Page 17 - John Hundley 2012

Sharp Thinking

No. 64 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. May 2012

Liberal Damage Rules Apply in FDCPA Suits

Statutory Damages, Class Action Provisions, Bona Fide Error Doctrine Are Unusual

As noted in the last two issues of Sharp Thinking, the Fair Debt Collection Practices Act (15 U.S.C.
§§ 1692 et seq.) (“FDCPA”) contains numerous provisions which threaten liability for debt collectors in
the collection of consumer debt. In this issue we address remedies for violations of that Act and
affirmative defenses which can allow collectors to prevail despite a violation.

Numerous Remedies. Under § 1692l, the Federal Trade Commission (“FTC”) and certain other
agencies are given certain administrative enforcement powers. Such administrative proceedings can
lead to imposition of injunctions and significant civil penalties under the FTC Act, 15 U.S.C. §§ 41,
45(m), 53(b). However, the major form of enforcement of the FDCPA has been through its civil liability
provisions, § 1692k. A private cause of action lies in
federal court without regard to the amount in
controversy, or in any other court of competent
jurisdiction, if filed within one year from the date on Third of three issues on the
which the violation occurred. § 1692k(d). Generally Fair Debt Collection Practices Act.
the case will be brought by the debtor, but that is not
necessarily required. Where a person other than the
debtor is covered by one of the substantive provisions,
that person may be able to sue under § 1692k(a). A single violation of the act is sufficient to give rise
to a lawsuit.

A collector who has failed to comply with the act generally will be held liable for any actual damage
sustained by the plaintiff as a result of such failure (§ 1692k(a)(1)) plus court costs and a reasonable
attorney’s fee (§ 1692k(a)(3)) plus other relief varying with the circumstances.
Attorney fees usually are assessed using the “lodestar” method common in
other contexts. Gastineau v. Wright, 592 F.3d 747 (7th Cir. 2010). The
attorney’s fees may be awarded to the prevailing plaintiff even if actual
damages are not. An award of fees generally is regarded as mandatory if the
plaintiff prevails on the merits. Schlacher v. Law Off. of Phillip J. Rotche &
Assoc., 574 F.3d 852 (7th Cir. 2009). However, to be entitled to fees the plaintiff must prevail on the
merits in some respect. Dechert v. Cadle & Co., 441 F.3d 474 (7th Cir. 2006).

If the case is brought by an individual, the court may award additional damages (often called
“statutory damages”) not exceeding $1,000. § 1692k(a)(2)(A). The right to a
jury trial applies to both the actual and the statutory damages, if requested.
Statutory damages are available with or without proof of actual damages. In
determining the amount of statutory damages, a court is to consider, among
other relevant factors, the frequency and persistence of noncompliance by the
collector, the nature of such noncompliance, and the extent to which
noncompliance was intentional. § 1692k(b)(1). Although the fact that the

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
constitute educational material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain
legal advice on your particular situation, contact a Sharp lawyer at the phone number or one of the addresses provided on page 2 of this newsletter.