New York FDCPA Lawsuit Alleges Debt Collection Late Fees Abuses

A recent New York FDCPA lawsuit alleges Select Portfolio Services (SPS) Inc. violated state and federal privacy laws while trying to collect on debt collection late fees. Plaintiffs Harold K. and Deborah K. are filing legal action against SPS, alleging the company used intimidation and other abusive tactics during debt collection and late fees demands.

According to the New York FDCPA lawsuit, SPS began calling the couple when it was first assigned their debt on Aug. 1 2013. These calls were made for the alleged purpose of debt collection late fees on a loan that occurred in 2010.

For the next 12 months, SPS would reportedly send the couple a monthly statement that announced debt collection late fees. The statements reported that “if payment is received after [date], $52.71 late fee will be charged.”

The couple alleges that according to their original mortgage agreement, after the couple’s loan was accelerated, the couple should have faced no late payments relating to the principal and interest. According to the lawsuit, SPS knew this but continued with its harassment of debt collection late fees.

Select Portfolio Services is a debt collection company specializing in residential mortgage loans, in which many of the loans assigned to SPS are already in default when the company becomes involved. SPS is involved in the day to day operations of debt collection and is well aware of both federal and state privacy laws.

Overview of FDCPA Policy

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collection companies from using unfair and abusive debt collection methods, in order to intimidate or deceive consumers into paying the debt. This federal policy also requires debt collectors to give sufficient information about the debt to the consumer, and give consumers options to refute the charges. The FDCPA was enacted by Congress in 1978 to help combat unfair debt collection practices.

While debt collection in itself is legal, the FDCPA prohibits companies from using abusive language, calling repeatedly, leaving intimidating voicemails, and using lies to intimidate the consumer. Even with these rules in place, debt collectors across the country still reportedly engage in abusive debt collection practices to collect on any alleged debts.

In addition to the FDCPA, New York has some of the strongest debt collection policies that further prevent companies from using lies or misleading representations to antagonize consumers. Additionally, New York law also requires debt collectors to inform consumers of the statute of limitations on the alleged debt and requires that consumers have the ability to refute this debt if it is expired.

This New York FDCPA Lawsuit is Case 7:17-cv-07540-NSR, in the U.S. District Court for the Southern District of New York.

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If you live in New York and a lender or debt collector engaged in unfair debt collection practices, you may have a legal claim and could be owed compensation for violations of the Fair Debt Collection Practices Act (FDCPA).

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DISCLAIMER: Debt collection itself is not illegal. However, debt collection firms collecting on consumer debts must adhere to the FDCPA. Even though debt attorneys are investigating these companies, their debt collection practices may be legal.