when is an attorney a "debt collector" under fdcpa

Consequently, attorneys hired by creditors are held liable as debt collectors under the FDCPA

, when they regularly engage in debt collection. The FDCPA applies to the collection of consumer debts only. It does not apply to the collection of commercial debts.

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Does the FDCPA apply to debt collectors?

Mar 20, 2013 · Stated otherwise, if the purpose of an activity taken in relation to a debt is to obtain payment of the debt, then the activity is properly considered debt collection under the FDCPA. This holding, which is echoed in several recent opinions from the 3rd and 4th Circuits, places real estate attorneys squarely in the path of the FDCPA.

When does a lawyer qualify as a debt collector?

Jul 09, 2020 · The Fair Debt Collection Practices Act (FDCPA) defines who qualifies as a debt collector under the law ( U.S.C. Section 1692a (6) ). One important distinction between debt collectors that are covered by the FDCPA and those that are not is that collecting debts must be the principal purpose of the business. For example, a collection agency that is also a large …

What is the Fair Debt Collection Practices Act (FCPA)?

Aug 20, 2013 · Tomio Narita. Beginning in 1995, when the Supreme Court issued Heintz v. Jenkins, 514 U.S. 291 (1995), lawyers have known that if they seek to collect consumer debts for clients – even when doing so through litigation – they might qualify as a “debt collector” under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq. (“FDCPA). But how often must …

What is a debt collector?

Dec 28, 2017 · By Jeffrey A. Schreiber* *. Schreiber/Cohen, LLC. Attorneys who act as debt collectors, as that term is defined under the Fair Debt Collection Practices Act (“FDCPA” or “Act” “statute”), to collect debts in behalf of their clients are exposed to liability by failing to comply with the statute’s requirements. One such obligation is to provide to consumers a notice of …

Who is not considered a debt collector as defined by the FDCPA?

How does the FDCPA define a debt collector?

Which is not part of the federal Fair Debt Collection Practices Act?

Is a creditor a debt collector under the FDCPA?

What is the most common violation of the FDCPA?

What is the difference between a creditor and a debt collector?

What constitutes a false and misleading debt collection practice?

Which action may a debtor take if a debt collector violates the law?

What is allowed and not allowed according to the Fair Debt Collection Practices Act FDCPA?

Does FDCPA apply to 1st party collections?

Can third-party debt collectors be classified as creditors?

What debt collectors can and can't do under CFPB rule?

What is a debt collection officer?

A corporate officer that is active in a company ’s debt collection activities. A debt collection agency owner who doesn’t personally engage in collection activity. Debt collection agency stockholders and officers if they are highly involved in collection activities. The parent company of a collection agency if the parent company significantly ...

Who is covered by FDCPA?

However, there is another element of the FDCPA definition that could apply to those types of companies, namely that which covers anyone who “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”.

Why do creditors collect debts for one another?

Creditors who collect debts for one another because of reciprocal collection agreements. For example, is a bank’s customer moves to another state, the bank may ask a bank in that state to collect the debt in exchange for performing a similar service for the other bank

What to do if you have been harassed by a collection agency?

The debt collection agency may have violated the FDCPA. If so, you are entitled to recover up to $1,000, as well as attorney fees and court costs . Lemberg Law won’t charge you a dime out of pocket and will go toe-to-toe with the debt collection agency. Call today for a free, no-obligation case evaluation.

How do telecom companies make debt collection easier?

Telecommunication companies that make debt collection easier by obtaining consumers’ unlisted phone numbers through deception

What is a non profit credit counselor?

Nonprofit consumer credit counselors. Original creditors. Retailers who issue credit cards through a bank but that do in-house collections. Someone attempting to collect a debt that they received from another individual, if the debt was not in default when it was received. In Henson v.

Why do finance companies transfer collections?

Finance companies that transfer collection accounts because the consumer has moved

What is debt collector?

Subject to certain limitations, a “debt collector” is defined as “any person who uses any instrumentality ...

Is a law firm a debt collector?

