For centuries, attorneys have been regulated and disciplined primarily by the state supreme courts that license them, not Congress or federal agencies. Consistent with this principle, the Fair Debt Collection Practices Act (FDCPA) originally contained a complete exemption for attorneys collecting debts on behalf of their clients. In 1986, Congress voted to eliminate the attorney exemption, based in part on its belief that the revised Act would only allow regulation of attorneys’ non-litigation collection activities. Despite Congress’ intent, however, the courts have since applied the FDCPA to creditor attorneys even when they are engaged in litigation activities on behalf of clients. As a result, many creditor attorneys who file lawsuits to collect legitimate debts are now being unfairly sued for alleged technical violations of the FDCPA even when consumers have suffered no actual harm. In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA or Dodd-Frank Act), which granted the new Consumer Financial Protection Bureau (CFPB) broad authority to regulate debt collectors and to enforce the FDCPA. Although Section 1027(e) of the DFA exempts most consumer attorneys engaged in the practice of law from the CFPB’s authority, it does not appear to apply to creditor attorneys who file suit to collect legitimate debts owed to their clients.
To address these problems, the ABA and its allies in the National Creditors Bar Association (NCBA) are urging Congress to pass corrective legislation known as H.R. 5082, the Practice of Law Technical Clarification Act of 2018. The bipartisan bill, cosponsored by Reps. Alex Mooney (R-WV) and Vicente Gonzalez (D-TX), would preserve traditional state court regulation and oversight of the legal profession by clarifying that the FDCPA and the CFPB’s regulatory authority under the DFA do not apply to creditor attorneys when they are engaged in debt collection litigation and thus are under the direct supervision of the trial judge.