It can often be hard for a debt collection agent to verify the contact information of a person who owes money. Sometimes the recovery specialist has to take a non-traditional means of contact, such as contacting the individual via social media. In other situations, relatives or employers are contacted.


Marx v. General Revenue Corporation

However, a recent case called into question the means by which an employer can be contacted. In Marx v. General Revenue Corporation, decided in the the Tenth Circuit Court of Appeals in Colorado, Olivea Marx was contacted by a collection agency after defaulting on student loans. The company hired to recover the payments, General Revenue, sent a fax to Marx's employers to verify her working status and see if the woman was eligible for wage garnishment after Marx refused to come to an agreement on repayment.

According to the written opinion of the court, though Marx alleged the fax constituted a violation of the Fair Debt Collection Practices Act and that their tactics were threatening and abusive, General Revenue was within their rights. Marx appealed, maintaining the FDCPA was violated and that the fax constituted a communication under the regulation.

Though the court of appeals was split on their decision, the majority ruled in favor of the collection agency, and awarded them damages of more than $4,500.

Supreme Court stepping in

However, according to Courthouse News Service, the Supreme Court will soon be reviewing the findings because of a discrepancy between the FDCPA and the Federal Rules of Civil Procedure.

While Part 3 of Section 813 of the FDCPA concerning civil liability states "the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs," if the defense wins the case, rule 54 (d) of the FRCP is contradictory. Under that law, a motion must be made to request compensation for fees.

The Supreme Court will be deciding which is the prevailing rule that will be applied to General Revenue Corporation in the near future.

Though the case held that the use of a fax to assess the employment status of a debtor is not considered a communication under the FDCPA, agencies may want to take this litigation as an example. Though the collector may win a case, they might not be compensated for lawyers fees in the future. So, a company should consider their attorneys' statuses and fees before entering into a court case.