The True Cost of Litigation: The ARM Industry’s Dilemma and One Company’s Response

Many debt collectors consider litigation and settlements the cost of doing business. For several reasons, the cost is there even if the debt collector is genuinely attempting to comply with the myriad statutes and regulations governing the collection of debt.

One-Sided Attorneys' Fee Provision

One reason is the dilemma caused by the one-sided attorneys’ fee provision of the Fair Debt Collection Practices Act (FDCPA). Initially intended to enable consumers to protect themselves from overzealous debt collectors even if they can’t afford legal representation, the FDCPA has morphed into something different. One judge in the Eastern District of New York called out the misuse of the FDCPA, hinting that the statute might now be “serving largely to facilitate debt evasion and to prop profits among the plaintiffs’ bar[.]”

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