Supreme Court Rules in Favor of Debt Collectors

A recent Supreme Court decision may discourage consumers from commencing lawsuits against debt collectors for violations under the Fair Debt Collection Practices Act (“FDCPA”). Under this new ruling, Plaintiffs that lose FDCPA lawsuits may be liable for the defendant’s costs even if the case was brought in good faith and with no intention of harassing the defendant. 

The question before the Supreme Court in this case, Marx v. General Revenue Corp., was whether a FDCPA defendant is entitled to an award of their costs should they win the case regardless of whether the case was initially brought by the plaintiff in bad faith and with the purpose of harassing the defendant.

This case was originally brought by a debtor, Marx, who had defaulted on student loan. The creditor then hired General Revenue to collect the debt. The debtor claimed that General Revenue violated the FDCPA when they sent a fax to her job to verify employment while they were trying to collect the debt. Marx also alleged that General Revenue harassed her by calling her phone and they also threatened to garnish money from her wages and bank account. 

The District Court in Colorado found that Marx failed to prove that there were any FDCPA violations. The district court awarded the defendant their costs even though there was not a finding that Marx brought the case in bad faith with the purpose of harassing the defendant. A Tenth Circuit federal judge who heard the case found in favor of General Revenue, stating that their actions did not violate the FDCPA. The case was dismissed after determining that the fax was not a “communication” under the law. In addition they agreed that costs could be awarded.

When this case was presented to the Supreme Court they decided to only hear arguments with regards to the award of costs. Since this is the case the Circuit Court opinion on whether the fax was a “communication” stands. Under this ruling, if the debt collector does not convey information about the debt then there is not a “communication” under the FDCPA. Therefore there is not any disclosure to a third-party under the FDCPA.

On the matter of whether a defendant can be awarded costs the Supreme Court found that the district courts had the authority to award cists to defendants that prevail in lawsuits under the FDCPA and the Federal Rule of Civil Procedure (“FRCP”) 54(d)(1). The ability to award defendants costs is not limited under FDCPA § 813 (a)(3). Therefore costs can be awarded to prevailing defendants in FDCPA cases without it being necessary for there to be a finding that the plaintiff brought the case in bad faith or with the intent to harass.

Debt collectors hope that this decision will reduce the number of frivolous and meritless lawsuits filed by consumers. However, it may also discourage claims that have merit because consumers will now think twice about bring the lawsuit since they face the possibility of being required to pay the defendants costs should they lose their lawsuit.

If you or a loved one have been subjected to these aggressive tactics by a creditor, please contact us immediately. We have been successfully representing those abused and taken advantage of by debt collectors for years, and have a long list of successful stories to share with you. We offer a FREE CASE REVIEW for you to assess whether we can assist you with your matter. Please do not hesitate to contact us toll free at 1-800-875-3666 if you prefer to talk to a trained professional over the phone instead, or of course, visit our website at http://www.krohnandmoss.com/.