Debt Collector Harassment Lawsuits: The Litigation of 2014?

Columbus, OHEach year, one or two types of litigation takes center stage as being the most talked about, or most prevalent. In 2014, it seems, that litigation could be debt collector lawsuits; lawsuits filed against debt collectors who use illegal and unethical tactics to recover debts. While debt collector harassment on the part of unethical debt collectors has been around a long time, states and consumers are starting to take those collectors to task for their actions.

Lawsuits are being filed against banks, financial institutions and third-party debt collectors, alleging consumers are being illegally harassed - sometimes for debts that are not even theirs. And one state now accuses a debt collector of adding illegal fees to the amount they have attempted to collect.

Star Tribune reports that Minnesota Attorney General Lori Swanson filed a lawsuit against Bradstreet & Associates LLC, alleging the company added illegal interest on old debts. In one case, the illegal interest resulted in a debt of approximately $1,800 jumping to more than $4,100. A different consumer said her debt jumped from $250 to more than $4,300 by the time Bradstreet began attempting to collect on it.

Bradstreet was reportedly attempting to collect on old bank overdrafts and fees owed to Wells Fargo and US Bank, but contracts the consumers had with the banks did not allow interest to be charged on overdraft or overdraft fees. Bradstreet allegedly added up to 21.75 percent interest on the owed amounts. Under Minnesota law, unless the customer has signed a contract authorizing a higher interest rate, interest rates are capped at six percent.

“Companies have the right to collect legitimate debt, but they shouldn’t charge people for interest that isn’t owed, nor should they get courts to award judgments against unrepresented people for interest that isn’t owed,” Swanson said.

Meanwhile, JP Morgan Chase reportedly faces a lawsuit regarding its own debt collection practices. According to The Wall Street Journal (12/17/13), Mississippi Attorney General Jim Hood filed a lawsuit against JP Morgan, alleging the company illegally targeted Mississippi consumers for late credit card debt that the consumers either did not owe or that had already been paid. Furthermore, the bank allegedly harassed consumers over a debt that was paid in full. In 2013, California also filed a lawsuit against JP Morgan Chase for its debt collection practices.