The Limits on Direct and Vicarious Liability Under the FDCPA

Consumers and their attorneys are constantly seeking to expand the pool of potential FDCPA defendants using principles of vicarious liability. Debt buyers are being sued based on the conduct of their agencies and law firms. Lawyers and agency owners are being sued based on the conduct of their clients and their collectors. Even original creditors, who are not subject to the FDCPA, are being drawn into FDCPA litigation under various theories of recovery. What are the limits of vicarious liability under the FDCPA? How can debt collectors avoid liability for the conduct of others?

Limits on Direct Liability

Before examining vicarious liability under the FDCPA, it is important to remember that Congress significantly limited the scope of direct liability under the Act. For example, generally speaking, the Act applies only to “debt collectors” who regularly attempt to collect debts that are “due another.” For this reason, original creditors are not subject to the FDCPA (except in very limited circumstances). See, e.g., Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.1985) (“The legislative history of section 1692a(6) indicates conclusively that a debt collector does not include the consumer’s creditors…or an assignee of a debt, as long as the debt was not in default at the time it was assigned.”). Because original creditors are not subject to the FDCPA, courts have recognized they may not be held vicariously liable for the FDCPA violations of the debt collectors they retain. See Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996) (assignee of auto loan not vicariously liable for FDCPA violations of its attorneys: “We do not think it would accord with the intent of Congress, as manifested in the terms of the Act, for a company that is not a debt collector to be held vicariously liable for a collection suit filing that violates the Act only because the filing attorney is a ‘debt collector.’”).

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