Creditors seeking to reduce collection costs often ask collection agencies for “precollect” efforts at a discount from normal contingent fee rates. Some collection agencies provide lettering services – with all calls and payments directed to the creditor – at a flat rate per letter or account.
Unfortunately, the FDCPA prohibits such flat fee arrangements in some circumstances. Further, consumer attorneys are aggressively pursuing FDCPA lawsuits against debt collectors and their clients for precollect “flat-rating,” which often drives a wedge because the debt collector and its client.
In the latest episode of ARM industry legal podcast The Debt Collection Drill, attorneys John Rossman and Mike Poncin discuss the recent surge in precollect “flat-rating” cases against collectors and creditors and also reveal some strategies for avoiding these claims.
Listen to the 8 minute-long podcast below:
Precollect Causes FDCPA Heartburn for Collectors and Creditors
(If you can’t see the audio player above, please visit http://traffic.libsyn.com/thedrill/TDCD_ep32.mp3 to listen to the podcast)