding each debt and debtor.’”
The article went on to say that the attorney general’s office previously noted the fact that , in the Baltimore Sun’s words, “companies then swear in affidavits that the information is accurate, though they frequently don’t pay to acquire documents — such as signed agreements or a list of purchases — to verify the details in the databases they have purchased.”
In a related blog, posted on ProtectingConsumerRights.com, Peter A. Holland, who the blog said runs a University of Maryland law school clinic that specializes in debt, was quoted on the topic of the buying of debt. He reportedly said of the debt-buying business, “This is a $100 billion-dollar-a-year industry…the sale of ‘accounts receivable.’ It’s created a crisis in our small-claims courts. There’s tens of thousands of cases filed without proof just in Maryland. Nationwide, it’s in the tens of millions.”
The Washington Post pointed out that consumer advocate groups have been proactively trying to bring attention to the less-than-scrupulous practice of some debt buyers. It referred to a report that said the groups had examined the practices of 26 debt buyers “who filed more than 450,000 lawsuits in New York City Civil Court from January 2006 through July 2008. The companies won about 95 percent of the time and were awarded more than $1 billion in judgments. The people sued were overwhelmingly low-income, elderly or disabled.” It went on to say that debt notices are frequently sent to outdated addresses which leaves people unaware that they are being sued, and therefore a high rate of default judgments ensues.
The Federal Trade Commission is pushing for more states to adopt reforms for debt collection litigation.
In other news, TMCnet reported, “There’s a checklist of rights to keep handy so that said collector is not, in fact, violating the FDCPA. A lot of the FDCPA, however, is a bit dated and, to keep up with the times, needs a little amending, at least Tennessee Representative Steve Cohen thinks so.”
Linda Dobel is a TMCnet Contributor. She has been an editor in the contact center space for more than 25 years, and has the distinction of being the founding editor of Customer Inter@ction Solutions (CIS) magazine. To read more of her articles, please visit her columnist page.
Edited by Jennifer Russell