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.
FTC Resurrects Penalty Tool in Crackdown on For-Profit Universities
The Federal Trade Commission yesterday announced a crackdown on deceptive and unfair practices used by for-profit universities by reviving a long-dormant enforcement tool that could have implications into how the regulator takes action against companies in the accounts receivable management industry. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF BALLARD SPAHR: This “crackdown” is not limited to the FTC or for-profit schools. As predicted, it is part of an ever-increasing focus on student loan servicing across multiple regulators. The CFPB and FTC continue to focus on how for-profits schools originate and service student loans. The CFPB is in the midst of investigating certain servicing and collection practices with respect to federal student loans and Rohit Chopra, who has a deep background in the student loan servicing, is at the helm. And on October 15th, Richard Cordray, former CFPB director and now the Chief Operating Officer over the Department of Education’s Federal Student Aid office, announced new and significantly tougher standards for federal student loan servicers that include requiring compliance with all federal, state, and local loan servicing laws, responding to complaints filed by federal, state, and local regulators in a timely manner, and prohibiting loan servicers from shielding themselves from lawsuits brought to hold them accountable for related violations. Entities involved at any level in any type of student loan servicing should anticipate continuing regulatory pressure and litigation to ensure compliant practices for the foreseeable future. Now is the time to take stock and act swiftly to ensure your organization will stack up well against these expectations.
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Appeals Court Upholds Ruling For Medical Provider in FDCPA False-Name Case
The Court of Appeals for the Second Circuit has upheld a summary judgment ruling in favor of a medical provider that was sued for violating the Fair Debt Collection Practices Act because it allegedly attempted to collect a debt using a name other than its own, even though the letter includes seven separate references to the provider. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER: I found two things particularly interesting about this case, and those two things are interrelated. First, part of Rubin’s argument focused on the letter in the context of other communications from Montefiore Medical Center—he argued that because the letter at issue was different in form and appearance from prior billing statements from Montefiore, the letter forming the basis of his complaint was clearly an effort by Montefiore to masquerade as someone else. The Second Circuit dismissed this argument out of hand, pointing out that Second Circuit precedent (like that of many other circuits) provides that the Court has to view the allegedly offending communication as a whole. Applying this standard, the Second Circuit noted that the letter referenced Montefiore seven times, making it unreasonable for anyone to believe the letter came from anyone but Montefiore. The Court’s Summary Order does not even mention whether communications can, or should, be read in the context of all communications with the consumer.
But from there, the Second Circuit did stray from the four corners of the letter itself in noting that the letter contained “a phone number that, when called, answers with “Thank you for calling the business office of Montefiore.” This raises the second interesting point, which is that while the Second Circuit said nothing of reviewing a communication in the context of other communications with the consumer, the Second Circuit seems to accept the consideration of facts implicated by, but not explicitly apparent from, the face of the letter.
With these two slightly contradictory approaches, the Second Circuit put its finger right on a common sore spot for debt collectors: communications are often viewed in isolation, even when prior or subsequent communications clearly reveal the consumer was neither deceived nor misled by the allegedly offending letter or message. Here, though, the Second Circuit was clearly receptive to other facts which, while not in the letter, were closely related to the letter—enough to tip the scales in Montefiore’s favor. Industry members should keep opportunities like this in mind when facing claims that a single communication, viewed on its own, is false, deceptive or misleading.
MDPA Judge Rules for Defendant in FDCPA Case
You’re damned if you do, and you’re damned if you don’t. Debt collectors are often accused of not providing enough documentation when filing lawsuits against consumers for unpaid debts, but can even be accused of violating the Fair Debt Collection Practices Act when they do provide all the documentation that is required. In a case that was defended by Rick Perr at Kaufman Dolowich & Voluck, a District Court judge in Pennsylvania has granted a defendant’s motion for judgment on the pleadings after it was accused of violating the FDCPA by including a copy of a contract to purchase an RV among the documents filed in an underlying collection lawsuit without the proper confidentiality requirements. More details here.
WHAT THIS MEANS, FROM LAUREN VALENZUELA OF ACTUATE LAW: I like this case because not only did the court get it right and clarify that noncompliance with procedural rules do not automatically give rise to FDCPA violations, but also because it is a great illustration of how consumers’ expectations of what should be “private” is evolving. The contract in question did not contain any PII (as the court said, it did not have any of the “hallmarks of a loan application”), yet the consumer presumably felt that this should have been filed under a cover sheet to maintain its confidentiality.
