by Jeff Sovern
The federal Fair Debt Collection Practices Act provides consumers a variety of protections. Collectors, for example, are barred from making false statements and engaging in unfair practices, and are obliged to give consumers certain disclosures. But the American Bar Association wants to excuse lawyers "engaged in litigation activities" from complying with the FDCPA. In the ABA's view, state courts and ethical rules provide all the protection consumers need. The House Committee on Financial Services has already reported a bill, H.R. 5082, to accomplish the ABA's goals.
In my view, lawyers should not seek or obtain exclusions from the FDCPA. The robo-signing scandal was only a few years ago, and lawyers did not exactly cover themselves in glory on that one. Robo-signing may have gone on for years, despite state courts and ethical rules. The CFPB has brought a number of cases against lawyers behaving badly in debt collection matters. In one case, for example, the CFPB complaint alleged (I reformatted the paragraphs and omit paragraph numbers for ease of reading):
Defendants, a law firm and its principal partners, have sued hundreds of thousands of Georgia consumers to collect debts that the consumers allegedly owe to others. To produce so many lawsuits, the Firm operates less like a law firm than a factory. It relies on an automated system and non-attorney support staff to determine which consumers to sue. The non-attorney support staff produce the lawsuits and place them into mail buckets, which are then delivered to attorneys essentially waiting at the end of an assembly line. The Firm’s attorneys are expected to spend less than a minute reviewing and approving each suit. Using high-volume litigation tactics, Defendants collect millions of dollars each year, often from consumers who may not actually owe debts or may not owe debts in the amounts claimed.
That case terminated in a consent order under which the firm agreed to pay a penalty of more than $3 million. That does not exactly suggest that we need fewer consumer protections against misbehaving lawyers. Will state courts force attorneys to compensate consumers when law suits allege the wrong amount of the debt? When lawyers sue the wrong consumer? When lawyers bring time-barred claims? Will consumers be told of their rights? The ABA would do better to devote its energy to making sure attorneys behave appropriately in debt collection than to insulate attorneys from complying with existing debt collection laws.