Class Action Defense Blog

FDCPA Class Action Claim Belonged to Bankruptcy Estate and Settlement of Individual Claim Appropriate because Trustee could not Prosecute Class Action Ohio Federal Court Holds

After a law firm filed an action to collect a debt from her, plaintiff filed a putative class action against the law firm alleging violations of the federal Fair Debt Collection Practices Act (FDCPA). Griffith v. Javitch, Block & Rathbone, LLP, 358 B.R. 338, 340 (S.D. Ohio 2007). Shortly thereafter, plaintiff and her husband filed a Chapter 7 bankruptcy petition in the federal court for the Southern District of Ohio, staying the underlying action, and plaintiff listed the class action as a contingent claim her creditor, Great Seneca Financial Corporation, but did not separately list her class action against the law firm. Id. The bankruptcy trustee determined that it was a no-asset case, and plaintiff and her husband received a bankruptcy discharge in October 2004; less than a month later, the underlying lawsuit was reopened. Id. The parties jointly requested a stay pending a decision by the federal Court of Appeals for the Sixth Circuit in a case concerning “several defenses to an FDCPA suit that are raised by [the law firm] here on essentially identical factual allegations,” id. (citing Todd v. Weltman, Weinberg & Reis, 434 F.3d 432 (6th Cir. 2006). The underlying class action again became active in June 2006.

Defense attorneys moved for dismissal or summary judgment, arguing that the class action claim belonged to the bankruptcy trustee because it was not properly listed on the bankruptcy petition schedules; accordingly, the defense argued, plaintiff lacked standing to prosecute the class action. Griffith, at 340. Plaintiff countered that a “class action claim” had been listed on the petition, and advised the court that the bankruptcy trustee would be filing a formal abandonment of the claim so that her class action could proceed; instead, the trustee advised plaintiff’s lawyer that it would not be in the best interests of the bankruptcy estate to abandon the claim. Id. The court issued an order to show cause why the complaint should not be dismissed for lack of standing, but the defense motions were held in abeyance pending further bankruptcy court proceedings. Id. The trustee moved to reopen the bankruptcy case, and to hire plaintiff’s lawyer to prosecute the class action on behalf of the estate. Id.

Continue reading "Class Action Defense Cases-Griffith v. Javitch: Ohio Court Holds Debtor’s Federal Fair Debt Collection Practices Act (FDCPA) Class Action Claim Belongs To Bankruptcy Trustee And Approves Settlement Of Individual Claim" »

Posted In: Certification of Class Actions, FDCPA, Court Decisions

Federal Fair Debt Collection Practices Act (FDCPA) does not Authorize Injunctive Relief Against Debt Collectors, FDCPA One-Year Statute of Limitations Begins to Run no later than Date Debt Collector Files Suit Against Debtor, and Debt Collector need only Establish that Notice Required by § 1692g was Sent, not Received, California Federal Court

Plaintiff filed a putative class action against debt collector and its attorneys in California state court for alleged violations of the Fair Debt Collection Practices Act (FDCPA) and California’s equivalent statute known as the Rosenthal Fair Debt Collection Practices Act (California’s FDCPA). Defense attorneys removed the class action to federal court and moved to dismiss the California state-law claims arguing that they were barred by California’s litigation privilege; the district court agreed with the defense and dismissed those portions of the class action complaint. Taylor v. Quall, 471 F.Supp.2d 1053, 1056-57 (C.D. Cal. 2007). Defense attorneys then filed a motion to strike certain portions of the class action complaint, as well as a motion for summary judgment. Id., at 1055-56. The district court granted these motions in part, and granted the request of plaintiff’s lawyer for additional time to conduct discovery as to the FDCPA § 1692e claim in the class action complaint.

The class action arose from the following facts: a Plaintiff obtained a credit card from Citibank but stopped making payments on the card in early 2002. Citibank transferred the debt to defendant Unifund CCR Partners, and Unifund retained California attorney Matthew Quall to collect the debt. Taylor, at 1056. Quall sent plaintiff a collection letter in May 2005, and filed suit against plaintiff in June 2005; that lawsuit eventually settled, and Quall filed a request for dismissal without prejudice. Id. Plaintiff’s class action complaint was filed in July 2006 (mistakenly identified as 2005 in the court order), the claims of which the district court summarized at page 1056: “Plaintiff asserts that Quall (1) failed to provide the proper notice of debt required by 15 U.S.C. § 1692g when he began his collection efforts; (2) made false or misleading representations while negotiating the settlement in violation of § 1692e; (3) failed to fulfill the FDCPA's standard for “meaningful” attorney involvement; and (4) violated the FDCPA by filing the Unifund Action without complying with California statutes governing suits brought on behalf of entities with fictitious business names.”

Continue reading "FDCPA Class Action Defense Cases-Taylor v. Quall: California Federal Court Partially Grants Defense Motions To Strike And For Summary Judgment In Class Action Alleging FDCPA (Fair Debt Collection Practices Act) Violations" »

Posted In: FDCPA, Court Decisions

Debtor need not Pay Debt to have Standing to Prosecute Federal Fair Debt Collection Practices Class Action and Debtor Entitled to Summary Judgment on § 1692g Claim because Collection Letter did not Track Statute but Triable Issues of Fact Existed as to Alleged Violations of § 1692e(5) and (10) as the Language in Collection Letters was Subject to Reasonable and Different Interpretations Florida Court Holds

Plaintiff filed a putative class action against a debt collector, Amalgamated Debt Collection Services, for violations of the federal Fair Debt Collection Practices Act (FDCPA) and various state laws arising out of its efforts to collect $39.32. Rivera v. Amalgamated Debt Collection Services, Inc., 462 F.Supp.2d 1223, 1225-26 (S.D. Fla. 2006). Plaintiff moved for partial summary judgment as to defendant's liability for violating the FDCPA, id., at 1225; defense attorneys argued that triable issues of fact exist, and that plaintiff lacked standing, id., at 1227. The district court granted the motion in part, but agreed with defense attorneys that triable issues of fact existed as to interpretation of certain language in debt collection letters.

