Legislature Should Protect State Consumers and Responsible Debt Collectors, Not Collectors Whose Tactics Are Illegal
October 20, 2014
Charleston, W.Va. – The West Virginia Association for Justice today called on the West Virginia Legislature to preserve the West Virginia Consumer Credit and Protection Act to protect state families from illegal conduct by out-of-state creditors. Established in 1974, the WVCCPA governs consumer credit sales and loans and how banks and other creditors can collect from consumers.
The West Virginia Legislature’s Joint Judiciary Subcommittee A is studying the WVCCPA during the October legislative interims.
“There is a common misperception among many that the only people being hounded by collection agencies are deadbeats who don’t pay their bills. That is not the case. Many West Virginia families are just a paycheck away from not being able to pay their bills. If there is a serious illness, a layoff or a major accident, these families are forced decide between paying their utilities, putting food on their tables, buying their medicine or paying other bills. These are families who have paid their bills on time, but now they can’t. It can happen to anyone,” said Anthony Majestro, president of the West Virginia Association for Justice and an attorney who handles these consumer law cases.
“While it is important for businesses to collect what is owed, it is equally important that when West Virginia families are in this situation that they are treated with respect and not harassed by debt collectors violating state law.”
The West Virginia Consumer Credit and Protection Act requires debt collectors to follow legal guidelines when collecting a debt. These guidelines include informing the consumer the total amount owed; avoiding abusive debt collection practices such calling a person’s employer, abusive language and threats of violence; protecting the privacy of the person; and maintaining accurate collection records. When the law is violated, debt collectors can face fines and financial penalties.
“The remedies are in place to penalize bad behavior—and they are the only deterrent to prevent illegal collection activity, but collection agencies keep violating the law. Debt collectors complain about having to pay penalties because they’re ‘too high,’ but these collectors refuse to do anything to curb the number of violations and reduce the penalties they receive. This is not an industry that’s hurting financially either, with nearly $12 billion in profits just in 2010,” said Majestro.
“If the WVCCPA is weakened and remedies reduced, it sends the wrong message. The West Virginia Legislature is not going to protect consumers and it’s not going to protect the banks and collection agencies who obey the law. Instead, it’s going to reward lawbreakers who are increasing their profits through illegal activities. That’s not how the free market works. Businesses that obey the law should be rewarded, not the other way around. It’s wrong. It hurts our consumers and our responsible businesses.”
Charleston attorney Jonathan Marshall noted that most states are increasing their consumer protection and unfair debt collection laws, not weaken them.
“In recent years, a lot of debt collection is being outsourced to collection agencies in India and the Philippines. It’s more important now than ever to protect our consumers. Other states recognize this and are improving their laws. Why would West Virginia want to go in the opposite direction?,” asked Marshall, who handles consumer law cases for Bailey & Glasser, LLP.
“The current law is simple. If you don’t break the law, then a creditor has nothing to worry about. There is even an existing defense for debt collectors that violate the law through an honest mistake. If you’re facing liability, you have knowingly broken the law. The decision to follow the law or not is in the hands of the debt collectors."
Get the Facts
- Debt collection is a large, multi-billion dollar industry that affects many consumers directly. In 2013, approximately 30 million individuals—14 percent of American adults—had debt in or subject to the collections process averaging approximately $1,400. (Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, November 2013)
- More than 25 percent of all debt collection is done by third-party collection agencies whose profits are tied to what they are able to collect—and industry revenues totaled nearly $12 billion. (http://www.ftc.gov/sites/default/files/documents/public_events/life-debt-data-integrity-debt-collection/understandingthemodel.pdf)
- The Federal Trade Commission receives more complaints about the debt collection industry that any other specific industry. A total of 204,464 complaints were filed with FTC in 2013—an increase of nearly 2,000 more than were filed in 2012. (http://www.ftc.gov/reports/consumer-sentinel-network-data-book-january-december-2013)
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