The Attempted Collection of an Unlawful Debt Could Constitute a Civil RICO Violation
Debt collectors are required to follow certain rules and procedures. As an example, a collection agency must comply with the Fair Debt Collection Practices Act (FDCPA). Failure to do so could result in sanctions, including significant financial liability. The FDCPA and other similar consumer protection laws govern the practices of debt collectors attempting to recover a lawful debt.
The attempt to collect an unlawful debt could be a much more serious violation. A company or other entity could even face a civil RICO lawsuit for knowingly attempting to collect unlawful debts. In this post, our Miami RICO claims lawyer provides an overview of unlawful debt collection practices and civil RICO violations.
RICO Statute: Unlawful Debt Collection May Constitute Racketeering Activity
Civil RICO lawsuits are complicated. A plaintiff must meet certain, highly specific legal standards in order to bring a successful claim. Among other things, a civil RICO plaintiff must prove that the defendant(s) engaged in a pattern of racketeering activity. Unlawful debt collection can constitute racketeering activity under 18 U.S.C. § 1962(c). As defined in the federal legal code, an unlawful financial obligation includes:
- Debts incurred through illegal gambling;
- Debts incurred through other unlawful activities; and
- Debts unenforceable because of a federal or state law against usury.
Important Distinguishing Factor: An Unlawful Debt Collection Practice vs. An Unlawful Debt
In considering debt collection and civil RICO laws, it is important to emphasize the difference between an unlawful debt collection practice and an unlawful debt. The FDCPA bars debt collector harassment. Under the federal law, consumers have a right to request correspondence in writing. If a debt collector keeps making phone calls after receiving such a notice, they are likely engaged in an abusive and unlawful debt collection practice. They can be held liable under the FDCPA.
That being said, an unlawful debt collection practice is not, by itself, a civil RICO violation. To prove that a debt collector violated RICO laws, you would have to prove that their unlawful debt collection practices amounted to a pattern of racketeering activity. In contrast, the attempted collection of an unlawful debt—a gambling debt, another illegal debt, or an unenforceable and usurious debt—is racketeering activity. Parties cannot try to collect unlawful debts.
The Bottom Line: To hold a debt collector liable for a civil RICO violation, a plaintiff must prove a pattern of racketeering activity. In general, that requires proving that the debt collector knowingly attempted to collect on an unlawful debt.
Get Help From a Civil RICO Attorney in South Florida
At Pike & Lustig, LLP, our Florida civil RICO lawyers have the legal skills and real world experience that you can rely on in a complex legal matter. If you have questions about unlawful debt collection practices and RICO law, we can help. Contact our firm today for a strictly confidential, no commitment consultation with an experienced civil RICO claims lawyer. We represent businesses, organizations, and individuals in Miami, West Palm Beach, and beyond.