In a 7-2 ruling, the United States Supreme Court found that consumers may be held liable for debt collection agencies’ court costs and attorney fees when the consumers file suit for violations of the Fair Debt Collection Practices Act and lose. The majority opinion, written by Associate Justice Clarence Thomas, found that the Federal Rule of Civil Procedure 52(d)(1) is not displaced by the provision of the FDCPA that attorney’s fees and court costs are to be awarded if FDCPA claims are brought in bad faith or for the purpose of harassment.
The appellant in the case, Olivea Marx, garnered support from the Federal Trade Commission, the Consumer Financial Protection Bureau, and the Department of Justice, which wrote an amicus brief on her behalf.
Associates Justices Sonia Sotomayor and Elena Kagan issued a joint dissent, saying that the FDCPA contains a cost provision that provides an exception to FRCP 52(d)(1).
While the debt collection industry is rejoicing, consumers who are hounded by debt collectors are undoubtedly reconsidering whether or not to exert their rights under the FDCPA. This ruling will likely have a chilling effect on consumers who are abused by debt collection agencies.