Mitigating E&O Claims: Best Practices

The landscape for accounts receivable management professionals is constantly shifting, presenting a complex web of legal and regulatory exposures. With consumer lawsuits accelerating nationwide, gaining fresh insight into recent claim trends is paramount for business resilience in this high-risk sector.

QBE North America has, for over a decade, partnered with Collectors Insurance Agency, a subsidiary of ACA International, to offer high-quality E&O and crime coverage specifically tailored to the industry’s needs. Together, we've observed a noticeable surge in TCPA-related claims—claims related to the federal Telephone Consumer Protection Act that restricts automated calls and texts—driven primarily by two critical factors.

First, the widespread use of artificial or pre-recorded messages, including ringless voicemail, is generating significant class-action payouts, with several major settlements finalized within the last few months in the pharmacy/healthcare, insurance, and banking/financial services industries. While many of these settlements have been against non-debt collection companies, the debt collection industry remains a primary target for these lawsuits. Consequently, organizations using artificial or pre-recorded messages—including ringless voicemail—must take extra precautions. A critical safeguard is leveraging the Reassigned Number Database to scrub phone numbers before outreach.

The second major driver of E&O claims involves continuing outreach after a consumer has clearly indicated they want communication to stop. It's vital to note that this doesn't require the exact phrase "stop calling me" to end outreach. Any expression of a clear intent to end contact must be respected by the debt collector to avoid potential liability under the Fair Debt Collection Practices Act. While the FDCPA traditionally required written notice, modern interpretations clarify that any clear message, verbal or electronic, must be interpreted reasonably. This includes honoring specific requests like "don't call me at work" or "no calls on weekends."

Failure to promptly honor these requests can result in significant penalties, including consumer lawsuits for damages up to $1,000 per violation. Effective compliance requires training staff to listen for and document any clear intent to stop contact, a proactive approach that helps mitigate E&O exposure.

Expanding Liability: Texting, Reporting, and Letters
A similarly concerning pattern is emerging in texting claims. Since early 2025, litigation in this channel has increased, focusing on compliance failures such as messaging wrong numbers, sending texts without proper consent, continuing contact after consent revocation, omitting required opt-out language, and contacting consumers outside permitted hours. Strict adherence to consent protocols is paramount here.

Furthermore, credit reporting claims have climbed sharply since Q1 2025, aligning with the nationwide increase in Fair Credit Reporting Act (FCRA) lawsuits, particularly those stemming from identity theft allegations. The allegations most commonly involve inaccurate reporting, failing to properly investigate disputes, and neglecting to mark accounts as disputed. To effectively defend against these claims, we emphasize the absolute necessity of well-defined procedures and meticulous documentation. Strong documentation is the single most important factor in mitigating risk during litigation.

While debt litigation claims are trending slightly downward, they remain an area of concern. We continue to see cases involving lawsuits on charged-off or non-existent debt, attempts to collect unauthorized fees, illegal garnishment actions, and improper notification practices. Though less frequent, these issues still pose significant risk requiring careful compliance oversight.

Finally, letter-related claims have declined slightly but still occur at a high frequency. Typical issues involve attempting to collect debt not owed, failure to validate debt, and pursuing settled accounts. While language-specific claims are less frequent, our program mandates that all client letters be reviewed every three years or upon any change to ensure compliance and reduce the risk of costly disputes.

For more information on claim trends or E&O and Crime coverage, please contact Kristina Warmka at ACA or Catherine Torrey with QBE.

QBE North America and Collectors Insurance Agency, a subsidiary of ACA International, have maintained a strong partnership for over 10 years. Collectors Insurance Agency serves as the program administrator, providing debt collection professionals with E&O and Crime insurance using QBE’s policy form. Together, we offer high-quality Errors & Omissions (E&O) and crime coverage specifically tailored to meet the needs of debt collection professionals who are ACA members.

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