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Portfolio Recovery Associates v. King

New York Court Rebuffs Effort to Collect Stale Debt


What’s at Stake

Even at rock-bottom prices, old debts are snapped up by debt collectors because the transaction costs are so low that even if debt buyers recover a mere fraction of the debt they have bought, they can make a substantial profit. For example, if a debt buyer pays 25¢ for $100 in face value of debt, it recovers its costs and makes a profit if it convinces a consumer to pay only $1.00. Moreover, greater efficiencies in the collection of debts, paired with communications advances that have reduced transaction costs, have made it more profitable for debt collection agencies and their law firms to go after a greater number of debts including these debts whose validity is most questionable. Even when a debt collector violates the law, the chances of being caught are minimal and the consequences are cheap — and relaxation of strict legal standards invites abuses.

For these reasons, AARP’s brief argued, the strict requirements of the laws of individual states as well as federal debt collection laws must be scrupulously adhered to.

The ruling is a welcome one that should send a message to debt collectors about strict adherence to the relevant laws.

Case Status

Portfolio Recovery Associates v. King
was decided by the New York Court of Appeals, the state’s highest court.

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Strengthening Law and Policy through
Legal Advocacy

Our legal advocacy initiatives  - conducted by AARP Foundation Litigation (AFL) - reflect more than 15 years of work in federal and state courts across the country. Through our efforts, we support the Foundation’s four priority areas: Hunger, Income, Housing and Isolation, and ensure that those 50 and older have a voice in the laws and policies that affect their daily lives.