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Fair Debt Collections Practice Act: A Quick Overview

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What Is the Fair Debt Collection Practices Act (FDCPA)?

The Fair Debt Collection Practices Act (FDCPA) is contained in subsections §§ 1692-1692p of chapter 15 of the United States Code. The FDCPA’s stated purpose is to eliminate abusive debt collection practices by debt collectors, to ensure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

Who Does the FDCPA Protect?

The FDCPA protects consumers who are defined as any natural person obligated or allegedly obligated to pay any debt which is defined as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes.

Who Must Comply With the FDCPA?

The FDCPA applies to creditors who are defined as any person who offers or extends credit creating a debt or to whom a debt is owed. It does not include someone who receives an assignment or transfer of a debt in default solely for the purpose of collecting the debt for another.

The FDCPA also applies to debt collectors who are defined as any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. However, the FDCPA makes exceptions for many individuals and entities we would normally think of as debt collectors.

Penalties for Violating the FDCPA

The act provides consumers with a Federal cause of action to recover damages from debt collectors for violations of the act. A debt collector who fails to comply with any provision of the FDCPA with respect to any person is liable to that person for any actual damages sustained by that person from the violation or violations and up to $1,000 in statutory damages.

Statute of Limitations for a Fair Debt Collections Act Violation

A statute of limitations limits the amount of time in which a cause of action may be brought. Once the statute of limitations period expires, the action is time-barred or barred by the passage of time. The language of 15 U.S.C. § 1692k(d) provides for the statute of limitations for an FDCPA violation:

“An action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.”

Despite the language of the subsection, some U.S. District Court of Appeals are in conflict as to when an action for an FDCPA violation must be brought before it becomes time-barred. The U.S. District Courts for the 4th and 9th Circuits agree that the statute of limitations for an FDCPA violation does not begin to run until the violation is discovered, while the 3rd Circuit disagrees and has held that the plain language of the FDCPA makes it clear that the statute of limitations it is one year from the date the violation occurred. Due to the circuit split, the U.S. Supreme Court will resolve this question stemming from the Rotkiske v. Klemm decision out of the 3rd Circuit Court of Appeals.

In 2015, Rotkiske filed a lawsuit against Klemm for violations of the FDCPA, claiming it is an FDCPA violation for a debt collector to obtain a default judgment upon a debt against a consumer knowingly (or should have known) served at an incorrect address. The judgment was obtained in 2009 after serving the complaint to an address where Rotkiske no longer lived, and where Klemm had previously attempted to obtain service unsuccessfully. Rotkiske did not discover the judgment until 2014 when he applied for a mortgage. Oral arguments were held before the Supreme Court on October 16, 2019.

This will be one of our first opportunities to see how the current makeup of the Court stands on the issue of consumer rights, but the implications are clear as a one-year statute of limitations is a short period of time from the date of discovery as it is.

Contact an Attorney Right Away to Protect Your Rights

If you believe your rights have been violated by unfair or illegal debt collections practices, contact a consumer rights attorney right away to ensure that your action will be not be time-barred. Call Luftman, Heck & Associates at (888) 726-3181 or use our online contact form.