Non-Consumer Debts Being Collected
Posted: Friday, March 16, 2012
Reports have surfaced that in some cities, such as Chicago on
particular, efforts are being increased to collect old tickets and
fines that have yet to be paid. Some of the fines and tickets
may date back more than ten years. Consumers should be on
alert, because it is anticipated that the collection tactics that
will be employed will be harsh and abusive.
Why am I so sure? Because the collectors that will be
hired to collect these debts will not have to comply with the
Fair Debt Collection Practices Act. Indeed the FDCPA
applies to debt collectors and prohibits abusive, harassing and
deceptive conduct. Thus, one would expect that a debt
collector that is being abusive while collecting a debt would be in
violation of the FDCPA. The problem is that the FDCPA
does not apply to every debt.
Under the FDCPA, the term "
debt" is defined as any obligation (or alleged obligation) to
pay money arising out of a transaction in which the money,
property, insurance or services which are the subject of the
transaction are primarily for personal, family or household
purposes. The term "
transaction" is emphasized here because that is a key component
of a collection to fall under the FDCPA. The debt itself must
arise out of a transaction. A transaction requires dealing
and an agreement between parties. Credit card agreements, car
notes, rental leases, or other loans that are not for business are
However, the receipt of a ticket or a fine is not a
transaction. It is a penalty or punishment in which the
consumer did not voluntarily enter into. As such, a municipal
fine, a parking ticket, or an insurance subrogation claim is not a
"debt" for purposes of the Fair Debt Collection Practices
Act. Collectors who obtain these accounts are well aware of
this and take advantage of it. We have witnessed many
complaints of rather abusive collection tactics, only to find out
it was the collection of a municipal fine, which then provides the
victim of no recovery.
This is not to say that collectors collecting on these debts
have open season to say or do whatever they want. Just
because the FDCPA does not apply, it does not mean that a person is
left wholly unprotected. Torts held at common law to be
actionable can be effective, such as claims for intentional
infliction of emotional distress. In addition, many states
have consumer fraud or deceptive business practices laws that may
be beneficial if the collector committed some sort of fraud that
ended up causing real damages to the debtor.
Protecting your rights as a consumer can be tough and
confusing. If you are overwhelmed, contact SmithMarco, P.C.,
today for a free and confidential case