On June 26, the 6th Circuit issued an opinion that further muddied the waters of the Fair Debt Collection Practices Act (FDCPA) and raised the specter of a new avenue of liability for law firms hired to foreclose on residential property. In conjunction with recent decisions from the 11th Circuit, the 6th Circuit’s opinion in Wallace v. Washington Mutual Bank, F.A. places foreclosure firms on notice that, in some circumstances, slight errors or misstatements in letters to mortgagors could lead to liability under the statute.
The FDCPA only provides liability for debt collectors. The statute defines a debt collector as “any person who [engages] in any business the principal purpose of which is the collection of any debts.” Any person meeting this definition is subject to liability for using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” The statute provides for either actual or statutory damages (up to $1,000 per violation) for a prevailing plaintiff, as well as attorneys’ fees and costs.