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January Sees Spike in Litigation Against Consumer Credit Reporting and Collections Companies

By Tracey E. Schelmetic
TMCnet Contributor

The latter half of January has shown a spike in litigation against consumer credit reporting companies and the collections industry, according to data from U.S. District Courts. Lawsuits were on the rise against companies for violating three key pieces of consumer protection legislation: the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act. According to the data, while January had a slow start initially, all three categories saw leaps in the second half of January. 

Specifically:

• Lawsuits based on FDCPA rose to 491 in the January 16 to 31 reporting period (compared to 377 in the first half of the month and 411 in the second half of January 2011.)
• Lawsuits based on the FCRA rose to 102 in the same period (up from 66 in the first half of January and 47 in the second half of January 2011.)
• Legal actions under the TCPA were at 46 during the same period (up from 18 in the first half of January 29 in the second half of January 2011).

These lawsuits represent 601 unique plaintiffs, and of those, 19 percent were repeat litigants, according to the website Collections & Credit Risk. All in all, 609 different collection agencies and creditors were sued during the second half of January, according to WebRecon LLC, a company that tracks data from federal courts.

Only one category saw a drop in litigation during the same period: Truth-in-Lending Act cases dropped to 38 during the second half of January. This is compared to 48 in the first half of January (but still up from 21 in the second half of January 2011), says Collections & Credit Risk.

So which federal courts are seeing the lion's share of these court cases? During the second half of January, California Central District Court, Western Division in Los Angeles saw 53 lawsuits; Pennsylvania Eastern District Court in Philadelphia heard 42 cases; and Minnesota District Court saw 34.