Creditors Beware: Fifth Circuit Court of Appeals Expands Purview Of Potential FDCPA Violations And Furthers Circuit Split
October 23, 2016
Authored by: Natalie Daghbandan
In Daugherty v. Convergent Outsourcing, Inc., No. 15-20392 (5th Cir. Sept. 8, 2016) the Fifth Circuit Court of Appeals recently joined the circuit split interpreting the Fair Debt Collections Practices Act (“FDCPA”) in a way that further limits debts collectors.
Under the FDCPA the term “debt collectors” is not limited to those collecting debts for others – certain creditors collecting debts directly owed to them can be bound by the FDCPA. This statute prohibits debt collectors from using “false, deceptive, or misleading representation or means in connection with the collection of any debt.” A debt collector who violates the FDCPA can be forced to pay actual damages, costs, reasonable attorney’s fees and up to $1,000 of additional damages if the plaintiff is an individual or up to $500,000 or one percent of the debt collector’s net worth in a class action.
In Daugherty, the Fifth Circuit considered whether a collection letter for a time-barred debt which contained a discounted “settlement offer” but which was silent as to the unenforceability of the debt and did not threaten litigation could mislead an unsophisticated consumer to believe that the debt could be enforceable in court and thus violate the FDCPA.