U.S. Representative Matt Cartwright (D-Penn.) Monday announced that he has introduced a bill in the House to amend the Fair Debt Collection Practices Act (FDCPA) to allow the awarding of lawsuit costs to successful collection agency defendants only when there is a finding of bad faith on the part of the plaintiff.

The proposal is in direct response to a U.S. Supreme Court decision in February 2013 that sided with the ARM industry.

In a 7-2 majority decision, the Justices ruled in favor of a debt collector in the case Marx v. General Revenue Corp. The question before the Court was whether a defendant in an FDCPA case is entitled to costs should they win the case, even if the case was not initially brought by the plaintiff in bad faith or for the purposes of harassment.

Cartwright said that the Supreme Court’s ruling may have a chilling effect on FDCPA cases, deterring consumers from filing them in fear of the defendant winning costs.

“Due to the Supreme Court’s unfortunate decision, consumers, particularly those who are economically vulnerable, may choose to forego legal action when subjected to abusive and illegal debt collection practices given the potential high costs of losing a suit,” said Rep. Cartwright. “My legislation would correct the Court’s decision and restore the original intent of the FDCPA.”

The bill would amend the FDCPA so that costs are only available to a winning defendant when the plaintiff is found to have brought a suit in bad faith or for the purpose of harassment.

The amendment has already found support among consumer advocacy groups, including American Association for Justice, Americans for Financial Reform, Public Citizen, the National Association of Consumer Advocates, and the National Consumer Law Center.

The bill, HR 4624, was just recently published and has no other co-sponsors. It was referred to the House Financial Services Committee as well as the House Judiciary Committee.


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