Statutory penalties under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act should be tied to inflation and are being devalued because they represent monetary amounts that have not kept up with the times, according to an essay published by the National Association of Consumer Advocates.
The FCRA, enacted in 1970, and the FDCPA, enacted in 1977, are “decades-past time” for an update, according to the essay, which notes that while the penalties for violating either law have remained the same — $1,000 for a statutory violation — inflation has increased 351% in the past four decades. An award of $1,000 today is the same as about $219 in 1977, which means the damages under the FDCPA have depreciated by 75% since the law went into effect, according to the essay. Applying inflation to the statutory penalties under the FCRA and FDCPA would increase them to about $4,601.
“Consumers are certainly not suffering less harm today than they were in 1977,” the article points out. “Indeed, more invasive and abusive corporate tactics have emerged over the decades that make it even tougher for consumers to overcome them.”
The article notes that other laws and bills — including some that attempt to amend the FDCPA — include penalties that are tied to indices like the Consumer Price Index, which would allow them to be adjusted on an annual basis relative to inflation. If the federal government is adjusting the amounts of its fines, then consumers should be able to have the same done for them, the essay argues.
“While the rate of inflation might not remain as high as it is now, inflation is an inescapable reality and lawmakers should address its devaluing effect on consumer remedies,” the essay concludes. “The decades-long erosion of these remedies has wider consequences for the safety of the marketplace.”
