Fair Debt Collection Practices Act (FDCPA)
15 U.S.C. § 1692, et seq.
The FDCPA is a federal consumer protection law that governs the conduct of debt collectors, but not that of original creditors. It only applies to collection of consumer debt.
The Texas counterpart to the FDCPA is the Texas Debt Collection Act , TEX. FIN. CODE § 392.001, et seq. It has a broader scope and covers original creditors. Plaintiffs suing debt collectors in Texas courts will typically plead both.
Like the DTPA at the state level, the FDCPA contains a laundry list of prohibited conduct. The specific items are typically referred to by section/subsection number (in the United States Code), rather than by descriptive labels. See -- > FDCPA violations
Section 15 U.S.C. 1692e of Title 15 of the U.S.C., for example, states that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." This section contains a non-exhaustive list of representations and collection methods that violate this provision. Subsection 1692e(10) makes it unlawful to "use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer."
COUNTERCLAIM VS. SEPARATE LAWSUIT IN STATE COURT OR FEDERAL DISTRICT COURT
A claim of a FDCPA violation (or several violations) can be asserted as a counterclaim in a debt collection case, but it is often brought as a separate lawsuit. In a separate lawsuit, of course, there will be a role reversal: the consumer will appear as the plaintiff, and the debt collector/creditor will be the defendant.
A lawsuit alleging an FDCPA violation by a company covered by it can be filed in state or federal court. But if the plaintiff’s preference is state court, the defendant can override that election by removing it to federal court because the basis for the lawsuit is a federal statute. Defendants often prefer federal court.
The right to removal does not apply when the consumer invokes the FDCPA for purposes of a counterclaim in a pending debt collection suit in which he or she is a defendant. Such debt suits are always filed in state courts because there is no basis for federal jurisdiction (nor does the amount in controversy exceed the threshold amount for diversity jurisdiction purposes, except in the rarest of cases).
DAMAGES AVAILABLE UNDER THE FDCPA
The FDCPA provides for a statutory penalty of up to $1,000, plus actual damages and attorneys’ fees. In the credit card debt suit context, there will rarely be actual damages, which means that even a proven FDCPA action will hardly yield a windfall, and will rarely exceed the amount of the debt. Attorneys’ fees are another matter -- they may run into thousands of dollars -- but defendants in FDCPA actions will often settle, thus cutting short the amount of litigation activity, and the amount of attorney’s fees that would otherwise be incurred in discovery, trial preparation, motions for summary judgment, and actual trial. Like any other litigant, an FDCPA plaintiff cannot be forced to settle, of course, but defendants can invoke the offer-of-settlement procedure, and thereby limit their potential damages exposure, should they lose on the merits following the rejection of a settlement offer by the Plaintiff.
ATTORNEY'S FEES AUTHORIZED FOR SUCCESSFUL PLAINTIFF UNDER FDCPA
When a consumer prevails against a debt collector with a FDCPA claim, he or she is entitled to recover attorneys fees on a showing that the amount claimed for fees is reasonable. This is what makes it worthwhile for attorneys to take FDCPA cases, which typically yield at most $1,000 in actual damages unless the conduct was egregious and mental anguish damages can be proven.
Depending on the complexity of the case, and the amount of discovery and pre-trial motion acitvity, the attorneys fees may add up to tens of thousands of dollars. The amount is typically computed by the "loadstar" method involving multiplication of attorney time legitimately devoted to work on the case times reasonable hourly rate for an attorney of like skills and experience. Other factors may be taken into account to deviated from the loadstar amount either upwards or downwards.
Any and all attorneys fees in a FDCPA action must be awarded to the plaintiff (client), not directly to the consumer's attorney. A judgment that awards such fees directly to the attorney is subject to reversal on appeal for nontrivial error.
STATUTE OF LIMITATIONS APPLICABLE TO FDCPA CLAIMS: 1 YR ONLY
FDCPA claims must be brought promptly and many are lost, or not even filed by an attorney who would otherwise do so, simply because too much time has passed since the date of the violation or apparent violation. While a creditor has the right to sue within four years of default, the statute of limitations for FDCPA claims is only one year.
RELATED POSTS ON FAIR DEBT COLLECTION ENFORCEMENT AND REMEDIES
Who is a debt collector under the federal FDCPA?
What is a consumer debt as defined by the FDCPA?
FDCPA and TDCA compared: What are the most significant differences and their implication for suing / counter-suing collectors
Enforcement of fair debt collection statute by the Texas AG's office by civil suit for injunction and penalties in the public's interest;
Texas Attorney General suit against Samara Portfolio:
State of Texas v Samara Portfolio Management, LLC et al; Cause No. 2013-35721 in the 80th Judicial District Court of Texas (Harris County)
|Texas Debt Collection Practices Act|