A recent decision in the Northern District of Illinois (N.D. Ill.) suggests that even if the consumer and his or her attorney knowingly contrived a Fair Debt Collection Practices Act (FDCPA) violation, the debt collector is not entitled to a defense under the “unclean hands” doctrine. The legal theory of “unclean hands” suggests that a plaintiff who acted unethically or in bad faith in regards to the facts in the complaint should not be entitled to damages based on their own bad acts.

The case is Francisco v. Midland Funding LLC et al., No. 17-cv-6872 (N.D. Ill. Mar. 15, 2019). Plaintiff defaulted on a debt that was placed with Midland Credit Management (MCM) for collection. MCM follows a certain schedule regarding credit report files where it compiles reports on the first and third Monday of each month and sends the reports to the credit bureaus on the following Friday. According to the factual background in the decision:

Likely knowing this schedule, Francisco’s counsel sent a letter to MCM disputing Francisco’s debt on Sunday evening, August 20, 2017, hours before MCM compiled a batch of reports. Though MCM quickly processed Francisco’s dispute, because by that point MCM had already compiled its batch of disputes, MCM reported Francisco’s debt to Equifax on Friday, August 25, 2017, without reporting that it was disputed, in violation of 15 U.S.C. § 1692e(8).

MCM argued that plaintiff should not be entitled to relief in this case because her counsel intentionally timed the letter to cause a violation. In other words, MCM argued that the unclean hands doctrine applied.

While acknowledging that the court is not foreclosing the possibility that debt collectors can rely on defenses other than those specifically listed in the statute, the court refused to extend this to the unclean hands doctrine, arguing that it goes against the text and spirit of the FDCPA.

According to the court, unclean hands shifts the focus of attention to the consumer’s actions, rather than those of the debt collector. The court states:

Permitting a debt collector to commit FDCPA violations when the consumer’s counsel might have contrived the violation (or the consumer is otherwise unworthy in equity) would impermissibly shift the focus back toward the consumer’s wrongdoing, which the text, structure, and history of the FDCPA do not allow. Allowing an unclean hands defense would transform the rule from “Debt collectors may not make false claims, period,” to “Debt collectors may not make false claims, comma.”

[internal citations omitted.]

The court continues:

If the debt collector could probe the consumer’s or counsel’s actions for unclean hands, FDCPA litigation would devolve into disputes over the plaintiff’s and counsel’s actions and motivations, even where, as here, the FDCPA violation is clear. Debt collectors could mire the consumer in discovery irrelevant to the violation, making litigation costlier. And allowing counsel’s actions and motivations to prevent recovery for FDCPA violations could also chill counsel from taking steps to root out violations, hindering one of the FDCPA’s key enforcement mechanisms.

insideARM Perspective

The decision misses two major points. First, the FDCPA, when enacted, likely did not contemplate the cottage industry of plaintiffs’ counsel filing mass claims on hyper-technical issues. These suits take advantage of the gaps within the FDCPA that cause compliance confusion for well-meaning businesses who genuinely try to comply with the laws. Second, the court references the FDCPA’s key enforcement mechanisms, turning a blind eye to the creation of the Consumer Financial Protection Bureau since the statute’s enactment.


The litigation dilemma issue has been thoroughly discussed on insideARM. Even courts are noticing a clog in their dockets with FDCPA claims, one judge going as far as finding that FDCPA litigation has become a debt evasion statute and one “to prop profits among the plaintiffs’ bar.” This decision is not helpful considering the current trend in credit repair organizations filing mass credit disputes, which overtake a debt collector’s resources to process and ultimately harms consumers with genuine disputes.

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