Judge Dismisses FDCPA Suit Because Defendant Not ‘Debt Collector’

Wells Fargo has won dismissal of a class-action lawsuit alleging it violated the Fair Debt Collection Practices Act when it mistakenly sent letters offering options to those who had been impacted by Hurricane Irma to individuals who were no longer customers of the bank.

A copy of the ruling in Rawls v. Wells Fargo Bank, N.A., can be accessed by clicking here.

The plaintiffs did have loans with the bank, but they were both satisfied using the proceeds from short sales when the individuals fell behind on their payments.

When Hurricane Irma struck Florida in 2017, Wells Fargo sent letters to individuals who were affected by the disaster. The letter said, in part:

We’re reaching out because your area was affected by a FEMA-declared disaster. We understand that you may not be able to make your normal monthly payments at this time. To help, we’re providing 90 days of disaster relief for this account. . . .

During these 90 days, we will not report any negative information for this account to the credit bureaus, and we won’t charge late fees. We encourage you to continue making your monthly payments. Even if you’re not able to, we want you to know that you’re protected with no late fees or negative credit bureau reporting.

Also keep in mind: This is short-term assistance . . . . At the end of this disaster relief, we’ll work with you to explore solutions to bring your account current, based on your specific financial needs. It is critical that you contact us to discuss options as soon as possible.

If you’re not able to make payments during this time, your billing statements may reflect that your past payments are overdue. You’ll also receive required notices about your payments being overdue.

The plaintiffs filed suit, alleging the defendant violated Sections 1692e and 1692f of the FDCPA by attempting to collect on loans by misrepresenting the status of the loan. But the plaintiffs overlooked one key fact: Wells Fargo is not subject to complying with the FDCPA because it does not meet the definition of “debt collector” under the statute.

Because Wells Fargo’s principal purpose is not to collect debts and there is no evidence to suggest that it collects the debts of others, the judge concluded that “Wells Fargo is exempt from the definition of a debt collector.”