FDCPA Cases Brought By Consumers Creates New Market Aimed at Collectors

A sharp increase in the total number of Fair Debt Collection Practices Act (FDCPA) lawsuits alleging collector abuse has prompted two entrepreneurs to offer solutions for litigation-weary accounts receivable management firms.

Bill Pinkney, founder of FDCPA Case Listing Service LLC, said that FDCPA-focused cases filed by consumers against ARM firms have been growing in “exponential proportions.” He said that there were 41 percent more FDCPA cases filed by consumers in 2008 over 2007. Last year, consumers filed 5,383 cases claiming violations of the FDCPA. Pinkney said that he believes there will be well over 7,000 cases filed in 2009.

His projection is supported by one of his primary competitors, WebRecon LLC’s FDCPA Litigant Alert. Jack Gordon, CEO of WebRecon, told insideARM that 654 cases claiming FDCPA violations were filed by consumers in May 2009 alone.

WebRecon, which opened its doors in January 2009, and FDCPA Case Listing Service, in business since 2007, operate in a similar fashion. Both track cases in the U.S. District Court system using proprietary searching tools. The services are looking for cases that mention the FDCPA or the Fair Credit Reporting Act (FCRA). Software then batches all of the information on the cases and is delivered to subscribers on a periodic basis.

The intent of both services is to provide ARM companies with the names of consumers and attorneys that bring FDCPA cases. Of particular interest are consumers that have filed lawsuits multiple times. The companies can use the information to scrub those consumers from their lists, avoiding a potential headache down the road.

The services are quickly becoming very popular in the ARM industry.

“I’ve been getting progressively more interest in the service [as FDCPA cases rise],” said Gordon.

The services have not only attracted potential clients. A major partnership was announced Monday by FDCPA Case Listing Service and TransUnion, the credit and information management giant ("TransUnion Alerts Collectors of Accounts Involved in Collection Litigation," June 22).

TransUnion will be offering the FDCPA case data offered by Pickney’s firm in its Collections Prioritization Engine. Scott Carter, group vice president of TransUnion’s collections vertical, told insideARM that the company wanted to offer its ARM clients access to the information in way that integrates with their current product suite.

It’s the integration with TransUnion’s robust current product offerings that excites Pickney. “Collection agencies were looking for a seamless way to take this litigant data and use it like bankruptcy scrubs when prioritizing collection accounts,” he said. “This partnership will allow that kind of workflow.”

TransUnion will brand the new offering as FDCPA Case Search.