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While repealing 1 U.S.C. sec. 7 of DOMA would be a big win for same-sex married couples, it would also change one of the cardinal sections of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. sec. 1692, to the nearly exclusive benefit of debt collectors.

DOMA repeal: win for debt collectors?

Protestors on both sides of the gay marriage issue showed up across from the street from the Supreme Court in Washington, March 27, as the court heard arguments on the Defense of Marriage Act (DOMA) case. (AP PHOTO: CAROLYN KASTER)

On March 27, the Supreme Court heard oral arguments for and against the constitutionality of the Defense of Marriage Act (DOMA), 1 U.S.C. sec.  7; 28 U.S.C. sec.  1738C, and by all indications the law appears to be on its last legs. United States v. Windsor, docket no. 12-307.

While repealing 1 U.S.C. sec.  7 of DOMA would be a big win for same-sex married couples, it would also change one of the cardinal sections of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. sec.  1692, to the nearly exclusive benefit of debt collectors.

Here is how it will work:

Section 1692c of the FDCPA restricts what a debt collector can say to whom regarding a debt. Collectors cannot contact a “consumer” at odd times, or at work after having been told to stop; they cannot contact a “consumer” at all if they know he or she has legal counsel in the matter, and with a few exceptions they must cease all communication after being asked to in writing. 15 U.S.C. sec.  1692c(a), (c).

Most notably though, without the permission of the “consumer” or a court, sec.  1692c bars collectors from telling anyone about a debt other than the “consumer” themselves. 15 U.S.C. sec.  1692c(b).  (Note: Debt Collectors may also tell a number of other interested parties about a given debt, including the consumer’s “attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.”  15 U.S.C. sec. 1692 ((b)).)

The astute reader wondering why “consumer” is in quotes throughout need only note the atypical definition ascribed to “consumer” exclusively in this section of the FDCPA: “[f]or the purpose of this section, the term ‘consumer’ includes the consumer’s spouse . . . .” 15 U.S.C. sec.  1692c(d).

(For sake of convenience this article overlooks the full meaning of “consumer” in this section, which also includes a “parent (if the consumer is a minor), guardian, executor, or administrator.”)

Because of this defining subsection, a collector may contact a consumer’s spouse about the consumer’s debt as if they were the consumer themselves—subject to the restrictions listed above.  And in turn the consumer’s spouse can act on their behalf, and may demand that collectors cease contact.

Enter the Defense of Marriage Act.

1 U.S.C. sec.  7 of DOMA is a definition statute that reads:

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word “marriage” means only a legal union between one man and one woman as husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.

Because of DOMA, every federal law using the words “spouse”—the FDCPA included—refers only to opposite-sex spouses.

This narrowed definition of “spouse” does several things to the various rights and obligations set out in sec.  1692c.  While nine states recognize same-sex marriages as of this writing, — Connecticut, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont, and Washington — the federal government under 1 U.S.C. sec.  7 of DOMA, and subsequently the FDCPA, does not.

To the detriment of consumers with a same-sex spouse, their spouse cannot write legally-binding requests to debt collectors demanding they cease communication. This effect, while unfortunate, is relatively minor compared to the comically knuckleheaded trap DOMA sets for debt collectors trying to collect from someone with a same-sex spouse.

In the illustrious tradition of legal explanation, here is a hypothetical: a debt collector wants to contact a woman named Molly about a debt which he thinks she owes.  For sympathy’s sake, and to place this example safely in the realm of fiction, this particular debt collector has never before violated state or federal law collection law.  This means he has never threatened, abused, misled, tricked, harassed, or cheated anyone in any way—all of which the FDCPA prohibits. 15 U.S.C. sec. sec.  1692d, e, & f.  He has never made an unauthorized disclosure of any debt to the wrong person, has never sued in the wrong court, and he always sends proper notices and provides proper verification upon request. 15 U.S.C. sec. sec.  1692c, g, & i.

Though Molly is at work when the collector first calls, her wife, Margaret, is home with the kids. When Margaret answers the phone, the collector asks “is Molly home?,” to which Margaret replies “no, but this is her wife.” The collector, keenly and justifiably familiar with the nuances of the FDCPA that allow him to speak of debts to spouses but ignorant of the particular effects of DOMA, tells Margaret all about Molly’s alleged debt and tries to convince her to set up a payment plan.

This would be permitted had Molly and Margaret been an opposite-sex married couple, but DOMA excludes Margaret from consideration as a “spouse” under the FDCPA.  The collector has just violated 1692c(b), which prohibits talking about debts with someone other than the consumer or their spouse, and is now strictly and federally liable to Molly for actual damages, statutory damages up to $1,000, court costs, and attorney’s fees. 15 U.S.C. sec.  1692k(a). Though actual damage is absent here, and even if the court is sympathetic to the collector and awards nominal statutory damages, the collector is still on the hook for all federal court costs and the hourly fees of Molly’s counsel.  Even a consumer protection attorney as pugnacious and litigious as the author can admit that this is a fairly outrageous federal cause of action.

“But what about the ‘bona fide error’ defense?” the astute reader asks. “A debt collector isn’t liable for mistakes ‘if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.’ 15 U.S.C. sec.  1692k(c).

After all, the collector only told Margaret about Molly’s debt after learning she was Molly’s spouse, and the fact that he has never made this mistake before speaks to the success of his routine. How was he supposed to know that 1 U.S.C. sec.  7 of DOMA, a definition statute several thousand pages of federal code away from the FDCPA, arbitrarily excluded her from the statute?”  A well-argued rebuttal, astute reader, but the bona fide error defense does not apply to mistakes of law.  Per a Supreme Court ruling in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich L.P.A., mistakes “resulting from a debt collector’s mistaken interpretation of the legal requirements of the FDCPA”—such as not knowing what “spouse” means for purposes of the law—are not covered. 130 S.Ct. 1605, 1608 (2010).  The collector would ultimately be federally liable for the exceptionally nefarious mistake of recognizing Mary and Molly’s marriage where DOMA does not.

Does this sort of thing happen a lot? Probably not, at least not in Minnesota, where a bill recognizing same-sex marriages is not set for a floor vote until early this summer.  HF 1054; SF 925. But thanks to DOMA such a claim is both valid and waiting.

During oral arguments on March 27, Justice Anthony Kennedy postulated that a Supreme Court decision repealing DOMA would benefit same-sex married couples in around 1,100 different federal statutes—everything from tax laws to employment laws to immigration laws. The same decision, however, would also benefit collection agencies by eliminating a perilous if uncommon FDCPA loophole through which they could easily fall.

One need not strain to imagine other unintended effects of DOMA hidden in the federal code. It is safe to say such effects were not considered during DOMA’s passage, and they may even be absent from talks of its repeal. The Supreme Court’s decision is expected sometime in June, allowing plenty of time in the meanwhile to contemplate the peculiarities of justice.

Bennett Hartz is a consumer protection attorney with Drewes Law. His practice focuses on the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and Minnesota foreclosure law.

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