The facts are straight-forward: In an effort to collect a debt, Amalgamated sent plaintiff two letters, each of which stated in pertinent part, "unless this matter can be resolved within 30 days of the above date, it will be necessary to consider the institution of legal procedures against you" and that she had 30 days from the date of the letters to dispute the validity of the debt, Rivera, at 1225-26; it was undisputed, however, that Amalgamated had never commenced legal proceedings in an effort to collect a debt, id., at 1226. Amalgamated also sent plaintiff a letter stating "that her failure to remit payment within 15 days would result in the 'nationwide reporting' of her debt as a 'bad debt.'" Id. Plaintiff moved for partial summary judgment.

Continue reading "FDCPA Class Action Defense Cases-Rivera v. Amalgamated Debt Collection Services: Florida Federal Court Holds Debt Collector Violated § 1692g Of Fair Debt Collection Practices Act But Issues Of Fact Exist As To § 1692e Claims" »

Posted In: FDCPA, Court Decisions

California's Litigation Privilege Bars Claims of Unfair Debt Collection Practices California Federal Court Holds

Plaintiff filed a putative class action in California state court alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and California's equivalent statute, the Rosenthal Fair Debt Collection Practices Act (RFDCPA), and for violations of California's unfair competition law (UCL), California Business & Professions Code section 17200 et seq. The lawsuit was premised on acts committed by defendants' efforts to collect a debt Defense attorneys removed the class action to federal court, and filed a motion to dismiss two claims for relief. Taylor v. Quall, 458 F.Supp.2d 1065, 1065-66 (C.D. Cal. 2006). Defendants argued that their conduct was absolutely privileged because it was part of the lawsuit aimed at collecting the debt. Id., at 1066. The district court agreed with the defense and granted the motion.

Plaintiff's class action complaint alleged the following. After plaintiff lost his job, he received several calls from people attempting to collect monies owed on his Citibank credit card account. Plaintiff advised these people that he was unemployed and would not pay the debt. Eventually, these collection efforts ended. However, defendants thereafter acquired the Citibank debt and filed a lawsuit against plaintiff seeking to collect the amounts owed. Plaintiff claims the lawsuit was time-barred and that defendants lacked standing. Plaintiffs further alleges that "Defendants improperly sought attorney's fees and costs, and made multiple misrepresentations to Plaintiff until he ultimately settled the action." Taylor, at 1066. As noted above, defense attorneys argued that any statements made during the course of the lawsuit fell within the scope of the litigation privilege, thus warranting dismissal under Rule 12(b)(6). The district court agreed.

Continue reading "Class Action Defense Cases-Taylor v. Quall: California Federal Court Grants Defense Motion To Dismiss Class Action Holding That Debt Collection Practices During Lawsuit Are Insulated By Litigation Privilege" »

Posted In: FDCPA, Court Decisions

Class Action Alleging FDCPA (Fair Debt Collection Practices Act) Violations Based on Form Letters Sent to Debtors Warranted Class Certification Montana Federal Court Holds, Rejecting Defense Argument that Plaintiff's Statute of Limitations Defense to Debt Collection Defeated Predominance Requirement of Rule 23(b)(3)

Plaintiff filed a putative class action against a debt collector seeking to collect on dishonored checks for alleged violations of the Fair Debt Collection Practices Act (FDCPA) based on letters sent to debtors that demanded fees not authorized by state or federal law. Alexander v. JBC Legal Group, P.C., 237 F.R.D. 628, 629 (D. Mont. 2006). Plaintiff's lawyer moved for certification of the class action; defense attorneys opposed the motion arguing that the numerosity requirement of Rule 23(a) is not met and that plaintiff's statute of limitations defense defeats certification under Rule 23(b)(3).

In 2004, defendant JBC Legal Group sent a letter to plaintiff seeking to collect $6.07 for a dishonored check that had been written more then 12 years earlier. Alexander, at 629. "The letter demanded that Alexander remit to Defendants $46.07 and stated that he would be subject to a penalty of triple the amount of the check, or $100.00, whichever was greater, if he failed to make payment within thirty days." Id. A month later, defendant sent plaintiff a letter demanding $146.07. Id. Several months later, defendant sent plaintiff another letter demanding $146.07. Id.

Continue reading "Alexander v. JBC-Class Action Defense Cases: Montana Court Rejects Defense Objections To Certification Of Class Action Alleging Violations Of Federal Fair Debt Collection Practices Act (FDCPA)" »

Posted In: FDCPA, Court Decisions

Federal Court Rejects Class Action Claim that Offer to Settle Debt for 50% of Current Balance Due Violates Fair Debt Collection Practices Act (FDCPA)

Plaintiffs filed a consolidated class action complaint against Midland Credit Management, a debt collector that purchases debts from third-party creditors, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq. Midland sent letters attempting to collect outstanding debts; the class action complaint alleged that the letters violated the FDCPA because they contain false and misleading information. Defense attorneys filed a motion for summary, and plaintiffs followed with a cross-motion for summary judgment. The federal district court agreed with defense attorneys that the collection letters did not violate the FDCPA and granted summary judgment in favor of Midland and against the class action plaintiffs. Jackson v. Midland Credit Management, Inc., 445 F.Supp.2d 1015, 1017 (N.D. Ill. 2006).

Preliminarily, the district court noted that the Seventh Circuit “evaluates FDCPA claims through the eyes of an ‘unsophisticated debtor’” – it does not employ the “least sophisticated debtor” test adopted by some sister circuits. Jackson, at 1018-19. The court explained at page 1018 that, under this test,

“The unsophisticated debtor is regarded as ‘uninformed, naive, or trusting,’ but nonetheless is considered to have a ‘rudimentary knowledge about the financial world and is capable of making basic logical deductions and inferences.’” (Citations omitted.)

