Question: Darlene Jenkins borrowed money from a bank in order to buy a car. When she defaulted on her loan, the bank's law firm sued her in state court to recover the balance due. One member of the law firm wrote to Jenkins's attorney listing in the amount she owed an amount that included certain insurance against her failure to repay the loan. Jenkins then sued in federal court under the Fair Debt Collection Practices Act. The case reached the U.S. Supreme Court. BREYER, J.: The issue before us is whether the term "debt collector" in the Fair Debt Collection Practices Act applies to a lawyer who regularly, through litigation, tries to collect consumer debts. The Court of Appeals for the Seventh Circuit held that it does. The Fair Debt Collection Practices Act prohibits "debt collectors" from making false or misleading representations and from engaging in various abusive and unfair practices. The Act says, for example, that a "debt collector" may not use violence, obscenity, or repeated annoying phone calls; may not falsely represent "the character, amount, or legal status of any debt"; and may not use various "unfair or unconscionable means to collect or attempt to collect" a consumer debt. Among other things, the Act sets out rules that a debt collector must follow for "acquiring location information" about the debtor, communicating about the debtor (and the debt) with third parties, and bringing "legal actions."

The Act imposes upon debt collectors who violate its provisions "civil liability" to those whom they harass, mislead, or treat unfairly. The Act's definition of the term "debt collector" includes a person "who regularly collects or attempts to collect directly or indirectly, debts owed to another." And: It limns "debt" to consumer debt, i.e., debts "arising out of transactions" that "are primarily for personal, family, or household purposes." The plaintiff in this case, Darlene Jenkins, borrowed money from the Gainer Bank in order to buy a car. She defaulted on her loan. The bank's law firm then sued Jenkins in state court to recover the balance due. A_s part of an effort to settle the suit, a lawyer with that firm, George Heintz, wrote to Jenkins' lawyer. H1s letter, in listing the amount she owed under the loan agreement, included $4,173 owed for insurance, bought by the bank because she had not kept the car msured as she had promised to do Jenkins then brought this Fair Debt Collection Practices Act suit against Heintz and his firm. She claimed that Heintz's letter violated the Act's prohibitions against trying to collect an amount not "authorized by the agreement creating the debt," and against making a "false representation of the amount of any debt."

The loan agreement, she conceded, required her to keep the car insured "against loss or damage" and permitted the bank to buy such insurance to protect the car should she fail to do so. But, she said, the $4,173 substitute policy was not the kind of policy the loan agreement had in mind, for it insured the bank not only against "loss or damage" but also against her failure to repay the bank's car loan. Hence, Heintz's representation about the amount of her debt was false; amounted to an effort to collect an amount not authorized by the loan agreement; and thus violated the Act. There are two rather strong reasons for believing that the Act applies to the litigating activities of lawyers. First, the Act defines the debt collectors to whom it applies as including those who "regularly collect or attempt to collect, directly or indirectly, [consumer] debts owed or due or asserted to be owed or due another." In ordinary English, a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings is a lawyer who regularly "attempts" to collect those consumer debts. Second, in 1977, Congress enacted an earlier version of this statute, which contained an express exemption for lawyers. That exemption said that the term "debt collector" did not include "any attorneyat law collecting a debt as an attorney on the behalf of and in the name of a client." In 1986, however, Congress repealed this exemption in its entirety, without creating a narrower, litigation-related, exemption to fill the void. Without more, then, one would think that Congress intended that lawyers be subject to the act whenever they meet the general "debt collector" definition. For these reasons, we agree with the Seventh Circuit that the Act applies to attorneys who "regularly" engage in consumer-debt-collection activity, even when that activity consists of litigation. Its judgment is therefore

1. Did the debtor have a legal obligation to repay her car loan?

2. Did the debtor have a legal obligation to insure her car?

3. What did the bank do wrong?

4. Why do you think Congress passed the Fair Debt Collection Practices Act?