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 Reverses Course, Undoes Certification, MSJ for Plaintiff in FDCPA Case Over Creditor ID in Letter
In a case that was defended by Jin Shin and the team at Malone Frost Martin, a District Court judge in Illinois has reversed himself and granted a defendant’s motion for reconsideration, undoing class certification and summary judgment in favor of the plaintiff, and awarding summary judgment to the defendant in a Fair Debt Collection Practices Act case over the identity of a creditor to whom a debt was owed in a collection letter. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: I think this is one of the rare situations where a motion for reconsideration is a good idea. There was a clear change in the way the Seventh Circuit came out and starting viewing standing in the FDCPA and RGS’s attorney rightly brought the issue back before the Court. It helped that the original decision was handed down in the middle of the flurry of Seventh Circuit opinions and just days before even more opinions were issued. This decision also signals that the district court judges are taking the issue of standing very seriously and are taking the appellate decision to heart. Of course, the question remains whether the consumer will now to turn state court to pursue his claim (which is the gamble with standing arguments).
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Judge Grants MSJ For Plaintiff in FDCPA Case Over Lack of Notification in Underlying Collection Suit
A District Court judge in Washington has granted a plaintiff’s motion for partial summary judgment while denying motions for summary judgment filed by the defendants in a Fair Debt Collection Practices Act case, ruling that an informal phone call between the plaintiff and a representative of the defendant was enough to notify the defendant of the plaintiff’s intent to appear in an underlying collection lawsuit, which should have triggered a motion for default judgment that was never sent to the plaintiff. More details here.
WHAT THIS MEANS, FROM JUDD PEAK OF CAPITAL ACCOUNTS: Sims v. Midland Funding, et al is a procedural case that discusses how a collection law firm must provide certain notice to a consumer. The particular issue turns on Washington state civil procedure on court appearances and defaults, but if your collections operations span multiple states it is always important to have an understanding of various jurisdictional rules. Many national collection agencies engage collections attorneys in multiple states, and exercising proper oversight of collections litigation is an important responsibility. In Sims, the collection lawsuit was filed and the consumer served a copy of the summons. Soon thereafter, the consumer called the law firm to work out a settlement plan and obviate the need for a trial. When the consumer never executed the settlement or followed up with the law firm, the firm requested (and obtained) a default judgment, which it then used to garnish the consumer’s wages. Importantly for the ensuing FDCPA claim, the law firm never told the court that the consumer had engaged them to settle the lawsuit and never gave notice to the consumer that it would seek a default judgment.
There is an important distinction here. The FDCPA court did not rule that a collector (or collection firm) cannot seek a default judgment against an unresponsive consumer. However, if there has been any communication with the consumer about the lawsuit or summons, then notice must be given to that consumer that a default judgment will be requested. Here, the collection firm engaged with the consumer after serving him with the lawsuit, but then unilaterally sought the default judgment from the court without providing a notice of that motion to the consumer. The consumer was unaware of the request or existence of a default judgment until his employer was served with the garnishment.
Judge Partially Grants MTD in FDCPA Case Over Dispute Language in Letter
A District Court judge in Illinois has denied a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by only mentioning that a dispute had to be filed in writing but granted the motion on the claim that a reference to obtaining a copy of a judgment and mailing it to the plaintiff violated the statute. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF MALONE FROST MARTIN: On a motion to dismiss, the Court reviewed two separate allegations and it got one right and one wrong. The plaintiff asserted that the collection letter violated the Section 1692g, e and f of the FDCPA by (1) listing only its PO Box as a method for submitting disputes, and (2) by using the term judgment in the validation notice when a judgment did not exist.
The Court dismissed the second argument related to the use of the term judgment in the statutory prescribed disclosure when an judgment did not in-fact exist. That part of the claim the court got right and was no real surprise as the statutory language has been contested time and time again over the years. The surprise in this case, although nothing should really surprise us anymore at this point, is the argument that a statement that was intended to assist the consumer by providing the address in which the consumer may send a dispute it may contest the validity of, somehow overshadowed the rights of the consumer to dispute the debt. Apparently, all feasible methods of how one may dispute a debt must be spelled out in the validation notice or maybe none should be at all.
A wise person once told me that debt collection letters do not collect money, collectors do. That is good advice and suggests that collection letters should serve a limited purpose – to comply with the statutorily required disclosure and nothing more. Anything more, no matter how well intended or how beneficial it may be to the consumer can lead to a negative result as was the case here.
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.