On September 22, the U.S. Court of Appeals for the 3rd Circuit affirmed a lower court’s decision to sanction two attorneys and their law firm for allegedly orchestrating a scheme to manufacture FDCPA violations. The court found that the attorneys sent fabricated, handwritten dispute letters to debt collectors, intending to provoke technical violations of the statute and collect attorney’s fees. The attorneys purportedly directed their firm’s lawyers and paralegals to send obfuscating, handwritten letters designed to be difficult for debt collectors’ automated systems to recognize, increasing the likelihood that the debts would not be marked as disputed. If a debt collector failed to respond appropriately, the attorneys would file lawsuits seeking statutory damages of up to $1,000 per violation, plus costs and attorney’s fees.

The case centered on complaints filed on behalf of two debtors, each attaching a nearly identical handwritten letter. The attorneys theorized that debt collectors would overlook such correspondence, and when the debts were not marked as disputed, the attorneys sued based on the technical violation under the FDCPA.

The district court determined the lawyers had violated a civil procedure rule by submitting complaints based on misrepresentations and half-truths to harass the debt collector and inflate litigation costs. The appellate court agreed with the district court’s analysis, emphasizing that members of the bar are held to a higher ethical standard.