This case also demonstrates the tension between providing consumers with enough information for them to recognize their debts and make informed financial decisions, while also providing that information in a way that does not compromise their privacy. It makes me think back to the Washington, D.C.’s emergency legislation earlier this year, where before the legislation was amended, it would have required debt collectors to proactively send a consumer 24 months of credit card statements. Our industry cringed at this piece of the legislation, not only because of the logistical challenges of obtaining and supplying that much information, but also because the consumer had not asked for it. Sending a consumer 24 months of unsolicited credit card statements had the potential to create multiple privacy and data security risks in an environment where we are seeing data privacy laws lean towards data minimization.
To consumers this is a cautionary tale – if you want all aspects of your finances “private,” you need to actually work with your creditors and their debt collectors to come to a voluntary repayment arrangement to keep debts from escalating to civil litigation. I promise, there are many law abiding, really nice collectors who are ready to help you – the first step is responding to their communications and engaging them in a meaningful conversation (i.e., don’t ignore the debt collection attempts!)
State Supreme Court Upholds Ruling Against Attorney Who Sued Collector
The Supreme Court of Montana has affirmed a lower court’s ruling against a plaintiff’s attorney who filed suit against a debt collector, another attorney who was hired to collect on a judgment against the plaintiff’s attorney, and a law firm that had agreed to have its offices used for a deposition after a judgment was entered against the plaintiff’s attorney for his actions in an underlying Fair Debt Collection Practices Act case. More details here.
WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON & BIRD: Desperation can make a person do surprising things. In Wallace v. Law Office of Bruce Spencer, such was the case for Terry Wallace, an attorney who began this misadventure by defending a medical debt collection action in which he was ultimately sanctioned nearly $32,000 for vexatious actions. After being referred to disciplinary proceedings that resulted in a recommendation for a 7-month suspension from the practice of law, Wallace doubled down by suing the State of Montana and the two District Judges who presided over the prior actions, which suit was ultimately dismissed.
Meanwhile, the debt collector retained counsel – Bruce Spencer – to collect on the sanctions. Spencer obtained a writ of execution and attempted to locate and serve Wallace, but could not. Spencer then sought to depose Wallace’s son and, after correcting some missing language, served a deposition subpoena on Wallace’s son when Wallace refused to accept service of the writ. At that point, for reasons that defy explanation, Wallace decided it would be a good idea to sue the debt collector, Spencer, and the law firm at whose office the deposition of Wallace’s son was to occur – a firm otherwise unrelated to the action – alleging abuse of process, intentional infliction of emotional distress and civil conspiracy.
The defendants filed motions for summary judgment and to have Wallace declared a vexatious litigant, which motions were granted. Perhaps not surprisingly by this point, Wallace appealed. Equally unsurprising, the Montana Supreme Court made short work of that appeal, noting that Wallace did not appear object to any abuse of process by the defendants, but rather to the process by which execution of judgments occur under state law. In addition to affirming the lower court’s granting of summary judgment, the Montana Supreme Court also affirmed the lower court’s vexatious litigant determination and extended the order statewide.
The lesson here … I’m not sure there is one, but it’s a fascinating read.
Judge Recommends Lowering Plaintiff’s Fee Award by 63%
In a case that was defended by Cooper Walker at Malone Frost Martin, a Magistrate Court judge in Texas has recommended reducing a plaintiff’s attorneys fee award by nearly two-thirds after a settlement was reached in a Fair Debt Collection Practices Act case. More details here.
WHAT THIS MEANS, FROM JASON TOMPKINS OF BALCH & BINGHAM: Although this seems like a routine and fairly mundane order, there are a couple of important takeaways for FDCPA defendants. The first is to carefully craft your offer of judgment. Because an accepted offer of judgment is contractual in nature, plaintiffs will be bound by its terms — even if they give up relief to which they would otherwise be entitled had they prevailed. For example, in this case, the defendant did not have to pay for the time plaintiff’s counsel spent drafting the fee petition itself (which is typically recoverable) because the offer of judgment specified that the only fees included were those incurred prior to its expiration. The second lesson from this order is that you should dig into the details when opposing a fee petition. The court’s reduction of more than 60% here was the result of any single factor, but instead a combination of reducing the hourly rate and excluding incremental time entries by examining them one-by-one.
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.