Eric M. Berman, P.C.
Protecting Consumers in Debt Collection Litigation and Arbitration: A Series of Roundtable Discussions" - August, September, and December, 2009
Having watched the first two Roundtables and participated in the third, I am concerned that the hyperbole and hysteria surrounding horrible anecdotes of alleged miscarriages of justice deflects attention from the actual rules, regulations and laws governing debt collection. Demonization may attract the media, but it does not lead to constructive improvement. Consumers are well-protected by the myriad laws governing credit, from its inception through its collection. Unfortunately, the basic tenets of credit are not well understood or avoided in the rush to create new regulation. Charge-off is the best place to start in the third party purchase or collection cycle because it is the most highly regulated summation of all amounts due and owing the creditor by the borrower as of a specific date, the date of charge-off. The amount and date are readily available and provide the foundation for collection efforts. Any fees or interest that may appropriately be added post-charge-off can be segregated and detailed so that the consumer, now debtor, can more easily understand the debt owed. The “Proof of Consumer Indebtedness” White Paper attached hereto provides the legal bases for this position. The FDCPA requires modernization. Pre-litigation contact serves consumers and creditors by creating settlement opportunities. Unfortunately, the ability to telephone debtors has been removed from collection in many venues so that litigation is the only real alternative. Letters can serve a purpose, but as we all know, they often are disposed unread. The number of cell phones has grown geometrically and traditional land-lines are becoming relics. Email and texting are the favored communication of the generations most likely to default on their obligations, and contact through these mediums will also serve to reduce the loads borne by the Courts. Attorney fees generate FDCPA litigation. The trial lawyers retained by “aggrieved” debtors flourish as their fees escalate. Serving the poor who are drowning in debt is a noble purpose. But that purpose has denigrated into a “cottage industry” which has, in many instances, used extortionist methods to obtain fees. Allowing attorney fees for triumphant FDCPA defendants will eliminate frivolous cases and have no effect on the meritorious. Bench-Bar discussions have taken place in several states in which collection issues were studied from the state and local viewpoints. They have achieved fair and equitable practices which protect all the parties in the litigation. At the same time, federal regulation will allow national creditors and their debt collectors to establish consistent practices that will protect consumers in every locale. Local rules should apply in local litigation, but national rules should control non-litigation debt collection. The Roundtables provided wonderful opportunities for the advocates of conflicting positions to present their arguments. Consensus was achieved in several instances and post-roundtable discussions will hopefully lead to more. I congratulate the Federal Trade Commission for creating the Roundtables and encourage it to continue to provide similar opportunities for dialogue among all the entities involved in consumer debt collection.