The Scales
Have Been
Tipped
e&o claims reveal
exposure resulting
from voice mail
messages.
By Janis St. martin, CIC
ongoing claim management and trend monitoring are vital aspects of ACA International’s
Errors and Omissions (E&O) program.
Collection agencies can use this
information when considering their own
internal practices. As claims develop,
facts have surfaced regarding agencies
leaving messages on answering machines
that are not compliant with the Fair
Debt Collection Practices Act.
Frequency •;: The majority of claims
made by consumer attorneys involve
an agency’s failure to leave messages
that identify the caller as a debt
collector and explain that the purpose
of the call is to collect a debt.
Liability •;: Liability can attach simply
by leaving a message for a consumer
that does not disclose the collector’s
identity or that the call was placed by
a debt collector.
Severity •;: Class actions have an easy
path in cases where the collector
leaves a message that does not
disclose the collector’s identity or
the fact a debt collector is placing
a call. Recovery for the named
plaintiffs in class action suits is
$500,000 or 1 percent of net worth,
whichever is less, and will include
plaintiff attorney fees and the class
administrative costs. All told, the
total is likely to be hundreds of
thousands of dollars. On the flip side,
the potential class action liability for
a third-party disclosure by leaving
compliant messages is extremely low
because the plaintiff must prove that
a third-party disclosure occurred in
each instance.
When collection agencies consider
the cost of their message procedures,
they should include the cost of their
deductibles and insurance coverage. A
growing number of carriers are applying
exclusionary language to their policies as
these claims develop. It is important that
your insurance agent understands your
increased exposure in relationship to
leaving messages for consumers. cm
Janis St. Martin, CIC, is vice president
of Collectors Insurance Agency Inc., a
subsidiary of ACA International.
The content of this article is provided
for informational purposes only and
should not be considered as legal advice.
It does not alter, amend, modify or
supersede the terms and conditions of
your insurance policy. In the event of a
claim, the policy language will govern.
ACA’s Insurance Unit offers Errors
& Omissions coverage specifically for
the collection industry. For additional
information on how your agency could
benefit from their expertise, contact
them at +1(952) 926-6547 or e-mail
riskmanagement@acainternational.org.
