Collection attorneys are attempting to exempt themselves from the Fair Debt Collection Practices Act for engaging in such conduct as filing suit on obviously time-barred debts, suing the wrong person, using patently false affidavits signed by “robosigners” who have no basis for swearing to anything, “sewer service” (throwing away a summons and complaint and misrepresenting that it was in fact served) and misrepresenting what is owed in court papers. Courts have held that all of these practices violate the FDCPA and that some of them exist on a widespread basis. For example, some 100,000 New York judgments were found to have been obtained by “sewer service,” and a major debt buyer settled claims that thousands of false affidavits were filed in collection lawsuits.
The collection attorneys are calling the proposed exemption a “technical fix” to the Fair Debt Collection Practices Act. It is neither “technical” nor a “fix.”
Here is what the collection industry has to say about the measure:
A bill introduced last week in the U.S. House of Representatives would exempt debt collection attorneys from the Fair Debt Collection Practices Act (FDCPA) “when taking certain actions.”
The bill’s supporters say that it is a technical fix that does not erode the consumer protections of the FDCPA.
H.R. 2892 (http://thomas.loc.gov/cgi-bin/bdquery/z?d113:hr2892:) was introduced Wednesday by Rep. Ed Perlmutter (D-Colo.), a member of the House Financial Services Committee. The bill has one co-sponsor so far, Rep. Spencer Bachus (R-Ala.), the Chairman Emeritus of the Financial Services Committee, the third highest-ranking Republican. The bill’s official title, or purpose, is “To amend the Fair Debt Collection Practices Act to preclude lawfirms and licensed attorneys from the definition of a debt collector when taking certain actions.” The bill has been referred to the House Financial Services Committee for further action.
Although the text of the bill is not yet available from the Government Printing Office, the proposal is very similar to a bill introduced in the waning days of the last Congress. That bill proposed to insert an additional exemption to the definition of “debt collector” in the FDCPA as follows:
…The term (debt collector) does not include –
- (F) any lawfirm or licensed attorney–
- (i) serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or
- (ii) communicating in, or at the direction of, a court of law or in depositions or settlement conferences, in connection with a pending legal action to collect a debt on behalf of a client; and…
Lou Freedman, president of the National Association of Retail Collection Attorneys (NARCA), said that it is important to note that consumer protections under the FDCPA will not be harmed by the bill. “All other communications from collection attorneys must still comply with the FDCPA,” he said. “This is a technical amendment to the law.” Freedman is also Chair of the Collections Group at Freedman Anselmo Lindberg, LLC.
The bill attempts to shield attorneys from liability when they are arguing in court on behalf of clients. For example, some states have ambiguous statutes of limitations for certain types of credit (written vs. oral contracts, or different standards for revolving debt). If an attorney argues that the account falls under one definition and the court rules that, in fact, the account is time-barred, that attorney could be liable under the current FDCPA. (From Inside ARM, August 5, 2013)
In fact, the Fair Debt Collection Practices Act has a “good faith error” defense that already protects collection attorneys when they argue legitimately debatable points of law or fact. The only thing this proposal does is give collection attorneys a blank check to engage in improper conduct without fear of civil liability.
Write your Representatives and Senators to urge the defeat of this proposal.