Heintz v. Jenkins

Background

A borrower named Darlene Jenkins failed to make payments on a car loan, and the bank’s law firm sued her to recover the balance. A lawyer for the firm, George Heintz, sent a settlement letter that included a $4,173 charge for insurance the bank bought after she let the car go uninsured. Jenkins sued the lawyer under the Fair Debt Collection Practices Act, saying the letter tried to collect an amount not authorized by the loan agreement. The District Court dismissed the case, but the Court of Appeals for the Seventh Circuit reversed, creating a disagreement with at least one other federal appeals court.

Reasoning

The Court addressed whether the Act’s term “debt collector” covers a lawyer who regularly tries to collect consumer debts through lawsuits. The Justices gave two main reasons to say yes. First, the Act’s plain wording covers anyone who “regularly” attempts to collect consumer debts, and a lawyer who tries to get payment through litigation fits that description. Second, Congress had once explicitly exempted lawyers but later repealed that exemption without replacing it with a narrower exception for courtroom activity. The Court rejected arguments that the statute implicitly protects all litigation-related lawyer activity, and it gave little weight to a sponsor’s later statement and a nonbinding FTC staff commentary.

Real world impact

The decision means lawyers and law firms who regularly pursue consumer debts in court can be treated as debt collectors under the Act and can face lawsuits and enforcement for abusive or false collection practices. Courts will still sort out how the Act’s specific rules apply to ordinary courtroom filings and settlement communications, but the broad rule making lawyers subject to the statute is now affirmed.