Debt Collector Law Firms Exempt From The FDCPA?
A new law recently passed a House Committee in March of 2018, may exempt lawyers from various restrictions contained in the Fair Debt Collection Practices Act
AnalysisDebt collectors who happen to be lawyers have been lobbying hard for an amendment to the Fair Debt Collection Practices Act, (*FDCPA*), that would partially exempt them from liability under the FDCPA. The lobbying has paid off. On March 21, 2018, the House Financial Services Committee voted 35-25 to approve a bill that would amend the FDCPA to exclude lawyers and law firms from the definition of a *debt collector* when engaged in *activities related to legal proceedings.*
Proposed Language of the New LawThese "activities" are wide-ranging and include:
1. Litigation activities in connection with a legal action in a court of law to collect a debt on behalf of a client, including:
(I) a law firm is serving, filing, or conveying formal legal proceedings, discovery requests, or other documents pursuant to the applicable statute or rules of civil procedure;
(II) communicating in, or at the direction of, a court of law (including in depositions or settlement conferences) or in the enforcement of a judgment; or
(III) any other activities engaged in as a part of the practice of law, under the laws of the State in which the attorney is licensed, that relate to the legal action; and
2. A law firm is conduction service on a defendant debtor, or service is attempted, in accordance with the applicable statute or rules of civil procedure.
The law would also restrain the Consumer Financial Protection Bureau*s oversight and enforcement authority over lawyers.
The bill will move to the House of Representatives for vote. If it becomes law the language of the FDCPA will literally change. While the language protects collection lawyers in all facets of legal activity AFTER legal process is served, it appears to leave open the possibility of FDCPA violation during normal collection practices before litigation is commenced. However, like any new law it will take years of court decisions analyzing the new language to determine exactly how broadly *activities related to legal proceedings* will be interpreted.