The elec?tion is over, and the votes are still being counted. And we?ll dis?cuss the election?s after?math over the next sev?eral days. But there?s more going on than that. We?re in the sec?ond month of Supreme Court hear?ings. Today focuses on one of?them.
How much pro?tec?tion does an indi?vid?ual have from a debt col?lec?tor? Legally, a debt col?lec?tor is not sup?posed to engage in harass?ment. Is it harass?ment for a con?sumer to sue the debt collector?
The Debt Col?lec?tor (Photo credit: Wikipedia)
For?mer stu?dent Ele?nea?Marx defaulted on a stu?dent loan. In Sep?tem?ber of 2008, the guar?an?tor of the loan, a divi?sion of the Cal?i?for?nia Stu?dent Aid Com?mis?sion called Edfund, hired a debt col?lec?tion agency ? the Gen?eral Rev?enue Cor?po?ra?tion, or GRC, to col?lect the out?stand?ing bal?ance on the loan. In Octo?ber 2008, Marx sued GRC, alleg?ing abu?sive and threat?en?ing phone calls in vio?la?tion of the Fair Debt Col?lec?tion Prac?tices Act?(FDCPA). The Fed?eral Trade Com?mis?sion (FTC) and the new Con?sumer Finan?cial Pro?tec?tion Bureau?(CFPB) share author?ity to enforce the?Act.
One of the things GRC?did, eas?ily doc?u?mented, was to send a fax to Marx?s employer, dis?play?ing basic con?tact infor?ma?tion for GRC, with blanks left for the employer to fill in infor?ma?tion about Marx?s employ?ment sta?tus and other related infor?ma?tion. The FDCPA?pro?hibits ?com?mu?ni?ca?tions? with third par?ties in an efforts to?col?lect a debt. Marx amended her com?plaint in March of 2009 to add a claim that GRC?vio?lated the FDCPA by send?ing the fax to her work?place to request employ?ment information.
The dis?trict court dis?missed her com?plaint. She appar?ently did not pro?vide suf?fi?cient evi?dence of being harassed. On the mat?ter of the fax, which no one dis?puted had been sent, the court held a fax is not a ?com?mu?ni?ca?tion? within the mean?ing of the law. The FDCPA had orig?i?nally been enacted in 1978 as Title VIII of the Con?sumer Credit Pro?tec?tion Act. It had been mod?i?fied many times since then, as recently as 1996. Even so, the court ruled that a fax does not fall within the FDCPA?def?i?n?i?tion of a ?com?mu?ni?ca?tion?, and there?fore, GRC did not vio?late the?law.
Los?ing the case was bad enough, but civil law is?designed to pro?tect peo?ple who are unjustly sued. GRC?was awarded their legal costs to defend them?selves, a sum of over $4,500. In addi?tion to los?ing her suit, Marx had to pay GRC?s?legal fees. Now, the FDCPA?rec?og?nizes that a cor?po?ra?tion has a much bet?ter?chance of defend?ing itself, and a good chance of hir?ing a crack legal team. The threat of hav?ing to pay stratos?pheric legal costs may be enough to dis?cour?age even legit?i?mate suits from con?sumers who have been abused. FDCPA?there?fore says that legal costs for the cor?po?ra?tion being sued are only reim?bursable when the suit against them is brought in ?bad faith? or as a form of ?harassment.?
The trial court did not address this issue, did not rule on whether Marx?s suit was brought in ?bad faith? or intended as ?harass?ment.? The trial judge merely awarded court costs and legal fees to the defen?dant. This pro?vided Marx with the abil?ity to appeal the ruling,
The U.S. Court of Appeals for the Tenth Cir?cuit, how?ever, upheld the rul?ing of the dis?trict court, with one dis?sent. The Cir?cuit Court not only upheld the case on its mer?its (that is, Marx lost her accu?sa?tion of being harassed by GRC), and held that the fax was not a ?com?mu?ni?ca?tion,? but also ruled that, although there was no evi?dence of ?bad faith? on her part, the FDCPA?did not pre?vent her from being required to pay GRC?s legal?costs.
Marx has appealed to the U.S. Supreme Court. Oral argu?ments are today. One aspect of the case is that a joint ami?cus?brief has been filed by the FTC and CFPB?(who are respon?si?ble for enforc?ing the law), and the Depart?ment of Jus?tice. They argue?that the Tenth Circuit?s deci?sion was incon?sis?tent with the FDCPA. The law says that while con?sumers who win law?suits against debt col?lec?tors may recover their legal costs from the defen?dants, the only sit?u?a?tion in which con?sumers who lose must pay defen?dants? costs is if there is prov?able bad faith or harass?ment on their part. The ami?cus brief also argues that Con?gress? intent in enact?ing the law was to deter abu?sive debt col?lec?tion prac?tices.? In con?trast, the Tenth Circuit?s rul?ing would cre?ate a dis?in?cen?tive for con?sumers to bring suit, and is there?fore in con?flict with the will of Congress.
What are your feel?ings on these issues? Should a fax be con?sid?ered a ?com?mu?ni?ca?tion? and thus be dis?al?lowed under the FDCPA? Should?the Supreme Court?rule in favor of GRC, and require Marx to pay for the company?s legal costs, despite any appar?ent bad faith or harass?ment on her part? What does this say for the proper bal?ance of power between con?sumers and debt collectors?
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Source: http://www.logarchism.com/2012/11/07/supreme-court-watch-marx-v-general-revenue-corp/
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