I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
Every week, AccountsRecovery.net brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.
Judge Grants MTD in FDCPA Case Over Third Party With Same Name Opening Summons
A District Court judge in North Carolina has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act, ruling that it can not be held liable if someone else with the same name, living at the same address, opened a summons and complaint that was addressed to the plaintiff. More details here.
WHAT THIS MEANS, FROM JONATHAN ROBBIN OF J. ROBBIN LAW FIRM: In another decision demonstrating the great lengths that some plaintiff’s attorneys will go to make up a claim, the Western District of North Carolina correctly held that it would be absurd to find a violation of the FDCPA where someone else with the same name, living at the same address, opened the debt collection letters that were addressed to the debtor. Even if the person did not have the same name, the fact that the letters were correctly mailed to the right address and with the correct name on the envelope, would take this situation out of the FDCPA purview. Thus, there is no authority for holding a collector liable for mailing a properly marked envelope to a correct address.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Judge Grants MSJ in FDCPA Class Action Over Interest, Fees Disclosure in Letter
In a case that was defended by Rick Perr of Kaufman Dolowich and Voluck, a District Court judge in New York has granted a defendant’s motion for summary judgment in a class-action lawsuit after it was accused of violating the Fair Debt Collection Practices Act by including references to interest and fees in a collection letter, even though the amounts were zero and neither was accruing. More details here.
WHAT THIS MEANS, FROM SARAH DEMOSS OF PREMIERE CREDIT OF NORTH AMERICA: It is nice to see a ruling in favor of our industry and in favor of common sense. We are starting to see judges apply the “least sophisticated consumer” standard in a more practical, rational way, and it is refreshing. However, this decision does not provide any real clarity on how agencies can comply with all of the conflicting letter case law that exists today. Right now, there is still too much variation across jurisdictions. All of the agencies I’m familiar with are truly not trying to trick consumers with their initial demand letters. Rather, they are simply just trying to keep up with all of the conflicting rules which leaves a lot of room for consumer attorneys to bring lawsuits. The industry needs more positive case law, but letter cases are brought as class actions and they are expensive to defend. So, it’s hard to get actual decisions from the courts. This is where I think the CFPB is on the right track as far as standardizing an initial demand letter. We just need to make sure the standard letter is also practical and rational, and that the states buy-in on the end result.
Judge Grants MTD in FDCPA Letter Overshadowing Case
In a case that was first spotlighted by Manny Newburger and Nabil Foster of Barron & Newburger, a District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for violating the Fair Debt Collection Practices Act by allegedly overshadowing the validation notice in a collection letter and by falsely suggesting that a dispute had to be filed in writing. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: Lawsuits regarding the information contained in collection letters are never going to stop as long as collection agencies send letters. The plaintiffs’ bar is incentivized by the fee-shifting aspect of the FDCPA to threaten collection agencies with lawsuits and possible high fee awards to settle quickly and avoid paying their own defense lawyers. Plaintiffs know that collection agencies will almost never be able to recoup their defense costs even in some of the most frivolous of cases. They also know that given the nature of the judiciary, if a plaintiff can survive a motion to dismiss, a collection agency will likely cave.
Kudos goes out to the agency at issue in this case. Plaintiff attempted to twist a clearly compliant collection letter into something it was not. And the Court did not succumb to the illusory arguments. The only true way to push back against overly aggressive plaintiffs’ attorneys is to make them lose money on their cases. It will be costly for collection agencies to follow this strategy. But it will be even more costly not to.
NYC DCWP Releases Debt Glossary As Enforcement of New Rule Starts Today
A new rule in New York City requiring collection agencies let individuals know if they offer translation or services in languages other than English that went into effect in June will start being enforced today by the city’s Department of Consumer and Worker Protection. Collection agencies that collect from individuals living in New York City have been working at understanding the requirements of the rule, and worry that they will have to stop providing services that they may have been providing informally for fear of running afoul of the rule and risking an enforcement action. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF BALLARD SPAHR: There are still so many unanswered challenges and confusing aspects to NYC DCWP’s new LEP rules. First, on October 7th, I saw coverage that the actual link to the rules on DCWP’s website no longer works and the rules also are not available on NYC’s rules site (although they still do appear on NYC’s licensing page). I am not sure what that means but I hope it reflects some internal effort by DCWP to address the number of unanswered questions, which includes but certainly is not limited to: how to disclose language line services provided by third-parties, whether repossession agents are “debt collectors” who need to request the language preference of the consumer while they are in the process of repossessing a consumer’s vehicle, and whether you need to put the request for the consumer’s language preference in a letter to the consumer before continuing collection efforts when you have been unable to make a live contact with the consumer (a common occurrence). These are just some of the questions I continue to field from clients and, in my view, reflect that the rules, at their core, do not reflect anywhere near sufficient and adequate consideration of the realities of the actual collections process – and even more so when we shift to creditor and other first-party collection activities.
