A recent judgement in a case we brought against a collection company shows that it is possible to take action against abuses in the collection industry.
The case
Our client, an entrepreneur in the art business, engaged a collection agency to collect an unpaid invoice. The collection agency outsourced the work to an outside attorney, who successfully completed the proceedings. However, after receiving the awarded amount in the collection company’s third-party account, our client was faced with unexpectedly high additional costs. These costs were immediately deducted from the collected amount, presenting our client with a fait accompli.
Abuses in the debt collection industry
Unfortunately, this is not an isolated incident. Such abuses are more common in the debt collection industry. Entrepreneurs are confronted with unclear terms, unexpected costs and aggressive collection methods. It is often difficult to do anything about this, especially if one is presented with a fait accompli.
The procedure
We took this case to court for our client, claiming that the amount enforced via set-off had to be repaid. The judge ruled that:
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Offsetting unexpected expenses without the client’s prior consent is unlawful.
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Recovery Company should have been transparent about all costs prior to service.
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The enforced amount must be repaid to our client.
Analysis of the judgment
The judge based his decision on some core principles:
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Collection agencies must be fully transparent about their costs and methods.
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Clients must agree to all charges and conditions in advance.
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Judge finds it unreasonable to charge high fees retroactively without prior agreement
This ruling shows that it is possible to act against abuses in the debt collection market, even in the face of a fait accompli.
Read the November 6, 2024 ruling here
