Settlement Reached In AT&T Debt Collection Class Action Lawsuit

A debt collection firm has agreed to settle an AT&T debt collection class action that alleged violations of the New York FDCPA.

New Jersey-based debt collection business Asta Funding Inc, a subsidiary of Palisades Collection LLC, and its law firm Pressler & Pressler have proposed to pay $3.9 million to settle an AT&T debt collection class action lawsuit. The class action alleged that the debt collection business violated the New York Fair Debt Collection Practices Act.

In addition to paying a settlement, the collection business also agreed to permanently cease all collections against over 60,000 Class Members. Although Asta Funding has agreed to settle the class action, none of the defendants admitted any wrongdoing.

Asta Funding and Palisades allegedly purchased debts from creditors for a fraction of the total due in hopes of collecting the debt in full. Some debts purchased were from AT&T debt collection accounts, although the phone company has declined to comment.

Although the practice of buying and trading debts is common in the debt collection industry, and collection agencies often use the court system to collect debts, Asta Funding allegedly failed to follow proper procedures. According to the AT&T debt collection class action lawsuit, Asta Funding often lacked evidence and never notified plaintiffs of the filing.

Many of the plaintiffs were allegedly sued by the defendants and never learned of the default judgments against them. Around 50,000 default judgments were awarded in court, but many plaintiffs only learned about them during security clearance for a job or when money was missing from a paycheck or bank account.

One plaintiff, Dionisio I., first learned of the judgment against him when he was a teenager and his wages were garnished at his first job, according to the Wall Street Journal. “I never had a phone bill in my life and, when I did, it was under my parents’ name,” Dionisio said. The judgment allegedly followed him to a new job where he learned he owed more than $1,300 on an AT&T debt collection account he never had. “At the time, I didn’t have the money. […] But if I had the money, I would have paid it off just to get them to leave me alone”.

The average judgment was $1,729.77 and the average collection amount was $1,354.62, according to the class action. Asta Funding has obtained $83.4 million in judgments against the Class Members, $37 million of which had been collected. As a part of the settlement, the defendants agreed to help vacate judgments through the state court.

Attorneys for the Class Members estimate that 10,000 to 15,000 people will receive a share of the $3.4 million AT&T debt collection settlement and thousands more will have their judgments canceled and collections ceased.

Plaintiffs filed their AT&T debt collection class action lawsuit under the New York Fair Debt Collection Practices Act. The New York Fair Debt Collection Practices Act is a state debt collection act modeled after the federal Fair Debt Collection Practices Act but includes more strict regulations. The act was passed in 2015 to increase protections for New York citizens. The New York Fair Debt Collection Practices Act adds additional protections and requires debt collection agencies to make clearer disclosures.