Fair Debt Collection Practices Act Violations: Do You Have a Case?

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:

1. You have to be a consumer.
2. 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.
3. It must be a debt collector who’s coming after you.
4. 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.

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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.

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Unveiling Debt Collection Violations: Case Studies on the Fair Debt Collection Practices Act (FDCPA)

Case Study 1: Liability Insurance and Misleading Debt Collection Letters

Amy receives multiple debt collection letters from an agency regarding an outstanding debt. However, these letters contain misleading information and false statements, which violate the Fair Debt Collection Practices Act (FDCPA). Amy consults with an attorney who specializes in FDCPA violations. Together, they gather evidence of the misleading language in the debt collection letters.

Amy’s attorney contacts the collection agency, informing them of the FDCPA violations and the potential legal consequences. The agency’s liability insurance, specifically designed to cover legal liabilities arising from their debt collection activities, comes into play.

The insurance company, after assessing the situation, agrees to provide a settlement amount to Amy, compensating her for the FDCPA violations and ensuring that the agency takes corrective actions to comply with the law.

Case Study 2: Homeowner’s Insurance and Harassment by Debt Buyers

Mark has been experiencing persistent harassment from a debt buyer attempting to collect a debt. The debt buyer goes to great lengths, contacting Mark’s family members, neighbors, and even his employer. These actions violate the FDCPA, which prohibits debt collectors from engaging in abusive or harassing behavior. Mark contacts an attorney who specializes in FDCPA cases.

The attorney reviews the evidence and determines that Mark has a strong case against the debt buyer. Mark’s homeowner’s insurance policy includes coverage for personal liability, which extends to legal liabilities arising from harassment claims. Mark’s attorney contacts the insurance company, providing them with the details of the FDCPA violations and the potential legal action.

The insurance company agrees to cover Mark’s legal expenses and potential damages, ensuring he can pursue the case against the debt buyer without financial burden.

Case Study 3: Professional Liability Insurance and Original Creditor Conduct

Samantha has been subjected to egregious conduct by an original creditor who has been attempting to collect a debt. The original creditor’s actions clearly violate the FDCPA, causing significant distress and emotional harm to Samantha. She seeks legal representation from an attorney who specializes in FDCPA violations.

Samantha’s attorney examines her case and determines that the original creditor’s conduct warrants legal action. The attorney reviews Samantha’s professional liability insurance policy, which includes coverage for claims arising from professional misconduct. The attorney files a lawsuit against the original creditor, alleging FDCPA violations and seeking damages for Samantha’s emotional distress.

The insurance company, upon receiving the claim, agrees to provide coverage for Samantha’s legal expenses and potential damages, ensuring she can pursue justice without incurring significant financial costs.

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