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A Car Accident Claim is not a "Consumer Debt" Under the FDCPA


It is becoming all too common for attorneys to file or threaten Fair Debt Collections Practices Act (“FDCPA”) lawsuits that have no merit in order to obtain quick settlements. The FDCPA is designed to protect consumers from wrongful debt collection practices involving consumer debt. Not all claims involving consumers, including car accident claims, qualify as consumer debt under the FDCPA.

In the recent case of Perham v. Seattle Serv. Bureau, the plaintiff appealed the federal trial court’s dismissal of his FDCPA lawsuit against Seattle Service Bureau, which is a debt collector that was attempting to collect a subrogation claim for State Farm Insurance after the plaintiff’s sister was involved in a minor car accident in the plaintiff’s vehicle. 2016 U.S. App. LEXIS 13734 (11th Cir. June 28, 2016).

In agreeing with the federal district court, the federal appeals court pointed out that: “The FDCPA specifically defines those debts as ‘any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject matter of the transaction are primarily for personal, family, or household purposes.”’ Id. (internal citations omitted).

The federal appeals court was correct in its reasoning that the subject matter of a car accident claim is not for personal, family, or household purposes. Compared to a credit card bill or a medical bill, which are some of the most common consumer claims, a car accident claim brings no value to a person, family, or household.

All companies who are sued or threatened with a FDCPA lawsuit should immediately ask themselves if the subject matter of the transaction is primarily for personal, family, or household purposes. If the answer is in the negative, there may not be a valid FDCPA claim and, if a lawsuit is filed, the plaintiff could be liable for the defendant’s attorneys’ fees and costs. Settling these frivolous matters only sets a dangerous precedent and will make a company a target for aggressive consumer attorneys and debt relief agencies.

Founded in 1997, Gill Law Firm represents small, medium and large corporations in commercial debt recovery, small business and nonprofit startups throughout the state of Florida. To find out how the firm may help your company collect its unpaid deficiency judgments, please contact A. Wayne Gill, Esq. via email at awgill@gillattorneys.com or by phone at (561) 454-0301.

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