FDCPA Caselaw Review for April 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 byTransUnion.

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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Here’s a rundown of just a few of the FDCPA cases in the spotlight in April 2018.

Pavlovich v. Account Discovery Systems, LLC

The issue: Interest language

Industry outcome: Positive

Collection letter stated that “A statement or correspondence may include post charge off interest and/or offer a settlement amount less than the legal now due balance." The plaintiff attempted a suit stating that the language was confusing. Court found that plain meaning of disclosure was not confusing if read in its entirety.

Tiffany Ham v. Midland Funding LLC

The issue: Court costs

Industry outcome: Positive

Debt collector filed suit and obtained a default judgement. Debt collector proceeded to a wage garnishment and sought the amount of the judgment, court costs and "probable court costs of $20.00." Kentucky law requires the judgment creditor pay a $10 fee to the clerk and a $10 fee to the garnishee for a total of $20.00. Consumer says debt collector did not have the right to collect those costs. However, under Rooker-Feldman, the consumer should have made that argument at the trial court level, and cannot make the argument now. Court found that at all times debt collector complied with state law as well as the Court's order awarding costs.

Kasey Velez v. Continental Service Group, Inc.

The issue: Letter, state notification

Industry outcome: Positive

Debt collection letter to a Pennsylvania resident also included a notice under Massachusetts law. Consumer alleged that this was confusing. Court agreed that state specific notice with other state notices in a debt collection letter is not otherwise confusing.

Dorrian v. LVNV Funding, LLC

The issue: Passive debt buyer not a debt collector

Industry outcome: Positive

A passive debt buyer was determined not to be a debt collector under Massachusetts statute, G. L. c. 93, § 24.4. The statute contains two separate definitions of “debt collector,” neither of which applied. A “passive debt buyer” is a company that buys debt for investment purposes and then hires licensed debt collectors or attorneys to collect the debt on its behalf. Because this definition covers entities of which the “principal purpose” is the “collection of a debt,” the debt buyer in this instance had no no contact with consumers and the Legislature did not intend for these entities to be treated as debt collectors. The second definition covers entities that “regularly collect or attempt to collect, directly or indirectly, debts owed or due” to another and this definition did not apply because debt buyer deals only with its own debts and  not the debts of another.

Rodriguez-Ocasio v. Law Offices of Joseph Molinaro, L.L.C.

The issue: Improper medical disclosure

Industry outcome: Positive

A law firm sued a consumer in state court for past due medical bill. Consumer alleges that documents submitted to court contained medical information that should not have been disclosed. Court granted motion to dismiss. Doctor-patient privilege is not absolute, and to maintain a claim for breach of doctor-patient confidentiality, consumer must allege that doctor did more than send Plaintiffs' past-due account to a debt collector for payment.

Bell v. Northland Group

The issue: Demand letter on settled debt

Industry outcome: Negative

Agency sent a demand letter on debt that had been settled. Agency immediately remedied the situation, but was sued anyway. Agency said it relied on information from its client, but because FDCPA is a strict liability statute, agency's summary judgment was denied.

Kolbasyuk v. Capital Management Services, LP

The issue: Collection letter, amount owed

Industry outcome: Positive

Consumer alleges debt collection letter failed to provide a true and accurate statement of the amount owed. Letter contained safe harbor language found in Avila. Consumer alleges that letter failed to follow the Carlin case. In Carlin, letter spoke of unspecific costs; court found that consumer did not have an understanding of what was immediately owed. It did not result in additional requirements under the FDCPA. Motion to dismiss granted.

John H. Burton v. Kohn Law Firm

The issue: Whether or not a debt was a consumer debt

Industry outcome: Positive

Consumer was unable to prove that debt was a consumer debt, especially when consumer denied the existence of the debt. Summary judgment granted for debt collector. 

Jackson v. Barton

The issue: Untimely suit-filing by consumer

Industry outcome: Negative

Law firm alleges that consumers FDCPA action was untimely and should relate back to the filing and service of the complaint. Court found that allegation relates to specific conduct which occurred after the filing of the collection action amounts to an FDCPA violation.

Warner v. Ray Klein, Inc.

The issue: Failure to identify current creditor

Industry outcome: Positive

Consumer alleged that agency failed to identify the current creditor. Court disagreed. The FDCPA does not discern between “original creditor and “current creditor.”  FDCPA only requires the collector to identify the name of creditor to whom the debt is owed. Agency complied with the statute by stating this was an attempt to collect a debt and only one creditor was named. Consumer's attempts to persuade the Court to parse out distinctions between an “original creditor” and a “current creditor” or to find confusing the inclusion of the debt collector's account number fail in the face of the facts of this case and border on the “idiosyncratic, or peculiar misinterpretations."

