FTC, DOJ and CFPB File Amicus Brief in Support of Debtors Ability to file Lawsuits without Recourse of Costs

 

 

 

 

Washington DC – August 20, 2012 – In a showing of support to borrowers and attorneys who would wish to file lawsuits against creditors or collectors without having to bear the cost of defenses in the event of their cases being dismissed, the Federal Trade Commission (FTC), the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) have filed an amicus brief(friend of the court) in an attempt to overturn a 10th Circuit Supreme Court Decision.

In question is whether Federal Rule Of Civil Procedure 54(D)(1),Which Permits Cost-Shifting “(u)nless A Federal Statute” or Another Rule “Provides Otherwise,” Allows Taxation of Costs Against A Plaintiff Who Filed Suit In Good Faith under The Fair Debt Collection Practices Act, 15 U.S.C. 1692K, which authorizes taxation of costs against Plaintiffs only when They File Actions “In Bad Faith And For The Purpose of Harassment.”

The Federal trio is attempting to overturn a Tenth Circuit Supreme Court of Appeals ruling that consumers who sue collection agencies and lose, are responsible for paying both parties’ legal bills. The ruling comes from the case of an Olivea Marx, who filed suit against the General Revenue Corporation, a debt collection agency, after the collector contacted her employer to obtain information about her employment status.

Marx claimed that General Revenue had violated the Fair Debt Collection Practices Act but lost the case and was ordered to pay $4,500 to cover the collection agencies legal costs. The joint Federal amicus brief argues that the Tenth Circuit misinterpreted the Fair Debt Collections Practices Act (FDCPA) in its ruling.

The act specifies that consumers who win lawsuits against debt collectors may recover their litigation costs from defendants, but consumers who lose a lawsuit only have to pay if they brought the case in bad faith or for purposes of harassment.

The FTC argues in its brief that the legal cost provisions of the act are designed to help consumers fight abusive debt collection practices by engaging in, what the government terms, “good faith private enforcement actions.” Consumer advocacy groups are concerned that the Supreme Court’s decision might severely weaken consumer’s ability to sue collection agencies.

Oral arguments in the case are scheduled for Nov. 7, 2012.

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