Because the court’s analysis requires an understanding of the specific language used in Midland’s letters, we provide the quoted language, including the emphasis in the original letters, as set forth by the district court at page 1017:

Continue reading "Jackson v. Midland Credit-Class Action Defense Cases: Illinois Federal Court Grants Defense Motion For Summary Judgment Holding Debt Collection Letter Did Not Violate Federal Fair Debt Collection Practices Act (FDCPA)" »

Posted In: FDCPA, Court Decisions

In Case of First Impression Florida District Court Holds that Collection Letter Sent by Law Firm Violated Federal Fair Debt Collection Practices Act (FDCPA) Because it Told Debtor that Validity of Debt could be Disputed Only in Writing

Plaintiff opened an American Express Centurion credit card account. American Express retained a law firm to collect amounts owed on the account. The law firm sent a “Dunning letter” that stated, in pertinent part, that the debtor had to “notify this office in writing within thirty days after receiving this notice that you dispute the validity of the debt.” Baez v. Wagner & Hunt, P.A., 442 F.Supp.2d 1273, 1274 (S.D. Fla. 2006) (italics added by court). Plaintiff filed a class action against the law firm alleging that the collection letter violated Section 1692g of the federal Fair Debt Collection Practices Act (FDCPA) by requiring that the validity of the debt be disputed in writing, and defense attorneys moved to dismiss the complaint. Id., at 1274-75. The basis of the lawsuit is that Section 1692g(a)(3) requires that a debt collection letter notify the debtor that the debt will be assumed valid unless the debtor disputes the validity of the debt within 30 days. Sections 1692g(a)(4) and (a)(5), however, reference written notifications from the debtor disputing the debt. Defendant argued that its Dunning letter simply “provided [plaintiff] with additional guidance for disputing the debt and avoided confusion by reconciling the notification requirement in subsection (a)(3) with the writing requirement contained in subsections (a)(4) and (a)(5).” Baez, at 1275-76. The district court disagreed.

Continue reading "Baez v. Wagner & Hunt-Class Action Defense Cases: In Class Action Against Debt Collector Florida Federal Court Holds That Law Firm’s Collection Letter Violated Fair Debt Collection Practices Act (FDCPA)" »

Posted In: FDCPA, Court Decisions

California Federal Court Reaffirms that Scope of Precertification Discovery in Class Action Lawsuits is Within the Discretion of the Court

A putative class action alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) was filed against a county district attorney and a private company (ACCS) under contract to administer the county’s Bad Check Restitution Program. Del Campo v. Kennedy, 236 F.R.D. 454 (N.D. Cal. 2006). After plaintiff learned that the check she had given a store merchant (Fry’s Electronics) did not clear, she called the store and offered to make full payment: “The store declined her offer because the check had not been entered yet into the computer system.” Id., at 456. Plaintiff later received a letter from the district attorney concerning the crime of writing a bad check, and advising her that she owed not only the amount of the check ($95.02), but a returned item fee ($10), administrative fee ($35), and bad check restitution program fee ($125); plaintiff tendered only the amount of the delinquent check. Id. Upon receiving a demand threatening criminal action if she failed to pay the $170 in additional fees, plaintiff filed the FDCPA class action. Id. Eventually, the class action was consolidated with another lawsuit. Plaintiff then filed subpoenas on two stores (Safeway and Target), and defense attorneys filed a motion to quash the subpoenas or for a protective order.

Continue reading "Class Action Defense Cases-Del Campo v. Kennedy: California Federal Court Denies Defense Motion For Protective Order That Sought To Bar Third Party Precertification Discovery In FDCPA Class Action" »

Posted In: FDCPA, Court Decisions

Pennsylvania Federal District Court Holds that Named Class Action Plaintiffs may Recover Damages Under the FDCPA (Fair Debt Collection Practices Act) Both Individually and as a Member of the Class

A class action was filed in federal court against Drive Financial Services and Drive G.P. alleging violations of the Fair Debt Collection Practices Act (FDCPA) in that defendants allegedly sent letters “on the ostensible letterhead” of an attorney for the purpose of collecting a debt. McCall v. Drive Fin. Serv., L.P., 440 F.Supp.2d 388, 388-89 (E.D. Pa. 2006). Plaintiff’s lawyer filed a motion in limine to determine the amount of statutory damages that would be available under 15 U.S.C. § 1692k(a)(2)(B). Id. The district court rejected the argument by defense attorneys that the named class action plaintiff could not also recover as a member of the class, and held the maximum amount of statutory damages available at trial to be $501,000. Id., at 391.

Continue reading "Class Action Defense Cases-McCall v. Drive Financial: Class Action Statutory Damages Under Federal Fair Debt Collection Practices Act (FDCPA) Can Exceed $500,000 Pennsylvania Court Holds" »

Posted In: FDCPA, Court Decisions

Defense attorneys frequently face class action lawsuits alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), which prohibits abusive, deceptive or otherwise improper debt collection practices by third-party debt collectors. At the same time, however, the FDCPA permits reasonable efforts to collect legitimate debts. The Federal Trade Commission is one of several federal agencies with enforcement obligations under the FDCPA. The FTC has primary enforcement responsibility under the FDCPA, and it is charged with preparing an annual report for Congress summarizing its administrative and enforcement actions it during the prior year. The report also summarizes consumer complaints concerning debt collection practices. The FTC’s 2006 Annual Report to Congress is now published.

