Everyone agrees that a consumer plaintiff who prevails in a Fair Debt Collection Practices Act lawsuit is entitled to get his or her attorney fees and costs paid by the debt collector defendant. But in Marx v. General Revenue Corporation, the question is whether, under the Federal Rules of Civil Procedure, a debt collector can collect costs from an unsuccessful plaintiff. In other words, does the FDCPA apply, or do the rules of civil procedure?
This is a Really Big Deal, because if debt collectors can collect costs from unsuccessful plaintiffs, it will make it riskier to sue debt collectors. Quite apart from the law, the whole point of the FDCPA is to provide a formidable check on debt collection abuses. Damages in these cases are small, so if they cannot recover attorney fees and costs — or if they risk having to pay substantial costs — they will not sue.
If you want people to be able to stop debt collection abuses, then you cannot increase the risk. Doing so will render the FDCPA far less effective as a check on debt collection abuses. If you think consumers and consumer lawyers are running amok, then I suppose you favor the debt collector’s position.
The Consumer Financial Protection Bureau has started looking into regulating non-bank financial industries now that it has a chief. For starters, it is looking at debt collectors and credit reporting agencies. Says CFPB chief Richard Cordray, “Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks.” (Hat tip: CNN)
As US PIRG points, out, the debt collection industry claims that robo-calling harassment is rare, perpetrated only by isolated, rogue operations. But “[i]f that were true, why does the FTC receive ‘more complaints about the debt collection industry than any other specific industry’”?
When the evidence comes out, it will show that the firm invested a lot of resources in trying to comply with federal law, Pitet said, “and if there were violations, as the FTC alleges, they were done by employees against company policy.”
Collection agencies always come up with crap like that. Here’s what it reminds me of:
They know what their collectors are doing. If they don’t approve of it, they look the other way while they rake in the cash.
Debt collectors frequently call wrong numbers, for a variety of reasons. And, unfortuately, if your number ends up on one debt collector’s list, it is likely to end up on others. When this happens, it is nearly impossible to make the calls stop. Here’s why.
Gonzales, the consumer in this case, sued because Arrow implied a threat of negative credit reporting when it did not have the right to report the debt in the first place. The 9th Circuit agreed.
This decision (PDF) suggests that debt collectors cannot simply use a form that says if and leave it up to consumers to determine whether they are subject to the negative side of the if. In the 9th Circuit, at least, debt collectors may not threaten—even conditionally—unless they actually do have the right to do what they are threatening to do.
Debt collectors do a lot of ridiculous things, but this letter from Lender Business Process Services is apparently an attempt to alter reality. LBPS seems to think it can simultaneously collect and not collect a debt.
Here is its disclaimer, which provided at the bottom of its dunning letter:
This communication is from a debt collector as we sometimes act as a debt collector. We are attempting to collect a debt and any information obtained will be used for that purpose. However, if you are in bankruptcy or received a bankruptcy discharge of this debt, this letter is not an attempt to collect the debt, but notice of possible enforcement of our lien against the collateral property.
(Emphasis added; plus, I got rid of the all-caps for readability.) One of the two italicized statements is false. Either the letter is an attempt to collect a debt (which it obviously is—the letter begins “[w]e hereby demand that you cure the default by payment of the amount shown above”), or it isn’t. It cannot be both at the same time.
That means the letter contains false statements, which would seem to violate the Fair Debt Collection Practices Act. And if it is an attempt to collect a debt, it would seem to violate the bankruptcy stay, if LBPS sends it to someone who has filed bankruptcy.