A Congressional Response to Marx v. General Revenue Corp.

By on May 15, 2014

The case of Marx v. General Revenue Corp. is garnering even more attention. In December of 2011, the 10th Circuit affirmed the decision of the trial court that awarded costs to a prevailing defendant in a Fair Debt Collections Practices Act (the “FDCPA”) lawsuit. In February 2013, we reported on the United State Supreme Court decision upholding the ruling of the 10th Circuit. In a nutshell, the Supreme Court’s decision held that a prevailing defendant debt collector is entitled to an award of costs absent a showing of bad faith or harassment on the part of the consumer in filing suit.

Now, more than one year after the Supreme Court’s decision, it appears that the Marx decision may be under attack. U.S. Representative Matt Cartwright (D-Penn.) has introduced a bill in the House of Representatives to amend the FDCPA to allow the awarding of lawsuit costs to successful collection agency defendants only when there is a finding of bad faith on the part of the consumer. Proponents of the bill are concerned that the Marx decision may deter consumers from filing lawsuits in fear of cost award to a prevailing debt collector.

In actuality, the proposed bill not only attacks the Marx decision but it challenges a common tenet of our judicial system – both parties in litigation should be treated fairly and held to the same standard. Fairness dictates that if a consumer is unsuccessful in establishing liability under a strict liability statute like the FDCPA, the prevailing defendant should be awarded the costs incurred for having to defend the lawsuit.

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