In a class action suit against Portfolio Recovery Associates, a consumer rights firms wins a $350,000 judgment against the collection agency for violations of the Fair Debt Collection Practices Act (“FDCPA”). In the case of Zimmerman v Portfolio Recovery Associates, LLC, a plaintiff sued the debt collector for sending a collection letter inferring he was being sued for collection of the debt. U.S. District Court, Southern District of New York, 09 Civ. 4602 (PGG). Specifically, Portfolio Recovery sent 990 collection letters to alleged debtors implying legal action was being taken against them. These collection letters were titled “Pre-Suit Package” and were signed by a “Catherine M. Hedgeman, Esq.” and enclosed a draft summons and complaint. In his complaint, the plaintiff alleged Portfolio Recovery violated the FDCPA by misrepresenting legal action was being taken against him in an effort to collect the debt when in fact such was not the case.
In the Order issued by the Southern District of New York, the court stated that Portfolio Recovery Associates‘ use of the Pre-Suit Package was exactly the type of conduct the FDCPA seeks to prevent, justifying a large financial reward for the consumers. The court further went on to say that because the collector had a net worth in excess of $50 million, the penalty must be large enough to deter the collection agency from further engaging in this type of conduct.
The $350,000 judgment is the largest reported judgment on record in this type of class action suit. The court stated the reason behind such a large reward was based on “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.”
In conclusion, the court further determined that with the money awarded from the judgment, the class representative would receive $1500, each class member would receive $500 and any remaining balance would be donated to a not-for-profit organization seeking to protect consumers from abusive debt collection tactics and/or working to increase consumer awareness of their rights under the law.