AARP's brief argues that state law prohibiting abusive debt collection covers not only creditors, but also those who collect debts on their behalf.
West Virginia provides civil remedies and criminal penalties for violation of the state's Consumer Credit and Protection Act (WVCCPA). The Act prohibits communications made with the intent to annoy, abuse, oppress or threaten consumers.
Linda Barr alleged that NCB Management Services, while attempting to collect an alleged debt on behalf of HSBC Bank, violated the WVCCPA. NCB moved to dismiss the case claiming it is not covered by the WVCCPA because it is not the creditor.
AARP's "friend of the court" brief, filed by attorneys with AARP Foundation Litigation, points out the widespread abusive debt collection practices that led to enactment of fair debt collection laws. The brief, which was joined by the National Association of Consumer Advocates and National Consumer Law Center, argues that laws such as WVCCPA were written to protect consumers from a barrage of frightening and abusive tactics. These laws were written broadly to provide comprehensive protection even as debt collector tactics and approaches evolve.
AARP's brief carefully parses the language of the WVCCPA to point out that it not only intended to but actually does cover all entities seeking to collect debts, whether the actual creditor or not. Reading it otherwise would, in the words of the brief "conflict with common sense."
As the brief points out, the WVCCPA was enacted because consumers were being hounded with harassing calls and contacts. Before its enactment, perpetrators of such abusive acts were able to behave reprehensibly precisely because the chances they would be caught were minimal, and the consequences cheap. Unscrupulous debt collectors use harassing tactics to discourage debtors from challenging alleged debts; file lawsuits based on stale, paid or nonexistent debts; and clog the courts with unsupported claims that individuals either don't know about or don't know how to challenge. Most debt collection lawsuits result in default judgments based on little or no proof a debt is even owed. An explosion of delinquent consumer debt, particularly over the last decade, has spawned a $1 trillion debt buying industry to collect on stale debt acquired from original creditors and other debt collectors for pennies on the dollar.
What's at Stake
For more than 10 years, consumer complaints to state and federal authorities about debt collection practices have exceeded consumer complaints about any other industry. There is increasing evidence that hardball tactics have resulted in consumers being forced to pay on debts they don't owe, are too old to collect through the courts, that are the result of ID theft or that they already paid.
Low-income and older people are particularly vulnerable to such abusive tactics. Older people, who are more likely to own their homes, have assets that make their debt more attractive to debt collectors, who may threaten to take the home if the debt is not paid. People with and without cognitive problems may be unable to defend against collection of stale debt because they may not remember details of the transactions and no longer have any of the paperwork related to the alleged debt. Harassing phone calls may exacerbate pre-existing health conditions. Older people may not know to whom they can turn for help, may be too embarrassed to seek assistance or may resist help for fear they will be deemed incompetent and lose their independence. They may also be unable to go to court hearings to contest the claims against them. Some older people believe they will go to jail if they have to go to court and pay debts they do not owe for fear of such consequences.
Barr v. NCB Management Services is before the Supreme Court of Appeals in West Virginia, the state's highest court.