Posted In: FDCPA

Ninth Circuit Resolves Several Issues of First Impression Concerning Federal Fair Debt Collection Practices Act (FDCPA), Holding Debtor Can Waive “Cease Communication” Directive, Debt Collectors May Rely on Information Provided by Creditors to Verify Debt, FDCPA is a Strict Liability Statute, and One Act Can Support Multiple Violations

Debtors filed suit against a debt collection agency, its employee and its outside counsel alleging various violations of the federal Fair Debt Collection Practices Act (FDCPA) and Oregon’s Unfair Debt Collection Practices Act. The defense and debtors filed cross-motions for summary judgment; the district court granted the motion brought by the attorney, partially granted the motion brought by the debt collector, and denied the motion brought by the debtors. The Ninth Circuit affirmed in part and reversed in part. Clark v. Capital Credit & Collection Services, Inc., ___ F.3d ___, 2006 WL 2441705 (9th Cir. August 24, 2006). We provide a brief summary of the case, which the Ninth Circuit characterized as “present[ing] a complicated web of problems that has required us to address a litany of issues for which there is a dearth of applicable precedent” and for which it “endeavored to adopt a construction of the FDCPA that recognizes ‘there is room within the [FDCPA] for ethical debt collectors to make occasional unavoidable errors,” Slip Opn., at 10165 (citation omitted).

In an effort to collect a debt, a debt collector sent the debtor a collection notice letter. The debtor disputed the debt and detailed billing problems with the creditor. The debt collector sent a second notice, enclosing an itemized statement from the creditor and claiming that the statement adequately verified the debt. The debtor requested “proper verification” and instructed the debt collector to cease making telephone calls. Slip Opn., at 10143. The debt collector then retained counsel who, in response to a demand for verification of the debt and an end to telephone communications, responded with the same itemized statement previously provided to the debtor. The debtor subsequently called the attorney to discuss the debt, but received a return call from the debt collection agency that “so upset [her] that she was required to obtain therapy.” Id., at 10144. The debtors filed suit.

Continue reading "Class Action Defense Issues-Clark v. Capital Credit: Ninth Circuit Affirms In Part And Reverses In Part Federal District Court Judgment In Favor Defense In FDCPA (Fair Debt Collection Practices Act) Case" »

Posted In: FDCPA, Court Decisions

Federal Court Holds Decertification of Class Action Appropriate Where Defense Lacks Financial Ability to Satisfy Claims

Plaintiffs filed a class action against defendants, including The Credit Store, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA); a Texas federal district court certified the class action, but the defense delayed implementation of the certification order by filing a bankruptcy petition. The district court decertified the class action against The Credit Store sua sponte because it lacked the financial ability to satisfy any judgment against it. Barnett v. Experian Information Solutions, Inc., 236 F.R.D. 307 (E.D. Tex. 2006). The district court summarized the allegations against The Credit Store as follows: "The plaintiffs contend that the defendant purchased old debts and changed the date of last activity on the accounts such that they could be reported to credit reporting agencies under the Fair Credit Reporting Act. This gave the debt collectors leverage to collect the obsolete debts." Id., at 308.

Continue reading "Barnett v. Experian-Class Action Defense Cases: Texas Court Decertifies Class Action Under Federal Fair Debt Collection Practices Act (FDCPA) Decertified Because Defendant In Bankruptcy" »

Posted In: FDCPA, Court Decisions

New York Federal Court Converts Defense Motion to Dismiss FDCPA Class Action to Motion for Summary Judgment, Grants Motion, and Awards Defense Attorney Fees and Costs Because Lawsuit was Filed for Purpose of Harassment

After debt collector sent plaintiff a letter demanding payment of a $492 debt, plaintiff filed a putative class action alleging that the letter violated the federal Fair Debt Collection Practices Act (FDCPA) because it (1) demanded payment within 30 days and (2) that the letter’s request for “payment or notice of dispute” within 30 days “might” be interpreted as giving the debtor 30 days from the date of the letter rather than from its receipt. Jacobson v. Healthcare Fin. Servs, Inc., 434 F.Supp.2d 133, 139 (E.D.N.Y. 2006). The defense was not amused; and judging from the ruling, neither was the federal court.

The federal court discussed the fact that FDCPA claims are subject to abuse:

Continue reading "Class Action Defense Cases-Jacobson v. Healthcare Financial: New York Federal Court Throws Out Class Action Under FDCPA (Fair Debt Collection Practices Act) And Awards Defense Attorney Fees" »

Posted In: FDCPA, Court Decisions

California Federal Court Grants Summary Judgment in Favor of Wolpoff & Abramson and Client MBNA, and Issues Order to Show Cause re Rule 11 Sanctions Against Plaintiff

The law firm of Wolpoff & Abramson LLP is no stranger to litigation: it routinely prosecutes debt collection actions on behalf of national retail and banking clients; and it has been named in many individual and class action lawsuits by people upset at the Wolpoff firm’s efforts to collect on delinquent accounts. According to a lawyer at Wolpoff & Abramson, the law firm aggressively defends lawsuits filed against it, and statistically it appears to do a very good job in presenting its defense. The most recent court ruling concerning the firm comes out of a California federal court, which granted the defense motions for summary judgment. Gorman v. Wolpoff & Abramson, ___ F.Supp.2d ___, 2006 WL 1728915 (N.D. Cal. June 23, 2006). The action was filed by a lawyer (John Gorman) against MNBA and its attorneys, the Wolpoff firm, asserting causes of action under the federal Fair Credit Reporting Act (FCRA), the federal Fair Debt Collection Practices Act (FDCPA), and libel. (The claims under California state law that existed in Gorman’s original complaint were dismissed without leave to amend in response to an earlier defense motion. See Gorman v. Wolpoff & Abramson, 370 F.Supp.2d 1005, 1010-11 (N.D. Cal. 2005).)

Gorman’s action was precipitated by a contested credit card charge of roughly $760 that MBNA initially removed but then reposted. The federal court found that Gorman stopped making payments to MBNA in May 2003, “but then deliberately charged thousands of dollars more on his MBNA credit card” and then in August 2003 demanded that MBNA write off “the entirety of his balance of over $5000.” Instead, MBNA retained Wolpoff to file a debt collection suit against Gorman.

