Skip to content

I’m Not a Debt Collector; Does the FDCPA Apply to Me?

By Teresa Niederwimmer, Vice President, Claims

The Fair Debt Collection Practices Act (“FDCPA" or “Act”), codified in 1978 at 15 U.S.C. § 1692, was created to “eliminate abusive debt collection practices” utilized by those seeking to recover consumer debts.[1]  The FDCPA was also intended to protect debt collectors of consumer debts who do follow the law from being undercut by debt collectors who do not.[2]

Attorneys who do not style themselves as debt collectors may wonder if the FDCPA applies to their activities. Initially, the FDCPA did not apply to attorneys. That changed in 1986 when an amendment to the Act deleted the statutory exclusion for attorneys.[3] Since that time, attorneys have become a frequent target of lawsuits alleging violations of the FDCPA. The legislation is what is known as “self-enforcing”, which means consumers who have been the object of collection abuses are charged with enforcing compliance via civil litigation.[4]  As a result, if a violation is found, not only will statutory damages apply, but the consumer can recover attorney fees incurred in prosecuting the claim.[5]

The threshold question in any FDCPA case is; was the defendant acting as a debt collector. Since the FDCPA was intended to only apply to debt collectors, proof of this fact is a fundamental element of a successful FDCPA claim.

A “debt collector,” as defined in the FDCPA, includes:

[A]ny person who uses any instrumentality of interstate commerce of the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.[6]

Thus, the statute establishes two alternative tests for determining whether the offending party is a debt collector. The first is the “principal purpose” test, which applies if one “uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts”. This is generally understood to encompass debt collection entities, or law firms whose practice is centered on consumer debt collection. Specifically, see Scott v. Jones, 964 F.2d 314, 316 (4th Cir.1992) in which the court determined the “principal purpose” of the defendant's business qualified him as a debt collector when 70–80% of his legal fees were generated from debt collection. Additionally, Volden v. Innovative Financial Systems, Inc., 440 F.3d 947, 952 (8th Cir.2006) held the “principal purpose” test holds that a defendant was a debt collector because its “principal business—some eighty percent—is processing dishonored checks.”

The second test is the “regularly collects” test, which is applied to attorneys who may not regularly engage in consumer debt collection activities. This test seeks to determine if the attorney “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another” such that the Act would apply.[7]

The term “regularly” is not defined in the statute, so it has been left to courts to determine what this term means when applied to attorneys. In Heintz v. Jenkins, the Supreme Court held that “regularly collects” will encompass an attorney if that attorney regularly engages in consumer debt collection efforts.[8]

The Heintz court did not set forth a test for determining what constitutes “regularly collects”; so many circuits have looked to the analysis set forth by the Second Circuit in Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolott.[9] The Goldstein court held that “the question of whether a lawyer or law firm ‘regularly’ engages in debt collection activity “... must be assessed on a case-by-case basis in light of factors bearing on the issue of regularity.”[10] The court then listed various non-exclusive factors that it felt are relevant to the determination:

“Most important in the analysis is the assessment of facts closely relating to ordinary concepts of regularity, including (1) the absolute number of debt collection communications issued, and/or collection-related litigation matters pursued, over the relevant period(s), (2) the frequency of such communications and/or litigation activity, including whether any patterns of such activity are discernible, (3) whether the entity has personnel specifically assigned to work on debt collection activity, (4) whether the entity has systems or contractors in place to facilitate such activity, and (5) whether the activity is undertaken in connection with ongoing client relationships with entities that have retained the lawyer or firm to assist in the collection of outstanding consumer debt obligations. Facts relating to the role debt collection work plays in the practice as a whole should also be considered to the extent they bear on the question of regularity of debt collection activity (debt collection constituting 1% of the overall work or revenues of a very large entity may, for instance, suggest regularity, whereas such work constituting 1% of an individual lawyer's practice might not). Whether the law practice seeks debt collection business by marketing itself as having debt collection expertise may also be an indicator of the regularity of collection as a part of the practice.”[11]

