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 cornerstone of the page is a chart of significant FDCPA cases. Click on the link in the chart for the complete text of the decision. Where insideARM has published a story on the case, we provide a link. 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.
Ninteen cases will be added to our FDCPA chart, which makes May a busy month of wins and losses for the industry. Below are a few important highlights.
Win or Loss? Loss
Issue(s): Misleading discovery, misrepresenting the creditor, seeking post charge-off interest, seeking affidavit costs
The defendants brought a debt collection action against a consumer, Jason Heroux, for a credit card account. At the time the complaint was served, the law firm also served discovery. (This turned out to be the Wrong Thing to Do.) Heroux never answered the complaint or the discovery, so a summary judgment was entered in the state court action. That's when Heroux counter-sued, claiming that discovery was designed to mislead, deceive and confuse. The Court agreed.
As Joann Needleman adds, "This case highlights the problems of applying the FDCPA to litigation activity. In no other practice area is attorney conduct reviewed, retroactively, which permits an adversary to scrutinized the conduct of opposing counsel."
Win or Loss? Win
The defendant, Rene Ortiz, didn't believe he owed the $68.40 AT&T said he did. He sent a dispute, the collection agency responded, and that's where the trouble begins. Ortiz claimed that the collection agency, Diversified Consultants, failed to adequately validate the debt, confirming the balance but giving a different account number. (The Court wrote, "To be sure, the account number on the AT&T billing statement...did not match the account number listed on DCI’s June 8, 2016 letter, although it is far from clear whether the account number on the DCI letter referred to the AT&T account number or DCI’s own internal account number.") Regardless of account numbers, etc., the Court used a previous case, Mahon, to find that the minimum required for "verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed."
Win or Loss? Loss
Issue(s): Interest disclosure
The letter Kirschenbaum & Phillips sent to the plaintiff, Marina Medzhidzade, used Avila safe harbor language, even though the debt itself was not accruing interest. The letter only stated the balance, with no breakdown. Per the court, although this letter correctly states the amount of the debt under § 1692g, its use of the Avila is misleading under § 1692e.
Joann Needleman adds, "This decision seems to suggest that if no interest is accruing and you use Avila language then there needs to be something that says interest = $0.00."
Win or Loss? Loss
Issue(s): Collection jurisdiction, who can collect in Florida
Joann Needleman said, "This case is confusing." And she's not wrong.
Griffen Lee claimed that Illinois attorney Charles G. McCarthy, Jr., had no authority to collect the $448.50 that Lee owed because McCarthy was not registered as a consumer collection agency as required by Florida statute.
McCarthy said he was not required to register as a debt collection agency in Florida because he was from out of state and exempted under the Florida statute. The Court disagreed.
An out of state debt collector is defined as a debt collector who collects debt from debtors in Florida that are originated outside the state as well as solicits debt collection accounts from credit grantors who have a presence in the state. The exemption to the statute, however provides that the debt collector does not solicit debt accounts from credit grantors in the state.
McCarthy submitted an affidavit which said he does not solicit account from companies within the state. This didn't help him. The Court found he was not an out of state debt collector and thus not entitled to the statute.
As Joann Needleman explains, "It is unclear how any out of state debt collector would have the benefit of the exemption."