The Fair Debt Collection Practices Act (FDCPA) has a very specific attorney's fee provision. If the consumer wins, he gets his fees and costs. If the debt collector wins, it doesn't—unless a very high bar is met. Under section 1692k of the FDCPA, a debt collector may be awarded its fees and costs if the court finds that the action was brought for the purposes of harassment. This is rarely granted, but yesterday, the District of Arizona (D. Ariz.) did... sort of.
So, what happened?
In Navarro v. Portfolio Recovery Assocs., No. 18-cv-02333 (D. Ariz. May 6, 2020), the consumer filed an FDCPA lawsuit alleging that the defendant failed to credit report his account as disputed. The consumer previously mailed a dispute directly to the defendant, who properly reported that the account was under dispute. Then, once the dispute was resolved, the defendant reported the same and noted that the consumer disagreed with the findings of the investigation. At some point, the consumer pulled his credit report and noticed that it was no longer showing his account as disputed.
Evidence presented by defendant showed that it was, indeed, reporting the dispute to the credit bureau and it seems that something on the credit bureau's end prevented the dispute from showing up on the credit report. Defendant's in-house counsel also notified plaintiff's counsel of the same as early as one month after the lawsuit was filed. Ultimately, the court granted summary judgment for defendant, finding that, "The fact that Experian may have failed to take corrective action on its end does not support the inference that Defendant failed to report the dispute on its end."
Notably, the court also mentioned that defendant might be eligible for fees and costs under 1692k. This is what prompted defendant's request for fees.
The court's decision
In the end, the court granted in part and denied in part the motion for fees. The court granted the request as to costs (totaling roughly $450), but denied the request for attorney fees.
For fees, the court found that plaintiff's actions did not meet the very high bar of showing bad faith or harassment. While the court found that plaintiff's claim was based on faulty evidence, it declined to say that the claim was without merit. The court noted that while defendant's counsel notified plaintiff's counsel that it did report the dispute to the credit bureau, there was no evidence presented that defendant sent actual documentation or evidence of such a report to the bureau and plaintiff did not have to accept defendant's word that it did not violate the FDCPA.
The court also looked at the statutory language of the FDCPA section in question—it discusses bad faith or harassment when the suit is filed, not for actions that occur during the pendency of the lawsuit. Here, even if plaintiff's counsel received documentation evidencing the dispute reporting during the lawsuit (it was received during discovery), that doesn't change the analysis that at the time of filing, there was still an open question about whether or not a violation occurred.
However, the court noted there is a slightly lower bar to meet when it comes to awarding costs—it may grant costs to the debt collector as the prevailing party under the FDCPA without a showing of bad faith or harassment. It chose to do so here for the costs related to obtaining a transcript of the plaintiff's deposition.
Want to track what arguments for debt collector fees/costs under the FDCPA are winning? The iA Case Law Tracker does that in less time than it takes to pour your morning cup of coffee.