insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion.
The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Where insideARM has published a story on the case, a link is provided.
Here’s a rundown of just a few of the FDCPA cases in the spotlight in February 2018.
The issue: Revival warning on out-of-statute debt
The gist: A collection letter contained a statute of limitations disclosure explaining that the debt was too old to collect via suit, but did not explicitly include any warning that payment could revive the debt and restart the applicable statute of limitations. The Court found the letter to be false and deceptive, in violation of 15 U.S.C. § 1692e(10). Applying the least sophisticated consumer standard, the Court found that the letter was misleading because it did not include any warning that a partial payment on the debt could have revived the statute of limitations and obligation on the debt. Following Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017), summary judgment was entered in favor of consumer.
The issue: Interest disclosure requirements
The gist: The Northern District of Illinois struck down the idea that the safe harbor language provided in Miller somehow creates new disclosure requirements for debt collectors. The court in Chatman found that including a balance due at the time of the letter and a simple statement saying interest is accruing, directing the consumer to the original loan agreement for the accrual rate, is sufficient to put the consumer on notice of the amount owed.
For additional insight, read this insideARM article.
The issue: Collateral estoppel doctrine
The gist: On advice, consumer failed to respond to a state court action and default judgment was entered. Consumer then filed an FDCPA action against debt collector, alleging that statute of limitations had lapsed by the time suit was filed. Federal court found that Nguyen had three opportunities to raise his statute of limitations concern with the California courts, and chose not to. The Fair Debt Collection Practices Act doesn't function to provide litigants with a second chance to try out new arguments in federal court after failing to raise them in state court.
The issue: Use of word “settlement”
The gist: Plaintiff had a ten-year-old debt owed to Bally Total Fitness, which Allied sought to collect by sending a letter offering to settle the obligation. The 3rd Circuit ultimately found that the use of the term "settlement" in the letter could mislead the ‘least sophisticated consumer’ into thinking that the debt collector could legally enforce a time-barred debt. In its ruling, the Court made a point to say that settlement offers and attempts to obtain voluntary repayments of stale debts do not necessarily constitute deceptive or misleading practices, nor is the use of the word “settlement” misleading as a matter of federal law. The Court also did not impose any specific mandates on the language debt collectors must use, such as requiring them to explicitly disclose that the statute of limitations has run out. The Court did hold that letters, when read in their entirety, must not deceive or mislead the least-sophisticated consumer into believing that s/he has a legal obligation to pay a time-barred debt.
The issue: Existence of Injury
The gist: The Sixth Circuit reversed a summary judgment ruling in favor of consumers on their claims for violation of federal and Ohio state law that letters sent by a law firm did not cause them to suffer an injury and that the district court lacked jurisdiction over the case. The Court found that a bare procedural violation alone is not sufficient to create an injury where clearly none was present.
For additional insight, read this insideARM article.
The issue: State statute
The gist: A wife received medical treatment and a collection agency sought recovery from her husband due to the "necessaries doctrine." The husband claims that the debt collector's collection attempts were false, deceptive, misleading, unfair, or unconscionable because the Kentucky statute is unconstitutional. To date, no court has found the Kentucky statute unconstitutional. The Court found that the consumer's claims did not form the basis of of a valid FDCPA claim.
The issue: Reaffirmation agreement
The gist: After a consumer’s bankruptcy discharge, a law firm filed a state court action to collect on debt that was subject to a reaffirmation agreement. The consumer alleged that the reaffirmation agreement did not comply with all aspects of §524 of bankruptcy code, so the law firm violated 1692e(a)(2) and did not have a legal basis to pursue the debt. The Court found that the consumer has a valid FDCPA claim.
The issue: Collateral estoppel
The gist: Plaintiff alleges that when a debt collector failed to explicitly identify the current creditor in its demand letter, it violated 1692g. Because identical letters were at issue in two prior cases against same debt collector, the court found that debt collector was collaterally estopped from re-litigating those issues. This decision expands the limits of collateral estoppel and could limit the defenses debt collectors have in FDCPA cases if identical fact patterns are present.