Hill v. Accounts Receivable Services, LLC

The issue: Assignment of healthcare debt

Industry outcome: Positive

Agency brought a state court action to collect a medical debt. At the trial agency submitted exhibits—the authenticity of which consumer challenged—purporting to document the assignment. Judge ruled in favor of the consumer saying that exhibits did not show a valid assignment. Consumer sued agency. District court granted judgment on the pleading finding that consumer claims that agency engaged in false and deceptive means by submitting the exhibits was not material. Consumer appealed. 8th Circuit affirmed stating that a debt collector's loss of a collection action—standing alone—does not establish a violation of the Act. The fact that a lawsuit turns out ultimately to be unsuccessful” does not “make the bringing of it an ‘action that cannot legally be taken. Agency’s inadequate documentation of the assignment did not constitute a materially false representation, and the other alleged inaccuracies in the exhibits are not material.

Robinson v. Accelerated Receivables Solutions (A.R.S.), Inc.

The issue: Request for fees

Industry outcome: Positive

Consumer sued agency claiming that request for attorneys fee and pre-judgment interest was improper under state law because the claim was for an account stated rather than services rendered. Nebraska state law does not provide for attorney’s fees and interest on account stated claims. Court disagreed and found that services were rendered in the form of medical services and regardless of who was collecting, that forms the basis of who the claim is characterized.

Ruel Nieto v. MRS Associates

The issue: Overshadowing

Industry outcome: Negative*

Agency sent two collection letters to consumer. The first letter was fully compliant with the FDCPA; the second letter, sent less than 30 days after the first, provided consumer with various options for settlement which were due within 15 days of the date of the second letter. Consumer alleged that second letter made her think she no longer had the thirty days promised in the first letter in which to challenge the debt. Court concluded that even if consumer received the first letter the same day Defendant sent it, the second letter could conceivably have required her to make a payment within the 30-day period. That is, for a payment to be received in Defendant’s office “on or before February 15, 2017,” one might reasonably suppose some action was required before February 6, 2017. Under these circumstances, an unsophisticated consumer could reasonably have been confused about whether the payment options in the February 15 letter (the second letter) overshadowed her right (promised in the first letter) to dispute the debt during the full 30−day period.

* Note from Joann Needleman: This is a disturbing case which required the judge to  undergo a far reaching analysis to conclude that a violation occurred

McGee v. Rockford Mercantile Agency, Inc.

The issue: Reporting bankruptcy

Industry outcome: Positive

Agency who continued to report debt in bankruptcy prior to discharge does not violate FDCPA.

Richard Brannigan v Michael Harrison, Attorney at Law

The issue: Communication with a lawyer

Industry outcome: Negative

Consumer sued law firm over the collection of a medical debt. Consumer claims that the person he spoke with was a lawyer, and thus the law firm violated 1692e(3) because representative gave impression that she was a lawyer. Court found there was a genuine issue of material fact on that issue.

Deborah Al v. Van Ru Credit Corporation

The issue: Poorly-worded settlement offer

Industry outcome: Negative

Agency sent consumer a settlement letter and stated that consumer needed to act promptly. Consumer alleges Defendant’s failure to define “promptly” is misleading, as it does not clearly define when the settlement offer expires and statement that agency was not "obligated to renew the offer" was an improper threat. Court could not dismiss claim because "there is only one path by which the [term] 'promptly'...could be dismissed –if the Court finds that language is plainly not misleading to a significant fraction of the population." This the Court was not willing to do.  Further, statement that not obligated to renew offer could be misleading. Because the letter had no expiration date for the settlement the language that we are not obligated to renew the offer could be confusing.

Michael Lait v. Medical Data Systems, Inc.

The issue: Letter and name of original creditor

Industry outcome: Positive

Consumer alleged that agency's letter failed to identify the name of the creditor to which the debt is owed in violation of 1692g(a)(2). The matter involved a medical debt and the letter identified the collection agency and stated the "facility name." The court found the consumer's claim not to be plausible. The letter stated this was an attempt to collect a debt and it was hard to imagine that the least sophisticated consumer would not think he owes money if not to the facility particularly since it was the consumer himself who personally incurred the medical debt at the facility and whose name was listed on that account. District Court judge reversed the recommendation of the magistrate and dismissed the case for the failure to state a clam.

Spurlock v. Receivables Management Partners, LLC.

The issue: Interest disclosure

Industry outcome: Positive

Agency's collection letter did not disclosure interest because agency had policy not to seek interest unless client approved the matter for suit. When they filed suit interest was pled. Court disagreed and found collection letter accurately stated the amount due at the time of the letter so no violation of 1692g(a)(1). Plaintiff also that because letter failed to disclose that interest would continue to accrue in the future it was a violation of 1692e. Court again disagreed, as there is not obligation to inform a consumer that he or she will be required to pay court costs, attorney’s fees, or other statutory penalties if the case proceeds to litigation and results in a judgment.