2.1.2 Reason #2: Stopping Systematic Abuse of the Justice System and Educating Judges

Debt buyers today are using the courts to engage in wholesale litigation abuse. They sue huge numbers of consumers with no real knowledge of whether the consumer owes the debt or whether the statute of limitations has run. Debt buyers sue with little or no evidence to prove that the consumer owes the money, that the debt buyer in fact owns the debt, or even that they are suing the right consumer. This litigation strategy is effective because very few consumers obtain legal representation, and the overwhelming majority of consumer defendants default in the collection action.

When the consumer contests an action, the collector utilizes various techniques to win without having to produce admissible evidence to prove its claim. The collector may take advantage of the unrepresented consumer by working out a stipulated judgment without disclosing that the collector cannot prove the debt. Another technique is to send the consumer a long list of requests for admission to which the consumer does not timely respond. The requests are deemed admitted, and the collector needs no other evidence to prove its case.¹³

Alternatively, collectors seek summary judgment on junk evidence—attachments that are not attached or affidavits from employees (or even non-employees) of a debt buyer who state conclusory facts about which the affiant has no personal knowledge or about pretend “business records” created years after the fact. The collection attorneys, who are in court every day, often get preferential treatment by the court clerks and use this to their advantage.

Consumers fare much better in court when they obtain legal representation. Many debt buyers will not even pursue the case once they realize the consumer has legal representation. Such an individual consumer victory has no adverse impact on a debt buyer that has purchased the debt for pennies on the dollar. But that strategy may educate the court as to the shoddy practices of certain debt buyers and collection attorneys. The next time the collector or collection attorney brings a series of cases asking that court to enter default judgments, the court may look more closely at the collector’s evidence, and even throw out uncontested collection actions or establish standards for when default judgments will be allowed in uncontested consumer collection matters. For example, courts and legislatures have enacted rules or statutes to deal with these abuses in Delaware, Maryland, Massachusetts, New York, North Carolina, and other states.

Individual collection litigation can be the vehicle that creates a jurisdiction’s controlling standards. A collector or collection attorney who brings cases that are clearly not actionable under those established standards runs a significant risk that a Fair Debt Collection Practices Act (FDCPA) class action will succeed in producing a large award for the class.

For example, individual litigation in a collection case may establish the state’s rule recognizing, a three-year limitations period for an account stated claim or barring an account stated claim on an “account statement” that the debt buyer created and sent to the consumer years after the creditor wrote off the account¹⁴