If the “principal purpose” of your firm or your law practice is collecting consumer debts, then you probably know this already, and you know that you are a “debt collector” under the statute. See, e.g., Scott v. Jones, 964 F.2d 314, 316 (4th Cir. 1992) (where 70-80% of attorney’s fees were generated from collection work and attorney filed approximately 4000 collection cases per year during a four year period, the “principal purpose” of his practice was debt collection). The more difficult issue is determining when a lawyer or a firm or firm with a relatively small collection practice is still “regularly” collecting consumer debts. What exactly does “regularly” mean?

Is there a magic number of consumer debt collection cases?

Thus, there is no magic number of consumer debt collection cases and no set percentage of firm revenues that will make an attorney or a firm into a “debt collector” under the FDCPA. Each of these cases will be decided based on a balancing of multiple factors relating to the nature of the practice of the attorney and the firm.

Is Reese v. Ellis a debt collector?

2012), the Court held that a law firm that allegedly sent 500 letters in connection with foreclosure proceedings could be a “debt collector” under the FDCPA: “The complaint contains enough factual content to allow a reasonable inference that the Ellis law firm is a ‘debt collector’ because it regularly attempts to collect debts. The complaint alleges that the law firm is ‘engaged in the business of collecting debts owed to others incurred for personal, family _{] or household purposes.’ It also alleges that in the year before the complaint was filed the firm had sent to more than 500 people ‘dunning notice [s]’ containing ‘the same or substantially similar language’ to that found in the letter and documents attached to the complaint in this case. That’s enough to constitute regular debt collection within the meaning of § 1692a (6).” Id. at 1218.}

What is debt collector?

Attorneys who act as debt collectors, as that term is defined under the Fair Debt Collection Practices Act (“FDCPA” or “Act” “statute”), to collect debts in behalf of their clients are exposed to liability by failing to comply with the statute’s requirements. One such obligation is to provide to consumers a notice of their rights otherwise known as a validation letter. [1] To a lawyer who is beginning a law practice representing consumer creditors, the FDCPA is a minefield of exposure that could easily explode if the lawyer fails to comply with the Act. Consequently, it is important that before one undertakes representation of a creditor as a debt collector, one becomes learned of the statute. Representing consumer creditors to collect defaulted accounts receivable is a law practice concentration. The FDCPA is to a creditor attorney as, for example but not by limitation, the Internal Revenue Code is to a tax lawyer as the Bankruptcy Code is to a bankruptcy lawyer and as the Securities Exchange Act is to a securities lawyer. It is all in the statute.

What is the FDCPA?

The FDCPA is to a creditor attorney as, for example but not by limitation, the Internal Revenue Code is to a tax lawyer as the Bankruptcy Code is to a bankruptcy lawyer and as the Securities Exchange Act is to a securities lawyer. It is all in the statute. Effective March of 1978 [2], the FDCPA was enacted to “eliminate abusive debt collection ...

Does the FDCPA apply to consumer debt?

Consequently, attorneys hired by creditors are held liable as debt collectors under the FDCPA, when they regularly engage in debt collection. The FDCPA applies to the collection of consumer debts only . It does not apply to the collection of commercial ...

Is the FDCPA silent?

The FDCPA does not establish this standard. Rather, it is silent. Instead, the Ninth Circuit Court of Appeals on its own decided that when evaluating whether language may be deceptive, “the court should look not to the most sophisticated readers but to the least.”. Baker v. G.C. Servs.

When does the Fair Debt Collection Practices Act apply?

The fair debt collection practices act generally applies when third-party collectors seek to collect a consumer debt. It does not apply to business debts or “in-house” collection efforts by the entity that extended the credit. For more on this, check out our article: When Does the FDCPA Apply?

What can a debt collector do?

Debt collectors can call, email, text, or send letters to you in order to collect a debt.

Is debt collection dishonest?

Just as debt collectors are prohibited from dishonest actions, The Fair Debt Collection Practices Act to also requires them to abide by the following guidelines.

What is debt collector?

The term "debt collector is defined as being a person whose principal business is collecting a debtor who regularly collects debts on behalf of another. §1692a (6). It doesn't include the creditor to which the debt is owed, its employees; process servers; or enforcement officers of the United States or a State (such as a Sheriff or Marshal). The term "debt collector" also includes attorneys regularly engaged in debt collection. Heintz v. Jenkins, 115 S.Ct. 1489 (1995). However, the term has been found not to include:

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act, as codified in 15 U.S.C. §1692, is a federal statute that governs the practices of "debt collectors." Accordingly, attorneys engaged in the general practice of law and debt collection, in particular, should be mindful of the rules of this federal law.

