ACA members know all too well of the rising volume of lawsuits being filed against debt collectors and asset buyers. According to the FDCPA Case Listing Service, over 9,000 lawsuits were filed in 2009 alleging violations of the Fair Debt Collection Practices Act (FDCPA).
Combating lawsuits is not easy as debt collectors and asset buyers must weigh the cost of litigation vs. the cost of settling a potential lawsuit. Each case often requires an individualized determination and consideration of the many variables involved in a case, such as the facts underlying the claim, whether there is insurance coverage, and applicable case law that may substantiate or defeat a consumer’s assertion.
Make no mistake, there are many cases out there where settling is the easy option for a number of reasons. But as the rise in litigation continues, the credit and collection industry is beginning to witness a growing commitment to fight litigation that is frivolous or otherwise without merit based upon concrete case law. In addition, there is a growing commitment to obtain clarification on poor case law and obtain favorable and clarifying decisions. As the industry continues its trend to fight these claims, it is absolutely critical that ACA and MAP members are aware of the resources available through ACA to support these efforts.
One of the most important resources provided by ACA to support debt collectors is the ACA Legal Fund. Administered by the Legal Fund Committee consisting of five ACA members, the Legal Fund provides financial assistance to ACA and ACA members for the purpose of helping them initiate or defend against litigation affecting the credit and collection industry.
The Fund provides assistance through a spectrum of opportunities in the litigation process, from offering financial assistance to cover an insurance deductible, to paying for legal support beyond the deductible, to paying for the preparation, drafting, and submission of an amicus brief.
The funding which supports the administration of the Fund and the resulting awards of money is from special assessments and any investment income which accrues based upon the principal balance in the Fund from time to time.
Upon submitting an application and appropriate supporting documentation, the Legal Fund Committee reviews the applicant’s information to determine whether financial assistance is warranted as well as the amount and whether any conditions on the award are appropriate. When reviewing an application, the Committee considers:
- Potential for adverse precedent if the case is unsuccessful;
- Nature of alleged violations;
- Previous court decisions in similar cases;
- Potential for favorable outcome;
- Advice of ACA General Counsel;
- Willingness of applicant to cooperate with the Committee; and
- Timeliness of the request.
If you would like to obtain support for litigation from the Legal Fund, please review the Legal Fund Rules and complete the Legal Fund Application.