Why States Should Have Primary Oversight of Attorney’s Activities in Debt-Collection Litigation

This article was co-authored by Thomas B. Pahl and Matthew J. Wilshire. Thomas B. Pahl is the Acting Director of the Bureau of Consumer Protection at the Federal Trade Commission, and Mathew J. Wilshire is a Senior Attorney in the Division of Financial Practices at the FTC. The views expressed in this article are the personal views of the authors and do not necessarily reflect the views of the FTC or any FTC Commissioner.   

Since its enactment in 1977, there has been great controversy over whether the Fair Debt Collection Practices Act (“FDCPA”)[1] does and should apply to attorneys’ conduct in debt-collection litigation, most of which occurs in state court. Although the statute originally exempted attorneys, Congress rescinded that exemption and courts have since applied the FDCPA to a growing range of activities in litigation. The National Creditors' Bar Association and the American Bar Association have advocated that Congress pass legislation[2] that would exempt lawyers’ litigation activities from the FDCPA.[3]  Even though we take no position on this proposed legislation, we generally agree that the best approach to protecting consumers from the litigation activities of lawyers is to rely on state court and state bar enforcement of state law along with FTC enforcement of the FTC Act as a backstop.   

The FDCPA’s application to lawyers has expanded over time. When Congress first enacted the FDCPA, it exempted attorneys completely by defining “debt collector” to exclude “any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client.”[4]  Courts generally construed that definition to immunize attorneys for conduct inside or outside of litigation, including practices non-attorneys generally do today.