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Printer friendly versionWhy a debt collector may have to pay you money?
If debt collectors are calling you or sending you collection notices, you might be able to obtain compensation from them. Congress passed the federal Fair Debt Collection Practices Act (FDCPA) in 1978. This law was designed to combat abusive and deceptive practices committed by third party debt collectors against consumers. It grants consumers the right to sue debt collectors for a violation of the FDCPA. The courts have interpreted the FDCPA in a manner favorable to consumers despite the fact that the law has not been interpreted consistently across the country.
Scope of the FDCPA
The Act does not apply to creditors; therefore, you cannot seek compensation under the FDCPA if the person demanding payment from you is an employee of the company that provided you with goods, services, or credit. However, the FDCPA does apply to the following categories of “debt collectors”:
- Collection Agencies
- Debt buyers or debt purchasers
- Law firms engaging in high-volume debt collection work
- A creditor’s in-house collectors pretending to be employed by a collection agency
- Skip-tracers (individuals trying to locate a debtor's contact information or information about a debtor's assets)
The scope of the FDCPA is limited to debts arising from personal, family or household purposes. Businesses are not entitled to any protection under the Act.
The right to recover money from debt collectors for FDCPA violations
The FDCPA grants consumers the right to sue debt collectors for damages in a civil court where the debt collector or its employees have violated the Act within the past 12 months. Many violations of the FDCPA are technical in nature. Some courts have ordered debt collectors to pay consumers thousands of dollars for mere technical violations, such as the failure to include required language on a collection letter. Debt collectors often find it more cost-effective to settle these claims for a few thousand dollars, rather than go to trial and spend several times this amount in legal fees.
The amount of damages that may be recovered
The amount of damages that a consumer may potentially recover under the FDCPA will depend upon the seriousness of the violation and the number of violations. Debt collectors routinely settle FDCPA claims involving technical violations of the Act for amounts in the $1,000 to $3,000 range. As a general rule, the worse the conduct of a debt collector the higher the potential damages under the FDCPA.
Under the FDCPA a consumer may sue the debt collector for four different types of damages:
- Statutory damages of $1,000
- Costs
- Attorney fees
- Actual damages
In some parts of the country, courts have ruled that statutory damages are capped at $1,000. Some courts in the U.S. have ruled that consumers are entitled to $1,000 per violation of the Act. The fact that costs and attorney fees may be recovered is important, because it makes it much easier for consumers to find a lawyer willing to represent them. In some cases, a consumer might be entitled to recover tens of thousands or hundreds of thousands of dollars in actual damages for intentional infliction of emotional distress.
If you retain a consumer lawyer to sue a debt collector, the lawyer will likely sue the collection agency and your creditor under the common law and state law, as well as seeking damages under the FDCPA.
If you are a resident of New York state, you can call Mark Silverthorn to discuss whether a debt collector contacting you has violated the FDCPA.
This is not legal advice, your ability to recover will depend on your particular circumstances.