Portfolio Recovery Sued For Illegal Collection Practices
Debt collector Portfolio Recovery Associates is in trouble with the State of Massachusetts for illegal and deceptive debt collection practices. Although this is a win for consumers, there is a question of how many other debt collectors are still engaging in these kinds of practices.
Illegal Collection Practices
According to one report, Portfolio went after a man who lived on $1,300 monthly, which was his payment from social security disability. He uses a wheelchair, and lives in housing for the disabled in Springfield, Massachusetts.
The Attorney General in Massachusetts sued Portfolio, and the case has settled, requiring Portfolio to pay $4 million. The Attorney General’s office alleged that Portfolio was collecting on debts that were as old as 8 or 9 years, making them legally unenforceable because of the expiration of the statute of limitations.
Debt Buyers Cause Problems
Like many debt collectors, Portfolio is not just a collector, but a buyer. Debt buyers purchase huge volumes of consumer debt at pennies on the dollar. They often have no way of documenting the accuracy of the accounts they purchase, and put no time or effort into determining which accounts are legally unenforceable, such as those where too much time has expired, or where the consumer has filed for bankruptcy and discharged the debt.
But Portfolio’s actions go even further. The Massachusetts Attorney General claims that Portfolio hired lawyers to take many destitute consumers to court. It also says that Portfolio had an obligation to inform consumers when their income was exempt from collection, but did not, such as with disability income or certain kinds of retirement payments. In many cases, the suit alleges that Portfolio reported unenforceable or uncollectable debts to consumers’ credit files.
Because it is often the elderly or disabled that are living off of exempt income, those groups tended to be the ones most victimized by Portfolio’s practices. According to Massachusetts, even in cases where the consumer knew and told Portfolio that the money they made was exempt and protected from collection, Portfolio employees pressed on, pressuring consumers into paying debts that couldn’t even be verified as accurate. In some cases, Portfolio went after the wrong consumer, or was trying to collect an inaccurate dollar figure. Some of the debts that Portfolio collected had already been paid by consumers.
Changes May Be Coming
Portfolio has promised to change its business practices, including promising to actively inform consumers if it seems like they have exempt income, and refraining from reporting any debt that Portfolio cannot verify as being accurate.
Still, Portfolio’s actions are not unique to it; many debt collectors and debt buyers engage in the exact same techniques. The actions alleged by Massachusetts would also be violations of the Fair Debt Collection Practices Act, and consumers who live anywhere have a right to sue for money if they are victimized the way Massachusetts consumers allegedly were.
Questions about illegal debt collection practices? Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.