The House Financial Services Committee will soon take up H.R.4550 – Practice of Law Technical Clarification Act of 2017 . This “Free Pass for Lawyers” is an attempt by creditors and their debt collection cronies to carve out a “litigation activity” exception for debt collection lawyers from the Fair Debt Collection Practices Act (FDCPA). In a double whammy, this bill would also eliminate the power of the Consumer Financial Protection Bureau (CFPB) to regulate and investigate the debt collection litigation industry.
Debt collection lawyers who collect debt fairly, honestly, and carefully (and I know quite a few of those) already have nothing to fear from the FDCPA or the CFPB. But if this free pass for lawyers becomes law the result is easy to predict. The adversarial court system we already have establishes a built in advantage for lawyers who know the system. But without a regulator or the FDCPA to follow, debt collection litigators would have free reign to, shall we say, zealously advocate for their creditor clients with no regard to the limits of the FDCPA.
The American Bar Association: Orwell’s Animal Farm?
Incredibly, the ABA, the nation’s largest bar association, has thrown its support behind the bill. The ABA should support the FDCPA as the bare minimum standard for lawyers. Instead, it is treating the decades-old consumer statute like an unnecessary vestige despite the explosion of debt collection litigation and frequent abuses of consumers in debt collection lawsuits. Apparently, the ABA believes lawyers who sue people to collect debt are different from other collectors. But why shouldn’t a lawyer be subject to the same standards as everyone else who collects debt for a living?
The ABA’s position reminds me of George Orwell’s Animal Farm, where “all animals are equal, but some animals are more equal than others.” Manor Farm’s Napoleon would be proud of the ABA for its support of this so-called “narrow exception.” Outside regulation isn’t automatically wrong just because a group has its own ethical rules. Quite the opposite. A profession can establish a level of behavior above and beyond community standards. But that profession doesn’t get to ignore the rules and remedies established by the public, for the good of all.
“Fair” debt collection lawsuits, without the FDCPA?
Consider this example used by ABA President Hilarie Bass in support of the bill:
If a creditor lawyer sues a debtor for a valid debt but accidentally files the
lawsuit in the wrong county, the debtor can sue the lawyer for damages under the Act even though
the proper remedy would be to ask the court to transfer the case to the proper venue.
Ms. Bass seems to believe this remedy is simple matter for the litigants involved. But let’s dig a bit deeper. for example, what if you live in St. Louis, and are sued in Kansas City? Under the most commonly used rules, you can have a little as 10 days’ notice when you receive your summons to appear in court. If you don’t show, the court can grant the plaintiff a default judgment against you.
Cha ching! You get to pay for their mistake
Maybe you are lucky enough to know what a “change of venue” means, and you set out to obtain the “proper remedy” the ABA described. You may inform the debt collection law firm of the problem. But that doesn’t mean they will jump to do your bidding for you. The debt collection firm’s first duty is to its client, not to you.
You (not the debt collection lawyer) will have to draft and file a motion to alert the court of the problem. You incur the cost of crossing the state, to argue your motion. Or you can pay an attorney willing to do all that for you. Too bad for you, consumer. Your money pays to fix the debt collector’s “accidental” filing in the bad venue. Is this feeling like a “proper remedy” yet? Even if you win, you still lose.
Or you can choose option B: don’t go to court, and hope for the best. Sadly, this is what many choose to do now. Even with the FDCPA’s protection, a very small percentage of people appear at court or hire a debt collection defense lawyer. But make no mistake. It is the FDCPA and watchdogs like the CFPB that keep the careless, the malicious, and the greedy at bay. Debt collection lawyers aren’t “more equal” than other debt collectors, and they don’t need this free pass.