Student Debt Collection Businesses Face Looming Lawsuits and Shortfalls—Colleen Murphy and Anthony Kroese in Business First
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Student Debt Collection Businesses Face Looming Lawsuits and Shortfalls—Colleen Murphy and Anthony Kroese in Business First

Goldberg Segalla’s Colleen M. Murphy and Anthony M. Kroese, members of the firm’s Management and Professional Liability practice, spoke with Buffalo Business First about the unique legal risks that the COVID-19 pandemic and recent rule-changes pose to the student debt collection industry, and outlined recommended practices that businesses can implement for protection.

“We don’t know exactly where the lawsuits will come from for student loan collectors arising out of COVID-19, but we do know that, when you’re changing the rules and regulations, there’s always opportunity for a mistake to be made,” Colleen told Business First.

Aside from budget shortfalls due to missed debt payments, debt collection businesses could also face professional liability claims and lawsuits—including class actions—brought under the Fair Debt Collection Practices Act (FDCPA). Among other things, Colleen and Anthony explained, debt collectors must be careful of when they begin to contact debtors to apprise or remind them of upcoming required payments.

The debt collection industry has a reputation for being unwilling to work with debtors, Business First noted, but Anthony pointed out that this isn’t the always the case, particularly in the COVID-19 environment. “The goal for everyone right now is to get to the other side of COVID-19,” he said.

“We’re reminding them to take this time to get ahead of the game,” Colleen said. “I’ve talked to some of the people in the businesses. Some of them are small businesses, too, and in some ways are just like everybody else.”

“I think what we’re looking at is there are a lot of debt collectors in the background that need to look and start preparing for what comes next,” Anthony added. “Our advice is to make sure that you’re preparing your team internally.”

Colleen, Anthony, and other members of the firm’s Management and Professional Liability practice prepared a tip sheet for student debt collectors navigating the COVID-19 pandemic.

Click to download: Student Debt Collection in the COVID-19 Environment: Avoiding and Mitigating Professional Liability E&O and FDCPA Claims

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Goldberg Segalla’s Management and Professional Liability practice is home to a dedicated Student Loan Debt Collection E&O Defense Team, focused on handling and defending E&O cases brought against student loan debt collectors, including class actions brought under the Fair Debt Collection Practices Act (FDCPA). Contact Colleen M. Murphy or Anthony M. Kroese to learn more.