Our regular readers know we often criticize government officials for both refusing to enact stronger consumer protection laws and for failing to aggressively enforce those that already exist. While that criticism is justified – and will only intensify if the new president and his regulation-loathing billionaire appointees have their way – we don’t want to create the impression that victims of payday lenders, student loan abuse, mortgage fraud and other types of scams are totally defenseless.
The fact is they’re not.
That’s because a bountiful “alphabet soup” of laws enables lawyers like us to act as private “attorney generals” who fight for consumers and hold lenders, banks, mortgage servicers, debt collectors and other corporate predators accountable for their misdeeds. In this capacity, we file suit on behalf of our clients, stop foreclosures and other collection activities, and secure justice and substantial financial damages for our clients. Yes, it’s true, the cases are often complicated and our adversaries formidable and well-heeled, but the hundreds of victories we’ve achieved in and out of court clearly demonstrates how effective these legal tools can be in the hands of attorneys who know how to use them.
With that in mind, we thought it would be productive to devote our first two columns of 2017 to a refresher course on the existing consumer protection regulations and the way they work:
FAIR DEBT COLLECTION PRACTICES ACT (FDCPA)
Enacted in 1978, the FDCPA (15 U.S.C. 1692, et seq.) is the most well-known federal consumer protection statute. Its primary purpose is to prevent third-party debt collectors from using abusive, unfair, false or deceptive practices to collect debts. Violators of the act may be liable for statutory damages, actual damages and attorney’s fees. Entities collecting debt on their own behalf are not subject to the act.
Because the Supreme Court has yet to define many aspects of the FDCPA, its impact and application varies across the nation. For example, within the jurisdiction of the Sixth Circuit Court of Appeals, which includes Ohio, Michigan, Kentucky and Tennessee, consumers may only be awarded one statutory damage recovery regardless of how many times a debt collector violated the act.
TELEPHONE CONSUMER PROTECTION ACT (TCPA)
The TCPA (47 U.S.C. 227, et seq.) may be the most misunderstood federal consumer protection law. Its explicit purpose is to limit the use of automatic telephone dialing systems (ATDS) and artificial or prerecorded voice messages by telemarketers. Since its passage in 1991, the TCPA has been expanded to cover the use of ATDS and voice messages by debt collectors.
While the act has not completely evolved to keep pace with the seismic shift away from the use of landlines to cell phones, thanks to guidance issued by the Federal Communications Commission in 2016, the TCPA now applies to cell phones if an affected consumer does not have a landline. Under the guidance, debt collectors may not call a cell phone unless the owner gives consent. That means it’s important for consumers to deny consent verbally during the initial call and then to immediately withdraw consent in writing.
Statutory damages under TCPA range from $500 to $1,500 per call and may be applied to each and every call made if it is found that a debt collector willfully violated the act. The ability to “stack” damages serves as an effective deterrent and provides just compensation for consumers who have been victimized by aggressive debt collectors who willfully violate the law.
TRUTH IN LENDING ACT (TILA)
TILA (15 U.S.C. 1601, et seq.) governs a wide range of credit transactions including mortgage loans, credit card transactions, student loan financing and car loans. The act requires lenders to disclose important information, including annual percentage rate (APR), term of the loan and total costs to borrowers before they sign credit applications. TILA also gives borrowers a “right of rescission” that enables them to cancel home equity loans or lines of credit and mortgage refinancing transactions under certain circumstances.
Lenders that violate TILA are subject to statutory damages, actual damages, and may be forced to pay court costs and plaintiff’s attorney’s fees. Because the act covers a broad spectrum of issues in very specific ways, consumers as well as lawyers who do not regularly practice this type of law should consult with an attorney experienced in TILA litigation before pursuing claims.
We hope you enjoyed our first serving of consumer protection “alphabet soup.” Next on the menu: ECOA, CSPA, OMBA, EFTA and RESPA, a delicious blend of regulations that provide consumers and lawyers with the deeply satisfying experience of holding big banks, mortgage servicers, debt collectors and other bad actors accountable for the damage they do.
Join us next month to learn more about the ways we use the law to help our clients secure justice and regain their piece of the American Dream. M Marc Dannarc Dann