A lawsuit filed against a leading financial services firm is raising questions about its practices.
Lawyers for a company called Debt Relief filed a lawsuit against Equifax and Experian in a Florida court Tuesday in the case called Debt Reparations.
The suit argues that the debt relief companies provide borrowers with is unfair and deceptive.
It claims that the companies’ defaulted loans are so bad they have ruined borrowers’ credit.
The debt reliefs are based on the theory that borrowers are in better financial circumstances than before they started the debt collection process, according to the suit.
The lawsuit claims that some borrowers have been turned down for credit counseling and other assistance programs.
It also claims that Equifax’s practices and those of the other debt relief firms violate the state Fair Debt Collection Practices Act, or FDPA, by intentionally misclassifying borrowers who are being pursued by debt collectors and using inaccurate data in its collections processes.
The lawsuit claims the debt recovery companies are “disregarding the law and the rules governing debt collection and debt collection agencies,” according to its press release.
It’s not the first time the companies have come under fire from a group of consumer advocates.
In September, the Financial Consumer Agency of the Consumer Federation of America sued the debt rehabilitation companies.
The agency also alleges that some debt relief agencies use “deceptive” or “misleading” data in their debt collection processes, which may result in the collection agency violating the law.