Consumers who sue can collect their attorney fees from abusive debt collectors and credit reporting agencies. In addition,the law makes it illegal for most debt collectors to attempt to collect their attorney fees by adding them to the debt. Many state laws also follow the federal lead by shifting attorney fees when it benefits the consumer, but not when it benefits the debt collector.
The Fair Debt Collection Practices Act (FDCPA) changed the law by using fee shifting to protect consumers
Generally, in the U.S. everybody who goes to court pays their own fees. However, certain laws allow authorize fee shifting to accomplish a specific purpose. “Fee shifting” usually means that the loser pays the winner’s attorney fees. Congress passed the FDCPA to regulate the debt-collection business and believed that allowing consumers to collect attorney fees would help achieve this goal by encouraging consumers to sue illegal debt collectors. This law provides that the illegal debt collector will be liable for your actual damages, additional damages not to exceed $1,000.00, and your reasonable attorney fees.
A word of caution: The law also provides that if the court determines that your lawsuit was brought in bad faith and for harassment, you may be ordered to pay the defendant’s attorney fees. An experienced consumer protection attorney will advise you if you may be at risk.
The Fair Credit Reporting Act (FCRA) also includes fee shifting
Congress passed the FCRA to protect consumers’ credit from willful abuses which cause inaccurate information to appear on your credit report. As it did with the FDCPA, Congress included a fee shifting provision to encourage you to file suit if you have been damaged by inaccurate credit information. Under the FCRA, you can recover actual damages not to exceed $1,000.00, punitive damages awarded by the court, and your reasonable attorney fees.
This law also more closely monitors the work of attorneys for all parties. The court can order fee shifting to occur at any time during the lawsuit that it finds a party actedin bad faith or for purposes of harassment by filing a pleading, motion, or other paper. Again, your experienced consumer protection attorney will protect you by not filing improper documents.
Not all consumer laws allow fee shifting
For example, the Telephone Consumer Protection Act(TCPA) protects you against telephone abuse, including illegal pre-recorded messages and robocalls. The TCPA omits this provision. Instead of awarding you attorney fees, the law allows you potentially to recover potentially higher damages to encourage you to sue for illegal telephone conduct. You can recover your actual damages or damages of $500 for each violation and, if the defendant willfully or knowingly violated the law, these amounts can be trebled.
This provision had resulted in large verdicts that have gotten the attention of TCPA violators. In 2017, a North Carolina U.S. District Court judge trebled the $20.5 million award against Dish Network to $61.5 million. The judge determined that Dish knowingly and willfully allowed its agent to make more than 50,000 marketing calls to telephone numbers on the national “Do Not Call List’ in 2010 and 2011.
The law forbids debt collectors from fee shifting legal fees, with at least one very large exception.
In most cases, a debt collector can get bit if he attempts to shift his collection attorney fees to your debt. By falsely representing the amount of the debt, he violates the FDCPA and gives you the right to sue him. Remember that fee shifting discourages illegal collection activity. For example, a collection agency obtained a $390.09 default judgment that included $50 in attorney fees against a Wisconsin woman. She then obtained a $500 verdict against the collection agency for violating the FDCPA. After twenty months of litigation, the federal court awarded her attorneys $36,190.80. Lesson learned?
This result could not occur on a federal student loan default. According to FinAid, a student financial aid information site, the High Education Act of 1965 provides that defaulting borrowers must pay “reasonable collection costs” that include all attorney’s fees and court costs, which has been as much as 25% of the total principal and interest.
If a debt collector has been hounding you, to speak with a representative directly and immediately call 844-685-9200 for a free, no obligation case evaluation. Our attorneys have experience in fighting debt collectors and standing up for consumers. If a debt buyer has violated the Fair Debt Collection Practices Act, you’re entitled to file suit in federal court, and could be awarded up to $1,000, your attorney fees and other damages.
About the Author:
Sergei Lemberg is an attorney focusing on consumer law, class actions related to automotive issues, and personal injury litigation. With nearly two decades of experience, his areas of practice include Lemon Law (vehicle defects), Debt Collection Harassment, TCPA (illegal robocalls and texts), Fair Credit Reporting Act, Overtime claims, Personal Injury cases, and Class Actions. He has consistently been recognized as the nation's "most active consumer attorney." In 2020, Mr. Lemberg represented Noah Duguid before the United States Supreme Court in the landmark case Duguid v. Facebook. He is also the author of "Defanging Debt Collectors," a guide that empowers consumers to fight back against debt collectors and prevail, as well as "Lemon Law 101: The Laws That Lemon Dealers Don't Want You to Know."
Consumers who sue can collect their attorney fees from abusive debt collectors and credit reporting agencies. In addition,the law makes it illegal for most debt collectors to attempt to collect their attorney fees by adding them to the debt. Many state laws also follow the federal lead by shifting attorney fees when it benefits the consumer, but not when it benefits the debt collector.