“How Fair Debt Collection Laws are Thwarted by Routine Judicial Fee Slashing”

In March 2015, the Consumer Financial Protection Bureau issued its 2015 report to Congress regarding Fair Debt Collection Practices Act complaints and enforcement actions. In addition, the CFPB reported on its public education initiatives to inform consumers about their rights under the FDCPA.

The Fair Debt Collection Practices Act (FDCPA) includes a fee-shifting provision whereby the party in violation of the law pays reasonable attorney fees to the prevailing plaintiff. These fee-shifting provisions are included in statutory law to encourage private citizens to implement public policy, i.e., to become private attorneys general.

Lemberg Law examined 94 randomly selected FDCPA cases between 2011 and early 2015 and found that courts awarded the dollar amount of fees sought in only 8 percent of non-default judgment cases; courts reduced attorney fees in the remainder of cases. In 56 percent of cases where an attorney fee award was lowered, one or more attorneys’ hourly rates were reduced.

The lack of benchmarking of attorney fees may have a chilling effect on consumer access to attorneys willing to take on FDCPA cases. Indeed, the number of FDCPA lawsuits filed in federal court has steadily decreased since 2011. Compared with 2011, when 12,237 cases were filed, there were 7 percent fewer in 2012, 15 percent fewer in 2013, and 20 percent fewer in 2014.

The study suggests that, in order to mitigate this factor, it may be helpful to initiate a nationwide survey of prevailing consumer attorney fees that courts could use as a benchmark and that attorneys could rely on when filing motions for statutory attorney fees.