Killing “Zombie Debt” Through Clarity and Consistency in the Fair Debt Collection Practices Act. 15 USC § 1692.

Young W. Walgenkim, Willamette University

Abstract

The debt collection industry has seen incredible growth in the last decade as more and more people have been falling into greater debt. Much of the industry’s success comes from widespread use of unconscionable practices. One such practice is to mis-identify debt collectors as “creditors.” By employing this deception, debt collectors create enough confusion to collect Zombie Debts: debts that are stale, paid off, discharged, or otherwise uncollectable. Such mislabeling is contrary to the definitions in the Fair Debt Collection Practices Act (FDCPA) and the leading cases in every Circuit. Nonetheless, debt collectors rely on a handful of poorly reasoned cases to justify their practices and obtain favorable judgment against debtors across the nation. This article will explore the depth of this deception that debt collectors practice against consumers, revealing common arguments they raise in defense of such actions. I argue that clarity and consistency in correct application of the terms “creditor” and “debt collector” will help eliminate this string of deceptive practices.