Push to Amend FDCPA May Have Dangerous Consequences
The Consumer Protection Financial Bureau has filed a brief in a Supreme Court case involving the Fair Debt Collection Practices Act (FDCPA). If the Court rules in the Bureau’s favor, the case could be a huge blow to consumers, and a huge benefit to debt collection companies.
In addition to the case, which deals with the same subject, lawmakers are pushing to amend the FDCPA to exempt law firms and lawyers from the FDCPA, since they assert that lawyers are not debt collectors, and thus shouldn’t have to worry about the FDCPA. The act was intended to regulate those that regularly engage in the collection of debts.
Lawyers and Debt Collection
Some of this is true: Many lawyers collect money for clients, or enforce their clients’ contracts, and that does not make lawyers into debt collectors. Lawyers should not have to worry about FDCPA suits every time they send a collection letter on behalf of a client that’s owed money.
However, because the FDCPA only applies to those who regularly collect debts, this isn’t a problem for most lawyers anyway, unless their entire practice is dedicated to debt collection.
Some law firms are nothing more than collection mills. They process thousands of debt collection cases for big banks and creditors, and that’s all they do. They go to court daily sometimes filing hundreds of collection cases and negotiating with debtors in court.
During the foreclosure crisis, a small number of firms were filing thousands of foreclosure suits on behalf of banks. To say that they do not have to comply with the FDCPA because they aren’t debt collectors is nonsense.
Lawyers that Own Debts
Some law firms and lawyers have become debt buyers themselves. Instead of representing companies that purchase bad debt, the law firms buy their own portfolios of debt, and then enforce the debts, essentially representing themselves as the owners of the debt. Many attorneys have done this, knowing they can sue consumers without the legal fees that non-lawyer debt collection companies may have to incur.
Protections Would be Stripped
The loophole carved out by this exemption would be enormous. The FDCPA is a protection against law firms lying in court or filing false paperwork against consumers. This check would cease to exist if the exemption were granted.
The new law would provide free ability for these collection mill firms to harass consumers, file lawsuits with false accusations, make statements in court that are false, speak directly to consumers without making required disclosures, lie or threaten consumers, and generally give law firms the ability to do whatever they want, confident that they can never be sued for abusive collection practices.
It would also provide a haven for debt collectors, who could engage in abusive collection practices through their law firms. More collection agencies will be hiring law firms, and sending letters out on law firm letterheads to hide behind the lawyer exemption, even if the law firm knows little about the actual debt.
If you are being harassed by abusive debt collectors, contact Jacobs Legal in Miami today to discuss your rights how to defend yourself.