The debt collection companies that make your credit cards and auto loans seem more secure and reputable have taken a hit this week, as a new lawsuit alleges.
In a complaint filed Thursday in federal court in California, attorneys for the National Association of Consumer Advocates (NACA), which represents more than 60 million consumers, accuse the companies of collecting a “somewhat high” amount of unauthorized charges from people who don’t have credit cards.
The lawsuit, filed by the NACA and the Consumer Financial Protection Bureau (CFPB), claims the debt collection firms are “selling fraudulent consumer debt, including credit card debt, auto loans, consumer prepaid debit cards, and other consumer debt,” and that “these unauthorized charges often amount to hundreds of dollars.”
The lawsuit also alleges that the debt collectors have made false promises to consumers, saying they will protect consumers from debt collectors if they use a debit card, buy things with it, and otherwise use their credit cards for personal purchases.
The complaint states that the companies have collected $1.8 billion in unauthorized charges between January 2018 and June 2019.
The companies declined to comment on the lawsuit.
But some consumers are not happy with the companies’ actions, saying the companies make them feel like they are being taken advantage of, and that they can’t get their money back unless they pay off the debt they’ve taken on.
“They are a collection agency, they collect your credit, and they take your money, and then they take that money and use it to collect a fee from you,” said Stephanie Miller, an attorney at Consumer Watchdog, a consumer advocacy group.
“The problem is, they’re charging you for the privilege that you do not have.
They’re charging for something that you have no right to.”
The NACA, which represents consumers from more than 40 states, filed a lawsuit in July 2018 against six debt collection businesses and a bank over alleged unauthorized charges.
It said the companies were charging fees for unauthorized transactions that the banks say they do not collect.NACA is a consumer credit monitoring and advocacy organization that provides consumers with information on credit reporting agencies and credit card issuers.
