Another Supreme Court Victory for Consumers: Ignorance of the Law Doesn't Excuse Collection Abuses

by Deepak Gupta

 In an opinion by Justice Sotomayor, the U.S. Supreme Court this morning handed consumers an important victory in the battle against abusive and deceptive debt-collection practices.  The Court ruled 7-2 that debt collectors who violate the Fair Debt Collection Practices Act can't evade liability for those violations by claiming ignorance or mistake of law. Resolving a circuit split, the Court rejected the collection industry's argument that the Act's defense for "bona fide errors," which excuses clerical or factual errors made despite adequate preventive procedures, also extends to errors of law.

I filed a brief in the case, which you can read here, on behalf of five national consumer groups (Public Citizen, AARP, the National Association of Consumer Advocates, the National Consumer Law Center, and U.S. PIRG: The Federation of State PIRGs). We argued that a mistake-of-law defense would deter enforcement, inhibit the development of precedent, and create a "race to the bottom," encouraging the very abuses that Congress sought to prevent when it passed the FDCPA.  Justice Sotomayor's majority opinion cites and quotes our brief, explaining that "the dissent's reading would give a competitive advantage to debt collectors who press the boundaries of lawful conduct."  The opinion also twice cites the NCLC's manual on the statute.

Justice Breyer wrote a brief concurrence to stress that the dilemma lawyer-debt collectors may face--between zealous representation of their clients and fear of personal liability--can be cured by the FTC advisory opinion process.  He notes that the FTC hasn't issued many such opinions, but says that he "would expect" the FTC to issue more opinions if the dilemma proves serious, and joins the majority opinion "[o]n this understanding." Justice Scalia writes separately to say that the Court could have rested on textual analysis alone.

Justice Kennedy, joined by Justice Alito, dissents. Speaking for myself, I'm mildly surprised that there's a dissent in this case.  Justice Kennedy's opinion displays some worrying hostility to plaintiffs' lawyers, consumer litigation, class actions, and the statute itself.  Thankfully, it's just a dissent.

Comments

[Robert Weed]

This is a big victory. Thank you for your work on this. I'm a bankruptcy lawyer and I can see how people who are down on their luck become magnates for abuse. I'm glad Public Citizens stands up for them.

[Mary Zill]

Thank you for your work on this, it seems that people who don't have money get less and those who make money get more and those who have more get more forgiveness for defaults.

[thomas sabo charm]

he receives all the rejection he requires. Cole Smithey ColeSmithey.com