In May, we wrote about Marx v. General Revenue Corp. Olivea Marx sued General Revenue Corp for an FDCPA violation, alleging that when General Revenue sent an employment-verification fax to her work, it violated that collections statute.

As it turns out, General Revenue was on the right side of the law when it sent that fax: the fax was not a communication under the statute. With that in mind, a federal judge found that General Revenue’s actions did not violate the FDCPA and dismissed the case. Additionally, a district court judge in Colorado awarded General Revenue $4,543 in costs, despite the absence of a finding that Marx had brought the case “in bad faith and for the purpose of harassment.”

You can sort of imagine how that went over.

There is precedent of agencies recouping court costs when it’s clear that the consumer sued as a form of harrassment. Marx v. General Revenue Corp complicates that in some ways for a lot of consumers and consumer attorneys. Suits regarding technical violations of FDCPA are a cottage industry; allowing agencies to recoup court costs in unsuccessful attempts makes it a less lucrative endeavor.

Agencies shouldn’t get too excited, though, about this possibility: yesterday, The Federal Trade Commission, the Department of Justice, and the Consumer Financial Protection Bureau filed a joint amicus brief in the U.S. Supreme Court against collection agencies:

“The amicus brief argues that the Tenth Circuit’s decision was inconsistent with the terms of the Fair Debt Collection Practices Act, which specifies that consumers who win lawsuits against debt collectors may recover their litigation costs from the defendants, but that consumers who lose these cases must pay defendants’ litigation costs only if the consumers sued in bad faith or for purposes of harassment. The amicus brief also argues that these provisions of the Act advance Congress’ intent to help consumers deter abusive debt collection practices by bringing private enforcement actions in good faith. By contrast, the Tenth Circuit’s ruling would create a disincentive to the prosecution of private enforcement actions, the brief states.”

If there was a chance that a collection agency could recoup its court costs in the event that a consumer suit against it was thrown out or decided in the agency’s favor, it might be likely that more agencies would pursue legal action in court. As it now stands, there’s little benefit to an agency in fighting a consumer suit: being found to be on the right side of the law can still carry a hefty price tag, and doesn’t outrightly benefit the agency.

We’ll continue coverage of this case as we receive more details.

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