Civil Liability of Debt Collectors

When third party debt collectors fail to comply with the provisions of the Fair Debt Collection Practices Act (FDCPA) they are subject to civil liability under § 813. Liability can include actual damages, statutory damages, court costs, and reasonable attorney’s fees. Class action and individual liability is also provided for under this section. Both statutory and actual damages may be awarded under the FDCPA. Many of these cases do not go to court because it is often more cost-effective for the debt collectors to settle the case rather than suffer the costs of going to trial.

Should the case go to trial, the number of violations as well as the seriousness will impact the amount of damages the consumer may recover. Generally, the more severe the conduct of the debt collector the higher the potential damages. As experienced litigators, we have accumulated a significant amount of law-changing cases; many resulting in significant damages—including actual damages for emotional distress on top of statutory damages.

Actual and Statutory Damages

Under § 813(a)(1) of the FDCPA, there is not a limit on the amount a consumer can be awarded in actual damages. When a consumer requests actual damages, it is their burden to prove the damages alleged. There must be a reasonable connection between the debt collector’s conduct and the emotional and/or monetary damages alleged. Actual damages in FDCPA actions can include: 

• Money illegally collected from the consumer;
• Unlawful collection charges or interest;
• Lost wages or other monetary losses; and
• Damages that result from emotional distress

When a consumer alleges emotional distress and wishes to recover, courts require a showing of “sufficient proof.” Courts differ on what constitutes sufficient proof. Some have held that a consumer’s testimony is sufficient while other courts require evidence beyond the consumer’s testimony to recover for damages due to emotional distress under the FDCPA.

Under § 813(a)(2)(A) of the FDCPA, a debt collector cannot be liable for statutory damages that exceed $1,000. Statutory damages are easier to prove and a violation is deemed “strict liability”. In other words, any violation of the list of infractions renders the offender liable. Many of these violations are “technical” violations (failure to leave a proper voicemail with required disclosures; calling too often; calling the workplace after being told not to; calling a third party and disclosing the nature of the call; calling before 8:00 a.m. or after 9:00 p.m.; threatening court or legal action without proper intent; threatening wage garnishment; etc.).

If based on these factors the court determines that the violation was less severe then courts may award the consumer less than the statutory limit. Most courts have consistently held that consumers cannot receive more than $1,000 in statutory damages per action whether or not there are multiple violations under the FDCPA. However, some courts have awarded statutory damages of $1,000 per violation.

Court Costs and Attorney’s Fees

A consumer is only entitled to court costs and reasonable attorney’s fees if they prevail under FDCPA § 813(a)(3). One very important factor in determining whether a consumers action was successful is if, and to what extent, the consumer recovers actual or statutory damages. Courts have found that jury verdicts awarding damages as little as $100.00 deems the plaintiff to have “prevailed” and is thus entitled to attorneys’ fees. However, if there was no recovery then the consumer is not entitled to court costs and attorney’s fees. Most firms, however, absorb this risk and do not charge their client’s attorney’s fees when they lose a case.

Liability in Class Action Cases

Under 813(a)(2)(B) of the FDCPA, consumers can bring a class action lawsuit against a debt collector. In a class action lawsuit a single person or a small group can represent a larger group. In these cases courts can award all members of the class actual damages, each member up to the maximum in statutory damages, as well as an additional award for un-named members of the class up to $500,000 or one percent of the agency’s net worth, whichever is less. There is no set means of determining the debt collector’s net worth but a majority of courts determine net worth to be assets minus liabilities.

There are several factors used in determining a debt collector’s liability in class action cases in addition to those stated above. These additional factors under § 813(b)(2) include: 

• The debt collector’s resources; and
• The number of adversely affected persons

When a Debt Collector is Not Liable

A debt collector will not always be held liable under this section. When a debt collector shows that that the violation was unintentional, was a result of a bona fide error, and there were reasonable procedures in place to avoid such error by a preponderance of the evidence then the debt collector is not liable for the violation. Additionally, for there to be a valid action, the action must be brought within one year of the last violation.

We understand the frustration you may have when dealing with an aggressive debt collector. 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/.