When is suing a debt collector for $7500 a bad idea? When you have substantially higher damages of course. Unfortunately, the Consumerist website has posted an article congratulating a consumer for suing a debt collector in small claims court and winning $7500. Keep reading to find out why that $7500 award for suing a debt collector is actually a bad result.
Actual Damages are Available Under the FDCPA
The consumer in this article had actual damages. Under the Fair Debt Collection Practices Act (FDCPA) awards for actual damages are not capped. By suing a debt collector in small claims court she put an artificial limit on her damages of $7500 which was extremely unreasonable under the circumstances. Indeed, the abusive nature of the unfair debt collections suffered by the consumer in the article would have easily exceeded $7500 if she would have filed her case in federal court. By suing a debt collector in small claims court this consumer basically allowed the debt collector to keep a lot of money to which the consumer should have been entitled.
Attorneys Fees Under the FDCPA are Mandatory
Also of concern for this consumer is that under the FDCPA attorneys fees are mandatory if your prove an FDCPA violation occurred. If the consumer in the article had taken her case to federal court the debt collector would have paid her attorneys’ fees. Those fees would have easily exceeded $7500. Essentially, the debt collector would have been forced to pay for the consumer’s attorney; something they did not have to do in small claims court. That factor alone should tip the scales in favor of federal court over small claims court.
Another limitation of small claims court is that small claims courts do not allow discovery. Discovery is the process of obtaining information from the other side that helps prove your case. In most, if not all FDCPA cases you will want to conduct discovery. Debt collectors always have telephone records, call recordings, call notes, and other internal documents that support your claims of abusive debt collection conduct. In federal court you can get these documents whereas in small claims courts you can’t.
Small claims courts also have a very simple appeals process. That is great news if you lose but terrible if you win. Because debt collectors have a right to appeal they will often use the threat of appealing your victory to negotiate a smaller damage award. You can always refuse but then you have to conduct the trial a second time and risk losing your case. In contrast, suing a debt collector in federal court is highly unlikely to ever be appealed.
There are numerous reasons why a $7500 judgment for the FDCPA case in the article is too low. The consumer should be congratulated for suing a debt collector and holding it accountable for its Fair Debt Collection Practices Act violations but the consumer could have, and should have, received more.