Continue reading "Class Action Defense Issues--Gorman v. Wolpoff & Abramson: Law Firm Again Prevails In Action Alleging Violations of FCRA (Fair Credit Reporting Act) and FDCPA (Fair Debt Collection Practices Act)" »

Posted In: FCRA, FDCPA, Court Decisions

Fair Debt Collection Practices Act Requires Affirmative Action, Fair Credit Reporting Act Does Not Apply to Commercial Activity,

On July 10, 2006, a federal appellate court consolidated two appeals and (1) agreed with eBay's defense team that eBay was not subject to the federal FDCPA (Fair Debt Collection Practices Act) or the federal FCRA (Fair Credit Reporting Act), and (2) affirmed that eBay compliance with a subpoena for records did not violate the federal ECPA (Electronic Communications Privacy Act) or the federal SCA (Stored Communications Act): it therefore affirmed the dismissals entered in both underlying lawsuits. McCready v. eBay, Inc., ___ F.3d ___, 2006 WL 1881142 (7th Cir. 2006). For clarity, we address the two lawsuits separately. The first lawsuit arose from the fact that plaintiff utilized eBay's services to operate an online business through which he would buy and sell goods. Several eBay users became unhappy with their business dealings with plaintiff; they used eBay's "Feedback Forum" to explain their dissatisfaction, and several of them notified eBay of their complaints. eBay told plaintiff of the complaints and explained that his accounts would be suspended if the complaints were not resolved. Ultimately, eBay suspended plaintiff's accounts but offered to reinstate them if he reimbursed monies to the claimants. "Rather than make good on his sales, [plaintiff] embarked on retaliatory litigation," Slip Opn., at 2, and a summary of that litigation is described in the Note below. Relevant here, plaintiff filed a federal court complaint against eBay alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., the Electronic Fund Transfers Act (EFTA), 15 U.S.C. §§ 1693 et seq., Title 11 of the U.S. Bankruptcy Code, and nine (9) state law claims. Id., at 3. The district court granted the defense motion to dismiss the FDCPA and FCRA claims, and declined to exercise supplemental jurisdiction over the state law claims; the parties stipulated to dismissal with prejudice of the bankruptcy claim. Id., at 4.

With respect to the FDCPA claim, the Seventh Circuit observed that eBay simply suspended plaintiff's accounts until he resolved the outstanding fraud complaints and never threatened to take collection against him; the Court held that such conduct could not be deemed an attempt to "collect" a debt. McCready, at 8. With respect to the FCRA claim, plaintiff asserted that eBay's "Feedback Forum" constituted a "consumer report, id., at 9. The Court quickly dispatched this claim on several grounds:

Continue reading "Class Action Defense Cases–McCready v. eBay: eBay Not A Debt Collector Under Federal FDCPA Or Reporting Agency Under Federal FCRA, And eBay Lawfully Produced Documents Pursuant To Subpoena, Seventh Circuit Holds" »

Posted In: FCRA, FDCPA, Court Decisions

While Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978 for the purpose of establishing certain that ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts, it did not intend to foreclose States from enacting laws concerning debt collection practices. Several states, such as California, have enacted such laws, and defense attorneys must frequently defend against class actions filed under such State laws. Congress expressed its intent not to preempt State laws - “except to the extent that those laws are inconsistent” with the FDCPA - in § 1692n, set forth below. Congress also provided that the Federal Trade Commission debt collection practices from State laws or regulations under the provisions of § 1692o, also set forth below.

§ 1692n. Relation to State laws

This subchapter does not annul, alter, or affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection provided by this subchapter.

§ 1692o. Exemption for State regulation

The Commission shall by regulation exempt from the requirements of this subchapter any class of debt collection practices within any State if the Commission determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this subchapter, and that there is adequate provision for enforcement.

Posted In: FDCPA, Statutes & Rules

Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978 for the purpose of establishing certain that ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. Congress also authorized the Federal Trade Commission to commence administrative actions against debt collectors for violations of the FDCPA, and charged the Commission with an obligation to report to Congress annually on FDCPA matters. The specific statutory language concerning these reports is as follows:

§ 1692m. Reports to Congress by the Commission; views of other Federal agencies

(a) Not later than one year after the effective date of this subchapter and at one-year intervals thereafter, the Commission shall make reports to the Congress concerning the administration of its functions under this subchapter, including such recommendations as the Commission deems necessary or appropriate. In addition, each report of the Commission shall include its assessment of the extent to which compliance with this subchapter is being achieved and a summary of the enforcement actions taken by the Commission under section 1692l of this title.

(b) In the exercise of its functions under this subchapter, the Commission may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 1692l of this title.

Posted In: FDCPA, Statutes & Rules

When Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978, it provided not only for private rights of action by debtors against debt collectors, it also provided for administrative enforcement by the Federal Trade Commission. While defense against a class action is certainly a concern for debt collectors, the lawyer advising debt collectors does well to keep in mind and advise the client as to the administrative proceedings that may be brought to bear. As a resource to the class action defense lawyer, we set forth the text of the administrative enforcement provision of the FDCPA:

§ 1692l. Administrative enforcement

(a) Federal Trade Commission

Compliance with this subchapter shall be enforced by the Commission, except to the extent that enforcement of the requirements imposed under this subchapter is specifically committed to another agency under subsection (b) of this section. For purpose of the exercise by the Commission of its functions and powers under the Federal Trade Commission Act [15 U.S.C.A. § 41 et seq.], a violation of this subchapter shall be deemed an unfair or deceptive act or practice in violation of that Act. All of the functions and powers of the Commission under the Federal Trade Commission Act are available to the Commission to enforce compliance by any person with this subchapter, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act, including the power to enforce the provisions of this subchapter in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.

