Fair Debt Collection Practices Act Violations: Do You Have a Case?
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The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects consumers against the illegal practices of creditors. Various states have enacted their own versions of the FDCPA that may provide consumers with even greater protection. But, how do you know if you have a lawsuit against a debt collection agency that is harassing you?
Four Requirements for a Debt Collection Case
Steve Recordon, an attorney from San Diego, California whose firm represents individuals who have been sued or harassed by debt buyers, told us that there are really four requirements to a debt collection case:
- You have to be a consumer.
- The debt must be a consumer debt. In other words, the debt has to be personal, family or household. A business debt doesn't qualify.
- It must be a debt collector who's coming after you.
- It must be a violation of a law such as the FDCPA, California’s Rosenthal statute (California’s version of the FDCPA) or other state statutes.
According to Recordon, if those four requirements are met, they’ve probably violated the statute(s). He added that debt collectors are required to be truthful and treat debtors with fairness, dignity and respect.
What Can You Allege?
There are several causes of action that can be alleged against debt collectors who violate the Fair Debt Collection Practices Act and state statutes. Recordon explained:
The FDCPA is a strict liability statute. What that means is if they violate it, they're liable. Under the FDCPA, there is a $1,000 penalty they have to pay to the debtor, along with attorneys’ fees – which I’ve seen go as high as $100,000.
Under other state statutes, you have what we call torts. Torts are civil causes of action such as the intentional infliction of emotional distress. There's a lot of emotion going on in these collection cases and I see this in a pretty high percentage of them, particularly in the telephone harassment cases.
You may also have negligent infliction of emotional distress. If it's not quite as bad, it may fall into the negligence side of it. There are also abuse of process and malicious prosecution cases where they sue on cases they know they can't prove. Finally, you can also have invasion of privacy and libel situations as well.
Debt Collection Letters & "Misleading" Language
Debt collection letters should provide information about the original debtor, how much is owed and how to pay or dispute the debt. However, many debt collection agency letters contain misleading or incorrect information designed to confuse and intimidate debtors and a court recently ruled that when that happens – debtors can sue.
What is considered "misleading" language in a debt collection letter? This was the question before the 7th Circuit Court of Appeals. Plaintiffs in the case argued that the collection agency, Encore Receivable Management, Inc., sent them dunning letters that contained false and misleading statements saying that their credit card agreements had been revoked and that the language violated the Fair Debt Collection Practices Act (FDCPA). In deciding what constituted misleading language, the court reasoned:
Confusing language in a dunning letter can have an intimidating effect by making the recipient feel that he is in over his head and had better pay up rather than question the demand for payment. The intimidating effect may have been magnified in this case by the reference to revocation, which might have suggested to an unsophisticated consumer that any right he might have to challenge the demand for payment had been extinguished by the revocation of his contract with the issuer, the original creditor.
In other words, creditors have to be truthful and straightforward when it comes to debt collection – and if they don’t, you have a right to sue them.
FDCPA Lawsuits: When Do You Have a Case?
In addition to being able to sue debt collectors that attempt to mislead, legal experts say that debtors also may have a case against debt collectors who harass them. Most original creditors try to collect debts on their own. When they can’t collect, they sell the debt to what’s known in the industry as debt buyers. These debt buyers use any and all tactics to collect a debt, including calling family members, neighbors, co-workers – and even your boss in order to embarrass you. Those tactics violate the FDCPA and debtors will more likely than not have a case against the debt buyers and may be entitled to money damages.
Debtors generally don’t have a case against the original creditor (Citibank, Macy’s, etc.) unless their conduct is egregious. However, every situation is different and depends upon the facts and circumstances of that case.