How long does a debt collector have to be liable for a violation of the statute?

The statute authorizes a private cause of action by a person, including the debtor or any other person affected by the statute's provisions, to be brought against the collector within one year from the date of violation. In addition, section 1692k provides that a debt collector may be liable to a person in an amount equal to:

Why was the debt collectors bill passed?

The purpose was to protect consumers from abusive tactics and practices which were rife within the collection industry .

What is consumer debt?

The term "debt" means any consumer's obligation arising from a transaction whose primary subject is for personal, family, or household purposes. §1692a (5). Consumer debts have been defined to, among other things, include:

Can a debt collector contact other parties?

There are severe restrictions to contacting other parties regarding the collection of consumer debt by a debt collector. As outlined in §1692c (b), other than to obtain information concerning the debtor's location, a debt collector may not contact someone other than:

Which agency has enforcement power over the rules of the FDCPA?

Federal Trade Commission. The F.T.C. has enforcement power over the rules of the FDCPA, including the assurance of compliance and administrative enforcement. However, other federal agencies, including the Comptroller of the Currency, Office of Thrift Supervision, Secretaries of Transportation and Agriculture, may take appropriate actions concerning particular types of collectors. Hicks v. Intercontinental Acceptance Corp., 154 F.R.D. 134 (EDNC 1994) (decisions of the F.T.C. to investigate or prosecute alleged violations of the FDCPA are entirely discretionary).

What rule did the Court look to when dismissing Bencomo's claims?

After dismissing Bencomo’s remaining claims, the Court looked to the requirement in Rule 1 of the Federal Rules of Civil Procedure that the Court secure the “just, speedy, and inexpensive determination of every action,” and refused to allow Bencomo a second opportunity to amend her complaint. In the Court’s own words, “ [t]he defendants, and the Court, cannot be expected to be strung along as Bencomo tries out every theory of liability she can imagine as those theories come to her mind.”

Can an attorney be a debt collector?

At this time we are only acting as a debt collector. Attorneys may act as debt collectors. Our firm will not commence a suit against you. However, if we are not able to resolve this account with you, our client may consider additional remedies to recover the balance due. … Please note that we are required, under federal law to advise you that we are debt collectors and any information we obtain will be used in attempting to collet [ sic] this debt.

Can a debt collector use false representations in a collection letter?

Under the Fair Debt Collection Practices Act, a debt collector may not use false or misleading representations in the collection of a debt. 15 U.S.C. § 1692 (e). In Bencomo v. Forster & Garbus LLP, et al., No. 18-cv-1259 (E.D. Wis. July 15, 2019), plaintiff Modesta Bencomo alleged that the debt collector on her Target credit card violated the FDCPA by misrepresenting attorney involvement in sending her a collection letter. The Court rejected her theory of liability.

What is debt collector FDCPA?

One recurring question is the definition of “debt collector,” for being a debt collector is a threshold requirement to being subject to the FDCPA’s requirements. The Supreme Court held that a law firm representing a secured lender ...

Why did the Supreme Court pass the FDCPA?

By way of background, Congress passed the FDCPA in the 1970s to protect consumers and curb abusive debt collection practices.

What is the FDCPA in Obduskey v. McCarthy?

17–1307 (2019), the United States Supreme Court unanimously ruled that law firms acting on behalf of secured parties to foreclose on security interests in nonjudicial proceedings are not “debt collectors” and, thus, are exempt from liability under the Fair Debt Collection Practices Act (“FDCPA”). In what circumstances and to what extent law firms can be liable under the FDCPA are unsettled questions. The Supreme Court answered these questions in at least one circumstance: nonjudicial foreclosures of security interests.

How did Obduskey violate the FDCPA?

Obduskey alleged that the law firm violated the FDCPA by not ceasing its attempt to collect the debt – via the nonjudicial foreclosure – when he asserted his dispute of the debt. The District Court in Colorado dismissed the case, holding that the law firm was not a “debt collector” within the meaning of the FDCPA.

