We expect that across the nation, debt collectors greeted the recent opinion of the Fifth Circuit Court of Appeals with groans and complaints. The interpretation of the Fair Debt Collection Practices Act increases the pressure on collectors to be honest with consumers.
The FDCPA was created to protect Americans against abusive debt collectors and disreputable practices in debt collection. It should be noted that the law provides debtors who have been victimized by abusive collectors to recover actual damages, additional damages and attorney's fees.
In its recent decision, the Fifth Circuit took a close look at the section of the law prohibiting "false, deceptive, or misleading representation" by debt collectors. In Daugherty v. Convergent Outsourcing, Inc., a debt collector tried to collect a debt for which the statute of limitations for collection had expired.
The collector failed to tell the debtor that the debt was unenforceable, or that if she agreed to the offered "settlement" of a 10 percent payment, she "would revive the entire debt."
The court said it had to consider the collector's actions from the perspective of an "unsophisticated or least sophisticated" consumer.
In the end, the court decided that offering to "settle" an unenforceable debt without disclosing to the consumer the debt's unenforceability constituted a violation of the FDCPA. The National Law Review believes the decision will force collectors to be upfront about the status of debts and that what they fail to say could wind up hurting them.
In Philadelphia, a consumer protection attorney can help you fight back against abusive debt collectors.