(b) Applicable provisions of law

Compliance with any requirements imposed under this subchapter shall be enforced under--

(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C.A. § 1818], in the case of--

(A) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency;

(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25(a) [FN1] of the Federal Reserve Act [12 U.S.C.A. § § 601 et seq., 611 et seq.], by the Board of Governors of the Federal Reserve System; and

(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation;

(2) section 8 of the Federal Deposit Insurance Act [12 U.S.C.A. § 1818], by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;

(3) the Federal Credit Union Act [12 U.S.C.A. § 1751 et seq.], by the National Credit Union Administration Board with respect to any Federal credit union;

(4) subtitle IV of Title 49, by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

(5) part A of subtitle VII of Title 49, by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that part; and

(6) the Packers and Stockyards Act, 1921 [7 U.S.C.A. § 181 et seq.] (except as provided in section 406 of that Act [7 U.S.C.A. § § 226, 227]), by the Secretary of Agriculture with respect to any activities subject to that Act.

The terms used in paragraph (1) that are not defined in this subchapter or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) Agency powers

For the purpose of the exercise by any agency referred to in subsection (b) of this section of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this subchapter shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this subchapter any other authority conferred on it by law, except as provided in subsection (d) of this section.

(d) Rules and regulations

Neither the Commission nor any other agency referred to in subsection (b) of this section may promulgate trade regulation rules or other regulations with respect to the collection of debts by debt collectors as defined in this subchapter.

Posted In: FDCPA, Statutes & Rules

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., enacted by Congress in 1978, establishes certain that ethical guidelines for the collection of consumer debts, and provides debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. As class action defense attorneys know, the FDCPA has generated numerous class actions. The FDCPA expressly provides private rights of action and for the recovery statutory damages as well as actual damages. The FDCPA also expressly provides for class action recoveries. As a resource to the class action defense lawyer, we quote below the statutory provision of the FDCPA concerning civil liability:

§ 1692k. Civil liability

(a) Amount of damages

Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of--

(1) any actual damage sustained by such person as a result of such failure;

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.

(b) Factors considered by court

In determining the amount of liability in any action under subsection (a) of this section, the court shall consider, among other relevant factors--

(1) in any individual action under subsection (a)(2)(A) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional.

(c) Intent

A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) Jurisdiction

An action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) Advisory opinions of Commission

No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

Posted In: FDCPA, Statutes & Rules

To Defeat Federal Fair Debt Collection Practices Act Class Actions, Defense Lawyer Must Satisfy “Least Sophisticated Debtor” or “Unsophisticated Debtor” Standard

Class action lawsuits alleging violations of the Fair Debt Collection Practices Act (FDCPA) are commonplace. The class action defense lawyer frequently must defend against claims that the initial letter from the debt collector to the consumer failed to give the information required by 15 U.S.C. § 1692g. We discuss here the two main approaches taken by federal courts in determining whether such a violation occurred: the “least sophisticated debtor” standard, and the “unsophisticated debtor” standard.

We begin with the “least sophisticated debtor” approach because it is the most widely accepted. At least 6 courts have adopted this objective standard. See Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360, 365-66 (2d Cir. 2005); Wilson v. Quadramed Corp., 225 F.3d 350, 354-55 (3d Cir. 2000); United States v. National Fin. Serv., Inc., 98 F.3d 131, 136 (4th Cir. 1996); Smith v. Computer Credit, Inc., 167 F.3d 1052, 1054 (6th Cir. 1999); Terran v. Kaplan, 109 F.3d 1428, 1431-32 (9th Cir. 1997); Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1174-75 (11th Cir.1985). The least sophisticated debtor testis “lower than simply examining whether particular language would deceive or mislead a reasonable debtor.” Swanson v. Southern Oregon Credit Serv., Inc., 869 F.3d 1222, 1227 (9th Cir. 1998). Put another way, “The basic purpose of the least-sophisticated-consumer standard is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd.” Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993). But while this standard “protects naïve consumers,” Wilson, at 354, it also “prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care.” National Financial Services, at 136 (citation omitted).

Continue reading "Summary of Judicial Consideration of Federal FDCPA Claims Based on Debt Collection Letters: Defense of Class Action Issues" »

Posted In: FDCPA

The federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., has spawned numerous class action lawsuits, presenting defense attorneys with a wide array of claims. As a resource to the class action defense lawyer, we quote below the statutory provision of the FDCPA concerning deceptive forms:

§ 1692j. Furnishing certain deceptive forms

(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 1692k of this title for failure to comply with a provision of this subchapter.

Posted In: FDCPA, Statutes & Rules

Class action defense attorneys know that the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., is used frequently by a plaintiff’s lawyer to bring a class action against a debt collector for violating the FDCPA’s terms. The FDCPA, however, also includes provisions for lawsuits brought by debt collectors. Specifically, § 1692i addresses the venue for such lawsuits. It provides:

§ 1692i. Legal actions by debt collectors

(a) Venue

Any debt collector who brings any legal action on a debt against any consumer shall--

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity--

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

(b) Authorization of actions

Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors.

Posted In: FDCPA, Statutes & Rules

California Federal Court Finds Letter Referring to Debtor as “Customer” and to Debt Collector as “Account Representative,” and Offering to “Help” Resolve Debt, Not Misleading Under Fair Debt Collection Practices Act, But Allegation That Debt Collector Sought to Recover Excess Interest Sufficient to Survive Motion to Dismiss

In January 2006, a putative class action was filed in California federal court against Arrow Financial Services alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (FDCPA), and its California equivalent, California Civil Code, §§1788 et seq. Hapin v. Arrow Fin. Serv., 428 F.Supp.2d 1057, 1059 (N.D. Cal. 2006). Plaintiff’s lawyer asserted that the debt collector letter from Arrow was “false, deceptive, and misleading” in that it (1) described plaintiff as a “customer,” (2) characterized the debt collector as an “account representative,” and (3) offered to “‘help Plaintiff regain his financial future . . . [and] by the false . . . characterization of debt as helping “regain his financial future.”’” Id. The complaint also alleged that Arrow sought to collect excessive interest, id. Defense attorneys filed a motion to dismiss the class action complaint, which the California federal court granted in part and denied in part.