Is a law firm representing a secured lender to nonjudicially foreclose on the borrower's

The Supreme Court held that a law firm representing a secured lender to nonjudicially foreclose on the borrower’s real property was not a debt collector under the FDCPA. The case stems from a 2015 lawsuit that Dennis Obduskey, a Colorado homeowner, filed after Wells Fargo Bank, N.A., hired the California-based law firm McCarthy & Holthus LLP to initiate nonjudicial foreclosure proceedings on Obduskey’s home. Obduskey alleged that the law firm violated the FDCPA by not ceasing its attempt to collect the debt – via the nonjudicial foreclosure – when he asserted his dispute of the debt.

Is a law firm subject to the FDCPA?

The Supreme Court affirmed, holding that law firms (or other entities) engaged in no more than enforcement of a security interest in nonjudicial foreclosure proceedings are not debt collectors subject to the F DCPA. To arrive at the holding, the Supreme Court looked to the text of the statute and the legislative history.

When did the FDCPA stop allowing attorneys?

Initially, the FDCPA did not apply to attorneys. That changed in 1986 when an amendment to the Act deleted the statutory exclusion for attorneys. [3] . Since that time, attorneys have become a frequent target of lawsuits alleging violations of the FDCPA. The legislation is what is known as “self-enforcing”, which means consumers who have been ...

What is the Fair Debt Collection Practices Act?

§ 1692, was created to “eliminate abusive debt collection practices” utilized by those seeking to recover consumer debts. [1] . The FDCPA was also intended to protect debt collectors of consumer debts who do follow the law from being undercut by debt collectors ...

What is the threshold question in a FDCPA case?

The threshold question in any FDCPA case is; was the defendant acting as a debt collector. Since the FDCPA was intended to only apply to debt collectors, proof of this fact is a fundamental element of a successful FDCPA claim.

What is the second test for debt collection?

The second test is the “regularly collects” test, which is applied to attorneys who may not regularly engage in consumer debt collection activities. This test seeks to determine if the attorney “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another” such that the Act would apply. [7]

Did Sease send a debt collection letter to Lynch?

The record contains only a single debt-collection letter— the one Sease sent to Lynch.

Does FDCPA apply to attorneys?

Attorneys who do not style themselves as debt collectors may wonder if the FDCPA applies to their activities. Initially, the FDCPA did not apply to attorneys. That changed in 1986 when an amendment to the Act deleted the statutory exclusion for attorneys. [3] Since that time, attorneys have become a frequent target of lawsuits alleging violations of the FDCPA. The legislation is what is known as “self-enforcing”, which means consumers who have been the object of collection abuses are charged with enforcing compliance via civil litigation. [4] As a result, if a violation is found, not only will statutory damages apply, but the consumer can recover attorney fees incurred in prosecuting the claim. [5]

Does Heintz test for collecting debt?

The Heintz court did not set forth a test for determining what constitutes “regularly collects”; so many circuits have looked to the analysis set forth by the Second Circuit in Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolott. [9] The Goldstein court held that “the question of whether a lawyer or law firm ‘regularly’ engages in debt collection activity “… must be assessed on a case-by-case basis in light of factors bearing on the issue of regularity.” [10] The court then listed various non-exclusive factors that it felt are relevant to the determination:

What is debt collector?

The term “debt collector is defi ned as being a person whose principal business is the collection of debt, or who regularly collects debts on behalf of another. §1692a(6). Such term does not include the creditor to which the debt is owed, or its employees; process servers; or enforcement offi cers of the United States or of a State (such as a Sheriff or Marshal). The term “debt collector” also includes attorneys regularly engaged in debt collection. Heintz v. Jenkins, 115 S.Ct. 1489 (1995). However, the term has been found not to include:

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act, as codifi ed in 15 USC §1692, is a federal statute which governs the practices of “debt collectors.” Attorneys engaged in the general practice of law, and debt collection in particular should be mindful of the rules of this federal law.

How long does a debt collector have to be liable for a violation of the statute?

The statute authorizes a private cause of action by a person, including the debtor or any other person affected by the provisions of the statute, to be brought against the collector within one year from the date of violation. Section 1692k provides that a debt collector may be liable to a person in an amount equal to:

Can a debt collector contact other parties?

There are severe restrictions to contacting other parties regarding collection of a consumer debt by a debt collector. As set forth in §1692c(b), other than for the purpose of obtaining information concerning the debtor’s location, a debt collector may not contact someone other than: