Civil Recovery Requests Arising from Theft Do Not Constitute Debt Collection

Civil recovery requests stemming from the law of tort will not be restricted by the FDCPA.

Civil recovery

When a civil recovery request is made, many retail theft offenders assume that the request qualifies as an attempt to collect a debt and mistakenly believe that they are provided with the protections listed under the Fair Debt Collection Practices Act (FDCPA). Congress enacted the FDCPA in 1977 “to eliminate abusive debt collection practices by debt collectors, to ensure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent state action to protect consumers against debt collection abuses” (15 U.S.C. § 1692(e) (2011).

 The FDCPA and its state law relative “equivalents” are clearly intended to protect consumers from abusive debt collection practices. Debt falls under the realm of consumer law and is governed by the FDCPA and the abovementioned various state statutory equivalents. Under the FDCPA, a debt is defined as “a consumer’s obligation … to pay money arising out of a transaction in which the money, property, insurance or services [being purchased] are primarily for personal, family or household purposes …”(15 U.S.C. § 1692a(5) (2011)).

So does a request for civil damages arising from a theft constitute the collection of a debt? The emphatic answer is no! While some have argued that a civil recovery request arising from a retail theft incident involves an obligation to pay money, they missed the point that there was at that time, no consumer, no obligation and no consensual transaction as there would be in a debt collection matter. They failed to understand (or acknowledge) that to fall under the FDCPA: there needs to be a consumer, there needs to be an obligation and the obligation needs to arise from a consensual transaction for personal, family or household purposes. First, a thief is not a consumer for the item that is taken, even if it is a failed attempt.(See Shorts v. Palmer, 155 F.R.D. 172 (S.D. Ohio 1994)). Second, the payment for statutory or other civil recovery damages is not an obligation because while the wrongful act may trigger civil liability, it is not enforceable until the parties agree or a civil lawsuit is filed and a judge enters judgment in favor of the retailer. Third, theft is not a consensual transaction.

Congress, the courts, and the Federal Trade Commission have all clearly ruled that the FDCPA does not apply to civil settlement offers concerning tort claims, such as theft (See Shorts v. Palmer, 155 F.R.D. 172 (S.D. Ohio 1994); Hawthorne v. Mac Adjustment, 140 F.3d 1367 (11th Cir. 1998); Zimmerman v. HBO Affiliate Group, 834 F.2d 1163 (3d Cir. 1987); Staub v. Harris, 626 F.2d 275 (3d Cir. 1980); Coretti v. Lefkowitz, 965 F. Supp. 3 (D.C. Conn. 1997)).

Additionally, there is a specific exception from the reach of the FDCPA for tort claims. FTC Commentary to the FDCPA specifically states that the FDCPA does not apply to “unpaid taxes, fines, alimony, or tort claims because they are not debts incurred from a transaction [involving the purchase of] property…or services…for personal, family or household purposes” (FTC Statements on the FDCPA, 53 Fed. Reg. 50,097 (Dec. 13 1988); emphasis added).

The FDCPA applies where there is a purchaser of goods or services or credit is extended or offered to a purchaser of goods or services. It contemplates an agreement, negotiation or similar transaction between a buyer and seller of goods and services. Retail theft does not contemplate an agreement, negotiation or similar transaction between a buyer and a seller of goods and services because it does not qualify as a consensual consumer transaction. Instead, it is classified as a tort. A tort is defined as “a civil wrong … for which a remedy may be obtained, usually in the form of damages” (Black’s Law Dictionary 724 (3rd pocket ed. 2006); Emphasis added). Retail theft, as a civil wrong, falls under the realm of tort law and is governed by common law and statutory law.

When a retailer detects a person shoplifting in a store, it has suffered a violation of its property rights. When it suffers these legal damages arising from incidents of theft, the retailer should feel confident in knowing that the moment a person engages in shoplifting in its store, the retail theft offender ceases to be a consumer for the item or items at issue. The retailer should be assured in knowing that all states in the United States have enacted civil statutes to help allow retail theft victims to recover various civil damages for these civil “wrongs” and that civil recovery requests stemming from the law of tort will not be restricted by the FDCPA.

This article was originally published in 2011 and was updated February 15, 2017. 

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