Student Loan Collection Company Sued for Unfair Practices

A putative class action lawsuit was recently filed against the National Collegiate Student Loan Trust (“National”), a student loan collection company, and the Law Offices of Patenaude & Felix APC. The complaint was filed in federal court in California and alleges that National and Patenaude used deceptive practices to collect student loan debts.

                The suit was filed by Dawn Zoerb, who seeks relief under the federal Fair Debt Collection Practices Act (“FDCPA”) and the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), a California debt collection statute. Zoerb is filing the suit on behalf of all persons in California who had a collection lawsuit filed against them to recover a consumer debt where the lawsuit failed to identify the original creditor.

                The FDCPA was created to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy. The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. Generally, the FDCPA applies only to third party debt collectors.

                Similar to the FDCPA, the RFDCPA was created, by the California legislature, to assist debtors in protecting debtor’s rights against unscrupulous and harassing debt collectors. However, the RFDCPA is broader in scope and protects debtors from harassment from both third party debt collectors and the original creditors. The reason for this additional protection is because original creditors are generally the most aggressive collectors because the FDCPA does not apply to them in other states.

According to the complaint, after Zoerb had fallen behind on his student loan payments, his debt was transferred to National and then to Patenaude for collection. Zoerb alleges that Patenaude filed a state collections lawsuit against him, on behalf of National, for collection of the student loan debt in California debt court. Zoerb further claims that Patenaude incorrectly failed to identify the original creditor in the lawsuit.

The complaint alleges that the defendants unlawfully and abusively attempted to collect a debt owed by Zoerb and that this conduct caused him damages amounting to $1000, along with attorney fees and litigation costs.

If you or someone you know has being similarly taken advantage of or has been the victim of any other unfair business practices, please contact Khorrami Boucher Sumner Sanguinetti, LLP for a private consultation.