Appeals Court Affirms for Defendant Accused of Attempting to Collect Wrong Amount
The second time before the Ninth Circuit Court of Appeals turned out to be the charm for a debt collector that was accused of violating the Fair Debt Collection Practices Act by attempting to collect more than what was owed after a hospital made a billing error. The Court yesterday affirmed a judgment as a matter of law that was made by a District Court judge in favor of the defendant. More details here.
WHAT THIS MEANS, FROM SHANNON MILLER OF MAURICE WUTSCHER: In Fangsrud Von Esch v. Asset Systems, Inc., the Ninth Circuit recently affirmed a District Court’s granting of a motion for judgment as a matter of law and a prior denial of a motion for partial summary judgment revolving around a bona fide error defense asserted by the defendant, Asset Systems, Inc. (“Asset”). In Fangsrud Von Esch, the plaintiffs had sued Asset for violations of the FDCPA and related state statutes in regards to an erroneous medical debt, the result of a billing error by the creditor who had placed the debt with Asset. Asset had asserted a bona fide error defense during a three-day jury trial and moved for judgment as a matter of law prior to closing arguments which the District Court granted.
In order to grant a motion for judgment as a matter of law, the court must find that “a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.” Fed. R. Civ. P. 50.On appeal, the plaintiffs challenged that ruling. The Appellate Court held that the record sufficiently reflected that Asset’s procedures were “reasonably adapted” to prevent the type of violation in issue. The Court found that Asset’s evidence regarding its bona fide error defense was unrebutted by plaintiffs and, thus, that the jury could not have found in favor of the plaintiffs on that issue.
The takeaway for the industry is that stout policies and procedures can save your neck. Here, having proper procedures in place, which ultimately failed in this instance, was the determining factor when it came to liability. Additionally, and unfortunately, it is neither easy nor cheap to assert the bona fide error defense. Asset had to litigate all the way through a jury trial to find vindication. While the bona fide error is certainly an excellent arrow to have in the quiver, it’s an arduous task to successfully bring it to the forefront.
Appeals Court Affirms Dismissal of FDCPA Suit
The Third Circuit Court of Appeals has upheld the dismissal of a Fair Debt Collection Practices Act case in which the plaintiff alleged that a pair of disclosures in a collection letter were misleading, saying that one of the disclosures did the opposite of what the plaintiff alleged and the other allegation was nothing more than speculation. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: While not considered a precedential opinion, this opinion will nonetheless assist debt collectors in the 3rd Circuit battling an increasing number of lawsuits regarding balances. Prior to this opinion, the 3rd Circuit had not ruled definitively on the issue of “The Account balance as of today’s date:” and many consumer attorneys have been trying to gain traction in the theory that this statement is a FDCPA violation. It was nice to see the 3rd Circuit fall in line with both the 2nd and 7th Circuits, avoiding a potential circuit split. Of course, this may not stop such lawsuits altogether but it certainly should give consumer attorneys pause before filing or demanding pre-litigation settlements.
FTC Announces New Crackdown on Abusive Collectors
The Federal Trade Commission yesterday announced the launch of Operation Corrupt Collector, a “crackdown” on collection operations that engage in abusive or harassing practices while also attempting to collect on debts that do not exist. More details here.
RELATED STORIES:
Judge Grants TRO in Case Against Alleged Collection Scammers
Indiana AG Files Suit Against Scammer
N.M. AG Sues Collection Agencies
Arizona AG Files Suit Against Alleged Scammers
Ohio AG Launches Suit Against Alleged Scammer
WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: The allegations set out in the various regulators’ complaints read like a script of what goes through the head of everyday Americans when they hear media reports about “abusive collection tactics.” “Robocalls” threatening to sue, refusing to identify the caller during contacts, and attempts to collect debts already paid or that don’t exist at all — the list goes on. Incredible (if proven).
The convergence between public perception and regulatory action affects industry members in a real way. Here’s an example: when I update my clients and industry members about new regulatory efforts aimed at curtailing purported industry failures to comply with consumer-protection laws, I hear a common refrain: “Why don’t the regulators goes after the real bad guys?” If the FTC and the other regulators’ allegations in these actions are proven true, we expect that industry members will similarly react in unison: “Good. Godspeed. More of this, less of the ticky-tacky regulatory claims pointed at the white hats collecting legitimate debt through legitimate means.”
I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
