Vol. 10, No. 4, Pg. 28. Collecting for Clients: Eight Tips to Avoid Becoming a Fair Debt Defendant.

• Author: By James R. Allen

South Carolina Lawyer

1999.

Vol. 10, No. 4, Pg. 28.

Collecting for Clients: Eight Tips to Avoid Becoming a Fair Debt Defendant

28Collecting for Clients: Eight Tips to Avoid Becoming a Fair Debt DefendantBy James R. AllenFew things have thrilled me as much in my practice as the day I received the notice. The consumer debtor I was suing to collect my client's consumer loan had accused me and the sheriff of violating his rights under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (FDCPA). As it turned out, I have plenty of company. Many other lawyers have also had the pleasure of calling their malpractice carrier to inform them of their newfound notoriety. This article may help you avoid some of the mistakes other lawyers have made.

1. Lawyers collecting debts for others, and their firms, are personally liable for violations of state and federal laws. Lawyers have been responsible for complying with the FDCPA since 1986. Other changes that took effect in 1996 clarified and increased the disclosure requirements under the Act. You and your firm are "debt collectors" under the FDCPA if you attempt to collect a "consumer debt" from a consumer on behalf of another creditor or if you assist a debt collector. There are limited exclusions in § 1692a(6), which include a corporate affiliate of the creditor and process servers in connection with judicial enforcement of the debt.

For purposes of the FDCPA, a "consumer debt" includes not just the traditional consumer credit transaction as defined by Truth in Lending, but most consumers' debts, including those arising from a landlord-tenant obligation, a stay in the hospital, homeowners association dues or a bounced check to the liquor store.

Debt collection is also regulated under state law. The 1996 amendments to the South Carolina Consumer Protection Code, S.C. Code § 37-5-108 (SCCPC), define actionable unconscionable conduct to include improper debt collection activities and create a private cause of action for the debtor. The cause of action under the SCCPC is more narrow than the FDCPA, as it only applies to consumer loans, consumer leases, consumer credit sales and consumer rent to own transactions. S.C. Code § 37-5-108(2); §371-301(11).

It also does not apply to any creditor or transaction that is not otherwise subject to the Consumer Protection Code. These include non-real...