FDCPA Update: An Industry in Transition

The federal Fair Debt Collection Practices Act (FDCPA) generally applies to third-party "debt collectors" attempting to collect "debts" as defined by the Act. Several circuit cases decided since last year's Annual Survey considered such definitional and other procedural issues, but several other cases reflect broader changes in the debt collection industry. These changes include, among other things, the increased use of state courts to collect debts and the practice of purchasing large debt portfolios. This year's survey primarily focuses on these latter cases. Finally given the recent US Supreme Court decision rejecting application of the Act's bona fide error defense to legal errors, recent cases considering the application of that defense also are explored. In Allen v. LaSalle Bank NA, the US Court of Appeals for the Third Circuit considered whether a communication from a debt collector to the consumer's attorney, sent at the attorney's request, was an unfair or unconscionable practice in violation of FDCPA Section 1692f(1).