Continue reading "Hapin v. Arrow Financial: Defense Motion to Dismiss FDCPA Class Action Granted Because Debt Collector Letter Not Misleading California Court Holds" »

Posted In: Class Actions In The News, FDCPA, Court Decisions

Class action defense attorneys know that many provisions of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., form the basis of class actions, other provisions do not appear to be controversial. For example, even if a plaintiff’s lawyer has argued a violation of § 1692h, concerning multiple debts, it appears that it has not yet generated any appellate decisions. The statutory language of the FDCPA concerning multiple debts is as follows:

§ 1692h. Multiple debts

If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer's directions.

Posted In: FDCPA, Statutes & Rules

Federal class action defense attorneys know that the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., provides debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. The specific statutory language of the FDCPA concerning the validation of debts is quoted below:

§ 1692g. Validation of debts

(a) Notice of debt; contents

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing--

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) Disputed debts

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

(c) Admission of liability

The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

Posted In: FDCPA, Statutes & Rules

A defense lawyer in a federal class action under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., often confronts allegations of "unfair practices" by debt collectors. As a resource to attorneys in class actions, we here provide the statutory language of the FDCPA relevant to such claims:

§ 1692f. Unfair practices

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector's intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.

(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if--

(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

(C) the property is exempt by law from such dispossession or disablement.

(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

Posted In: FDCPA, Statutes & Rules

Defense attorneys often deal with class actions under the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., alleging false or misleading representations made by debt collectors. As a resource for the class action defense lawyer, we set forth the language of the application statute under the FDCPA:

§ 1692e. False or misleading representations

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

(2) The false representation of--

(A) the character, amount, or legal status of any debt; or

(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to--

(A) lose any claim or defense to payment of the debt; or

(B) become subject to any practice prohibited by this subchapter.

(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

(13) The false representation or implication that documents are legal process.

(14) The use of any business, company, or organization name other than the true name of the debt collector's business, company, or organization.

(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.

(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 1681a(f) of this title.

Posted In: FDCPA, Statutes & Rules

As a resource for federal defense lawyer defending against class actions under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., we provide on this site the text of the FDCPA. Attorneys in FDCPA class action cases often concern communications from debt collectors, which is governed by the following statute:

§ 1692d. Harassment or abuse

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.

(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 1681a(f) or 1681b(3) of this title.

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) Except as provided in section 1692b of this title, the placement of telephone calls without meaningful disclosure of the caller's identity.

Posted In: FDCPA, Statutes & Rules

As a resource for defense lawyer defending against class actions under the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., we provide on this site the text of the FDCPA. Attorneys in FDCPA class action cases often concern communications from debt collectors, which is governed by the following statute:

§ 1692c. Communication in connection with debt collection

(a) Communication with the consumer generally

Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt--

(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o'clock antemeridian and before 9 o'clock postmeridian, local time at the consumer's location;

(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or

(3) at the consumer's place of employment if the debt collector knows or has reason to know that the consumer's employer prohibits the consumer from receiving such communication.

(b) Communication with third parties

Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) Ceasing communication

If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except--

(1) to advise the consumer that the debt collector's further efforts are being terminated;

(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or

(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

If such notice from the consumer is made by mail, notification shall be complete upon receipt.

(d) "Consumer" defined

For the purpose of this section, the term "consumer" includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

Posted In: FDCPA, Statutes & Rules

As a resource for the class action defense lawyer defending against class actions under the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., we provide the text of the FDCPA on this site for attorneys.

§ 1692b. Acquisition of location information

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall--

(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;

(2) not state that such consumer owes any debt;

(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(4) not communicate by post card;

(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and

(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.

Posted In: FDCPA, Statutes & Rules

As a resource for attorneys defending against class actions under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., we provide the text of the FDCPA. This article sets forth for the class action defense lawyer the definitions used in the FDCPA:

>§ 1692a. Definitions

As used in this subchapter--

(1) The term "Commission" means the Federal Trade Commission.

(2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.

(3) The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.

(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

(5) The term "debt" means 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 of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

(6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include--

(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

(7) The term "location information" means a consumer's place of abode and his telephone number at such place, or his place of employment.

(8) The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.

Posted In: FDCPA, Statutes & Rules

As summarized in a separate article, Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978 for the purpose of establishing certain that ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. The FDCPA has been a well-spring for class action lawsuits since its inception, and the class action defense lawyer still confronts new twists to FDCPA claims. As a resource, we set forth the text of the FDCPA, beginning with 15 U.S.C. § 1692:

§ 1692. Congressional findings and declaration of purpose

(a) Abusive practices

There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Inadequacy of laws

Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Available non-abusive collection methods

Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

(d) Interstate commerce

Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.

(e) Purposes

It is the purpose of this subchapter to eliminate abusive debt collection practices by debt collectors, to insure 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.

Posted In: FDCPA, Statutes & Rules

Debt Servicer Automatically Becomes Debt Collector Under FDCPA (Fair Debt Collection Practices Act) If Lender Previously Declared Loan In Default Second Circuit Holds

In 1978, Congress added Title VIII to the Consumer Credit Protection Act entitled the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., as a line of defense between consumers and debt collectors. (Some states, such as California, have enacted parallel state laws, but those are outside the scope of this article.) Congress intended the FDCPA to establish certain ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. FDCPA has become fertile ground for class action lawsuits; in some of these class actions, the plaintiff’s lawyer has been so bold as to name law firms and attorneys as defendants, in addition to debt collectors. The lawyer who represents debt collectors must use care as the FDCPA has resulted in surprising rulings. One such surprising case, at least for the defense team, is Alibrandi v. Financial Outsourcing Serv., Inc., 333 F.3d 82 (2d Cir. 2003), a New York putative class action.

