Lawsuit Totals Spike in March: WebRecon

In a sign of what is likely to come, lawsuits alleging violations of the Fair Debt Collection Practices Act increased 19% in March compared with February, although the total for the first quarter of 2021 is still well below that from the same period last year, according to data released last week by WebRecon. Lawsuit alleging violations of the Fair Credit Reporting Act were up 25% on a month-over-month basis and were up 6% quarter-over-quarter, while lawsuits alleging violations of the Telephone Consumer Protection Act were up 24% from February, but were down 44% from the first quarter of last year.

Following the ruling out of the Eleventh Circuit in Hunstein v. Preferred Management and Collection Services, there are expectations of an explosion of FDCPA lawsuits making similar claims related to the use of letter vendors to print and mail collection letters to individuals. And while there were a number of class actions filed in the days following the ruling, it will be interesting to see what WebRecon’s April numbers look like when they come out later this month.

March’s numbers marked the first time since July 2019 where all three statutes saw double-digit percentage increases on a month-over-month basis, illustrating just how rare such an occurrence is.

The number of complaints filed by individuals with the Consumer Financial Protection Bureau continued to skyrocket. The 6,783 filed in March were 28% higher than the total filed in February, and 61% higher than the number filed with the CFPB last March. Through the first three months of 2021, the number of complaints is up 43% from the number filed during the same period last year. Attempts to collect a debt not owed accounted for 53% of all complaints filed with the CFPB in March, more than doubling complaints filed about written notifications about debt.

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