Rising Consumer Complaints and Legal Actions Against Debt Collectors

The debt collection industry, valued at approximately $15 billion, is witnessing a significant increase in consumer complaints and legal actions. In 2025, consumers filed 253,000 complaints against collection companies with the Consumer Financial Protection Bureau (CFPB), a notable rise from 140,000 in 2024. This surge reflects a broader trend, as nearly one in four Americans with a credit report has at least one debt in collections, according to the Urban Institute.

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Horst Seibert, a former employee at a South Florida assisted-living facility, became embroiled in a legal battle with Midland Credit Management after the company began garnishing his wages due to a $3,300 credit card debt. Despite making consistent payments, Seibert's balance inexplicably increased by $1,571 over time. Frustrated by Midland's lack of communication and resolution, Seibert filed a lawsuit against the company, which has faced numerous similar lawsuits from consumers alleging inaccuracies in credit reporting and aggressive collection tactics.

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Midland Credit Management, owned by Encore Capital, is part of a larger trend where debt collectors file over one million lawsuits annually against consumers. In 2025, Midland is expected to file more than 600,000 lawsuits, while Resurgent Capital is projected to exceed one million. These lawsuits often target small debts, as collectors find it financially viable to pursue amounts as low as $800. The automation of legal processes has enabled collectors to keep costs low, allowing them to file numerous cases efficiently.

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The regulatory landscape for debt collectors has shifted significantly, particularly under the Trump Administration, which has rolled back financial regulations. This reduction in oversight has raised concerns among consumer advocates about the potential for increased abusive practices. The CFPB has previously taken action against companies like PRA Group for filing lawsuits without proper documentation, yet the agency is considering reducing the number of debt collection companies under its supervision, which could further diminish consumer protections.

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Consumer advocacy groups, such as the National Consumer Law Center (NCLC), express alarm over the current trajectory of the debt collection industry. April Kuehnhoff, a senior attorney at NCLC, warns that cuts to healthcare subsidies and Medicaid could exacerbate consumer debt issues. Critics argue that the lack of regulatory oversight will embolden debt collectors, leading to more aggressive tactics against vulnerable consumers.

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Encore Capital's spokesperson, Faryar Borhani, emphasized that the company adheres to a consumer bill of rights and ceases collection in cases of significant financial hardship. However, he declined to comment on specific lawsuits. In contrast, the CFPB's acting director, Russell Vought, has suggested reducing the number of debt collection companies under its purview, citing concerns about compliance burdens.

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• “How am I going to correct this if these people don't respond?” — Horst Seibert, Consumer

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• “Collection litigation is a last resort at our company, and we’d prefer it never come to that.” — Faryar Borhani, Encore Capital Spokesperson

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• “With the cuts to Medicaid and to subsidies for health care plans, cuts today are debts tomorrow.” — April Kuehnhoff, National Consumer Law Center

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The debt collection industry is experiencing a surge in consumer complaints and legal actions, driven by aggressive collection practices and a lack of regulatory oversight. As consumers like Horst Seibert navigate these challenges, the potential for increased abuse looms, prompting calls for stronger protections and accountability within the industry.

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