By way of background, the FDCPA mandates that debt collectors include certain warnings in their first correspondence with debtors. 15 U.S.C. § 1692e(11). For example, the debt collector must inform the debtor of the name of the creditor, the amount of the debt, and the debtor’s right to challenge the validity of the debt. See 15 U.S.C. § 1692g(a). It is a general rule, however, that these warnings need be provided only by a “debt collector” – they need not be provided by a “debt servicer.” See Alibrandi, at 83 (“Significantly, if Financial Outsourcing were a debt service provider, its correspondence with debtors would not have to include the statutory warnings.”).

Continue reading "Class Action Defense Issues–Alibrandi v. Financial Outsourcing" »

Posted In: FDCPA, Court Decisions

California’s Fair Debt Collection Practices Act: A Brief Overview

In 1978, Congress added Title VIII to the Consumer Credit Protection Act entitled the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. Several states, such as California, have enacted consumer protection laws based upon the FDCPA. California’s version of the federal FDCPA is the Rosenthal Fair Debt Collection Practices Act. California Civil Code § 1788 et seq.

California Civil Code section 1812.700 provides:

(a) In addition to the requirements imposed by Article 2 . . ., third-party debt collectors subject to the federal Fair Debt Collection Practices Act . . . shall provide a notice to debtors that shall include the following description of debtor rights:

“The state Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt Collection Practices Act require that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or www.ftc.gov.”

(b) The notice shall be included with the first written notice initially addressed to a California address of a debtor in connection with collecting the debt by the third-party debt collector.

(c) If a language other than English is principally used by the third-party debt collector in the initial oral contact with the debtor, a notice shall be provided to the debtor in that language within five working days.

Continue reading "The Defense of Class Action Cases: California Issues" »

Posted In: FDCPA

In 1978, Congress added Title VIII to the Consumer Credit Protection Act entitled the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. Congress intended the FDCPA to make certain that ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. It is difficult to argue with the need for such guidelines: t he Federal Trade Commission provides Congress with an annual report covering its FDCPA enforcement activities and with a summary of consumer complaints of alleged violations of the FDCPA by debt collectors. The FTC reports that in 2005 there were more than 66,000 such complaints.

Congress found, “There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy. ” 15 U.S.C. § 1692(a). The FDCPA implements broad reforms to redress such abuse: we will highlight only a few of them in this article.

“The FDCPA broadly prohibits a debt collector from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt.’ 15 U.S.C. § 1692e.” Dunlap v. Credit Protection Ass'n, L.P., 419 F.3d 1011, 1012 (9th Cir. 2005). Additionally, it “‘prohibits unfair or unconscionable collection methods, conduct which harasses, oppresses or abuses any debtor, and the making of any false, misleading, or deceptive statements in connection with a debt, and it requires that collectors make certain disclosures.’” Foti v. NCO Financial Systems, Inc., 424 F.Supp.2d 643, 653 (S.D.N.Y. 2006) (citation omitted). For example, third-party debt collectors may not contact debtors before 8:00 a.m. or after 9:00 p.m., they may not threaten debtors with arrest, and they may not threaten legal action unless such action is truly being contemplated. However, the FDCPA does not prohibit third-party debt collectors from contacting debtors on holidays or weekends unless they know, or have reason to know, that it would be “inconvenient” to the debtor to do so. Indeed, the debtor may demand that the third-party debt collector terminate all communications, though the result of such a demand may well be a lawsuit. Specifically, provided the request is in writing, a debtor may demand that all further communication stop.

The FDCPA also “prohibits a debt collector from contacting a debtor where the collection agency ‘knows’ the consumer is represented by an attorney.” Schmitt v. FMA Alliance, 398 F.3d 995, 998 (8th Cir. 2005) (holding that while knowledge of agent is imputed to principal, knowledge of principal is not imputed to agent).

Finally, the FDCPA “requires debt collectors to notify debtors about their ability to challenge the validity of a debt and to provide other basic information. See 15 U.S.C. § 1692g.” Foti, 424 F.Supp.2d at 653. Specifically, the debtor may ask the collection agency to “validate” the debt by requesting proof that the debt is valid. (This provision has proven quite successful against collection agencies that would buy up “junk” debts and then demand payment from unsophisticated consumers.)

The FDCPA provides for private rights of action, and permits debtors to recover actual damages, statutory damages, and attorneys' fees and costs for violations of its terms. Under the statutory penalty provision, a jury may award up to $1000 for each violation of the FDCPA, regardless of whether the debtor can otherwise establish actual damages. One can easily imagine the significant damages potentially at risk in class action lawsuits alleging violations of the FDCPA.

NOTE: It is important to understand that, generally, the FDCPA only applies to third party debt collectors; the statutory scheme was not intended to cover the conduct of the original creditor. Some states, however, such as California, have enacted consumer protection statutes that provide broader coverage. California's Fair Debt Collection Practices Act is discussed in a separate article.

Posted In: FDCPA

A New Twist On Fair Debt Collection Practices Act Class Actions

California courts have been inundated with class actions alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and its California equivalent, the Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788 et seq. While California class action firms originally named the debt collection companies, the lawsuits were soon expanded to include California and out-of-state lawyers and law firms that assisted such debt collection companies in their efforts.

According to a June 20, 2006, press release prepared by the law firm of Brennan, Wiener & Associates of La Crescenta, California, a California putative class action was filed in the Los Angeles Superior Court on behalf of Kenneth Holtzclaw and Shane Satey against Great Seneca Financial Corporation, and against the Maryland law firm of Wolpoff & Abramson. Wolpoff & Abramson, LLP is a national law firm with approximately 850 employees. The firm is noted for its debt collection practice work and its representation of national retail and banking clients. According to the press release, “Wolpoff & Abramson set up Great Seneca just to try to insulate itself from unfair debt collection lawsuits.”

This is not the first time Wolpoff & Abramson has been sued. A computer search and cursory review of those lawsuits suggests that those actions have been less than successful. This does appear to be the first time, however, that an attempt has been made to eradicate the distinction between client and attorney. It will be interesting to see whether discovery turns up any evidence to support the plaintiffs’ bold claim.

Posted In: Class Actions In The News, FDCPA