FDCPA Caselaw Review for October 2018

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion.

The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Where insideARM has published a story on the case, a link is provided.

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Stewart v. Selip & Stylianou, LLP, No. 17-CV-2745 (E.D.N.Y. Oct 4, 2018)

Main Issue: Does a law firm’s collection letter require mentioning court costs when the collection lawsuit is not yet filed or still pending?

Conclusion: No

A law firm sent a collection letter to the consumer stating that it intended to file a collection lawsuit in state court. The letter did not include a disclosure that the firm would collect court costs or fees, which were ultimately requested when the suit was filed. The consumer sued saying that the letter was false and misleading due to this omission. The court found that the letter was not deceptive or misleading because court costs would only become due if the debt collector prevailed in the lawsuit. This means that the balance would remain static even while the suit was pending and no disclosure was needed per the Second Circuit’s Taylor v. Financial Recovery Services decision.

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Wise v. Credit Control Services, Inc., No. 16-CV-8128 (N.D. Ill. Oct. 19, 2018)

Main Issue: Is a debt collector sufficiently on notice of a consumer’s refusal to pay from (1) a fax received by an affiliated company or (2) a fax sent to the debt collector containing incorrect account information?

Conclusion: No

The consumer, with guidance from her attorney, sent two faxes to two separate numbers. One fax was sent to a company affiliated with and working under the same umbrella company as the debt collector, but the affiliated company did not engage in collecting debts. The consumer’s attorney found the affiliated company’s fax number in a job advertisement for the debt collector. The second fax was sent to defendant, but it contained incorrect account information. Specifically, the fax contained the consumer’s correct name and last four digits of her social security number, but it referenced a creditor and account number that was not associated with that particular debt collector. After the debt collector sent another collection letter to the consumer, this FDCPA lawsuit was filed.

The court found that neither letter put the debt collector sufficiently on notice of the refusal to pay. The court noted consumerdid not cite relevant case law and provided no reason sufficient for the court to extend liability to the debt collector for a fax received by the affiliated company, so the court considered the argument waived. The court also found that the second fax was insufficient to support the consumer's claims. The FDCPA only requires a debt collector to honor a refusal to pay for the particular debt listed in the refusal. Since the subsequent collection letter did not relate to the incorrect debt listed in the second fax, there was no violation.

Williams v. Harris, Klein Associates, Inc., No. 17-CV-03473 (E.D.N.Y. Oct. 23, 2018)

Issue: Does a debt collector’s refusal to discuss a debt with a debt settlement company violate the FDCPA?

Conclusion: No

Consumer retained a debt settlement company to assist with her debt. The debt settlement company sent a power of attorney to the debt collector for a “Bria Williams” whereas the debt collector’s records showed the consumer’s name as “Monet Williams.” After sending the power of attorney, an agent of the debt settlement company called the debt collector with the consumer on the line to provide verbal authorization to speak to the debt settlement company. The debt collector refused to discuss the debt with the debt settlement company because the name and address in the power of attorney did not match the name and address on the collection letter. The court ruled that established case law shows that FDCPA protections do not apply to conversations with third parties such as the agent for the debt settlement company. Since the FDCPA did not apply to the conversation in question, the court granted summary judgment in favor of the debt collector. The court also admonished plaintiff’s counsel for not mentioning relevant caselaw that precluded his client's claim even though he was counsel of record on both of those prior cases.

Guzman v. HOVG, LLC, No. 18-CV-3013 (E.D. Pa. Oct. 31, 2018)

Issue: Does including a validation notice that follows the statutory language listed in section 1692g (a)(3)-(5) violate the FDCPA?

Conclusion: Yes

In its letter, the debt collector included a notice of validation rights that followed the language in section 1692g of the FDCPA. The court found that this language is subject to two interpretations -- that a dispute per 1692g (a)(3) can be oral or written -- when only one of those interpretations is true, as least in the Third Circuit (the Third Circuit requires 1692g (a)(3) disputes to be in writing). The court noted that there is a circuit split on this issue, and that this circuit split is evidence that the FDCPA language is subject to more than one interpretation. According to the court, “[i]f the federal appellate courts have divided on the best reading, then surely the least sophisticated debtor would be similarly confused.” The court also took some issue with the notice being on the back of the letter. The court found that stating “see reverse side for important consumer information” did not adequately inform the consumer of the nature of the notice on the back page since the front side of the letter instructed the consumer multiple times to call with any questions.