Welcome to the final installment of our FDCPA for Beginners series. In Part 1, we covered key definitions and how to contest debts early on. Part 2 addressed common violations debt collectors commit during communication. Now, in Part 3, we delve into enforcing the FDCPA, calculating damages, and settlement agreements.
Every day, millions of Americans encounter collection agencies, leading to confusion and distress. To safeguard consumers, Congress enacted the FDCPA to ensure fair practices and deter unethical behavior by collectors.
Penalties Under the FDCPA
Actual Damages: Compensation for tangible harm suffered due to violations. Examples include travel expenses, humiliation, emotional distress, medical costs, lost wages, and reputational harm.
Punitive Damages:
- Individual Actions: Up to $1,000 per plaintiff per lawsuit.
- Claims Splitting: Filing multiple lawsuits for different violations against the same collector is prohibited. All related claims must be combined into a single lawsuit. The total recovery remains capped at $1,000.
- Class Actions: Up to $1,000 for each named plaintiff, and up to $500,000 or 1% of the debt collector’s net worth (whichever is less) for the entire class.
Costs and Attorney’s Fees: Reimbursement for reasonable attorney’s fees and legal costs. Courts may award these against parties who unreasonably prolong proceedings.
Defenses for Collectors: Collectors can avoid liability if they prove the violation was unintentional and resulted from a bona fide error, despite reasonable procedures to prevent it. Reliance on an advisory opinion from the CFPB or FTC can also be a defense, even if the opinion is later invalidated.
Actual Damages
Actual damages under the FDCPA cover tangible harm resulting from debt collector violations, including:
- Travel Expenses: Costs related to resolving debt collection issues.
- Humiliation: Compensation for loss of dignity or embarrassment.
- Fear and Anxiety: Reimbursement for emotional distress caused by abusive practices.
- Emotional Distress and Stress: Compensation for severe emotional impacts such as stress, nervousness, or sleeplessness caused by the debt collection activity.
- Medical Expenses: Costs related to treatment for emotional or psychological effects.
- Lost Wages: Compensation for income lost due to addressing debt collection issues or recovering from their effects.
- Property Damage: Reimbursement for expenses related to unlawful seizure or damage to personal property.
- Reputational Harm: Financial losses due to damage to personal or professional reputation from wrongful public disclosure of the debt.
Plaintiffs must demonstrate that damages were caused by the collector’s actions. Emotional distress claims require significant evidence, such as medical documentation, to be considered.
Significant Awards
In several notable cases, large monetary damages have been awarded for significant FDCPA violations:
- Emotional Distress Damages: In one case, plaintiffs were awarded $50,000 each in actual damages for emotional distress. The plaintiffs experienced severe stress, anxiety, and sleeplessness due to the defendant’s misrepresentations about the amount of debt owed and improper foreclosure actions. Despite lacking expert testimony or medical records, the court found the plaintiffs’ testimony credible and awarded substantial damages.
- Fear and Anxiety: Another case resulted in a $10,000 award for actual damages, covering fear, anxiety, embarrassment, and emotional distress. The plaintiff was harassed by debt collectors who made threatening phone calls to her workplace and falsely claimed they would seek her arrest. The court determined that the plaintiff’s credible testimony about the fear and emotional distress she endured warranted the award.
Seeking Expert Assistance for FDCPA Issues
Understanding your rights under the FDCPA and the potential for substantial settlements can empower you to address debt collection issues effectively. For expert guidance, Steven Grace, an experienced attorney in Chicago, offers free consultations. With his deep knowledge of FDCPA regulations, Steven can help you navigate your case, pursue the compensation you deserve, and protect your rights.
