Many companies function on the premise that they know what they’re doing is illegal—but that they’ll only stop doing those things once they get in trouble. Debt collection agencies are a great example of this way of running a business, often breaking the law to coerce victims into paying debts.
The Fair Debt Collection Practices Act is intended to prevent debt collection agencies from harassing debtors but the reality is that the Federal Trade Commission receives thousands of complaints every year about harassment by debt collectors.
In 2013, nearly 24,000 individuals complained to the FTC that debt collectors harassed by repeated and continuous calls and another 8,600 complained about collectors using obscene, profane, or abusive language. But what’s more is the 2,500 individuals who complained that they were threatened with violence by debt collectors. This number doesn’t include likely thousands more victims who didn’t complain to the FTC.
All of these debt collection tactics are illegal under the FDCPA but debt collection agencies often use them anyway. If the victims can prove the debt collection agencies didn’t follow the rules, these debt collection agencies can be fined for violations. However, in a recent court case in California, banks argued that debt collectors can use these tactics—and only need to stop after they’ve been sued.
California has their own debt collection rules that “allows debt collectors to escape liability if they ‘cure’ their violations within a certain period of time.” The Ninth Circuit, however, decided that the banks’ interpretation of the rule that a “cure” is to stop after being sued was incorrect. It’s a win for consumers across the board, not just for fair debt collection practices.
The argument proposed by the Public Justice Foundation is that you can’t un-punch someone after you’ve punched them. As part of the fair collection practices, collectors can’t use physical violence to collect debts, including coming to a debtor’s home and beating them up to get them to pay.
Companies would love if the banks argument had be accepted by the Ninth Circuit because it would have meant they could intentionally and openly violate regulations that protect consumers until someone sued them to stop—and then not have to remedy the harm they did to people in the process. It wouldn’t have taken long for unscrupulous businesses to use the opportunity to make a great deal of money while intentionally harming consumers if the Ninth Circuit had sided with banks.
The same applies when thinking about class actions. If a company’s products hurt thousands of individuals, they shouldn’t be able to “fix” the situation by simply stopping production. That leaves all the individuals they harmed without any cure or remedy for the harm the company caused them.
This is a win for consumers across the United States in a time when many regulations are under attack.