Examples of courts applying the Goldstein factors include the Tenth Circuit decision of James v. Wadas,[12]in which the court found attorney Wadas, over the span of one decade, engaged in only six to eight debt collection cases. Although the fact that Wadas has an ongoing relationship with the client whose debt she was collecting is a factor that would weigh in favor of “debt collector” status, the volume of cases accepted from this client comprised only a small portion of Wadas' overall caseload. Additionally the court found Wadas had not issued debt collection communications, and she did not have any system or personnel to assist with debt collection activity.  The Third Circuit in Hoffman v. Wells Fargo Bank, N.A. looked at the following facts to determine the FDCPA did not apply to the firm’s activities. The attorney marketed his firm’s expertise in business debt collection and residential mortgage foreclosure defense; the facts demonstrated only a small portion of the law firm’s work had involved consumer debt collection (“[O]f the hundreds of cases up to “five” cases involve consumer debt collection”); of the “many millions of dollars” in fees the attorney’s cases generated annually, consumer debt collection cases generated fees only “in the hundreds of dollars.”); and in the eighteen years at the firm, the attorney personally sent approximately four letters pertaining to consumer debt collection. [13]

The Eighth Circuit has also looked favorably on the Goldstein test, as outlined in Lynch v. Custom Welding and Repair, Inc.[14]In this case, plaintiff Lynch contracted with Custom Welding to repair a gearbox owned by Lynch. This was the first time Custom had performed services for Lynch. At the completion of the project Lynch paid Custom $500, but a dispute arose as to whether a balance remained. Custom sent Lynch a final invoice for $606.31. Custom retained the services of attorney Sease, who had previously represented Custom with regard to corporate law matters. Sease sent a demand letter to Lynch seeking the $606.31, plus $50 in attorney fees to be paid within 10 days. The letter went on to say failure to make payment would result in the filing of suit.

The facts revealed Sease was a sole practitioner who employed one legal secretary.  Sease described himself as a small town general trial practitioner who had handled over 4,000 matters. Less than 10 of those matters, representing less than one percent of his business, related to the collection of money on behalf of another party.

The Lynch court, citing Schroyer v. Frankel[15],  determined Lynch had presented no evidence that Sease was regularly engaged in debt collection. The record contains only a single debt-collection letter—the one Sease sent to Lynch.  The Court found this does not suffice to demonstrate Sease was a debtor collector as contemplated by the FDCPA.  The Court also points out that the Schroyer  Court held “the legislative history hardly makes clear that attorneys who collect debts occasionally and small firms that collect debts incidentally to their general law practices are ‘debt collectors’ under the FDCPA”.[16]   As a matter of law, Lynch failed to meet his burden of showing that Sease was a debt collector under the “regularly collects” test.  Because Sease was not a debt collector within the meaning of the FDCPA, the Court ruled he was entitled to judgment in his favor as a matter of law.

It is not uncommon for FDCPA claims to be made against attorneys who don’t consider themselves debt collectors. Understanding what courts look for when deciding if the FDCPA will apply is the first step to ensuring an attorney will not be caught unaware.


[1] 15 U.S.C § 1692(e)
[2] Id.
[3] Pub.L. 99–361, 100 Stat. 768
[4] Senate Report No. 95-382, at 5 (August 2, 1997)
[5] Carroll v. Wolpoff & Abramson, 53 F.3d 626 (4th Cir. 1995)
[6] 15 U.S.C. § 1692a(6) (emphasis added)
[7] 15 U.S.C. § 1692a(6)
[8] Heintz v. Jenkins, 514 U.S. 291, 299, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995)
[9] 374 F.3d 56 (2d. Cir. 2004)
[10] Goldstein, 374 F.3d at 62.
[11] Id. at 62–63 (footnote omitted).
[12] James v. Wadas, 724 F.3d 1312
[13] 2019 WL 186093 (January 11, 2019)
[14] 142 F. Supp. 814 (N.D. Iowa 2015)
[15] 197 F.3d 1170, 1176 (6th Cir.1992)
[16] Id. at 1175.