FDCPA Caselaw Review for January 2018

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.

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Here’s a rundown of just a few of the FDCPA cases in the spotlight as 2018 got underway.

Hsu v. Enhanced Recovery Company, LLC

The issue: Was the abbreviation of the collection agency’s name an FDCPA violation?

The gist: Collection letters for the plaintiff’s T-Mobile account included the name of the original creditor, an account number, and a balance due. However, instead of identifying itself as “Enhanced Recovery Company, LLC,” ERC instead identified itself only as “ERC.”  Plaintiff’s position is that ERC’s use of “ERC” to identify itself in its letters violates the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. ERC’s letters to Plaintiff each provide a Florida P.O. box as the company’s address, and ERC had registered its initials as a fictitious name with the Florida Secretary of State at the time it sent its letters to Plaintiff. The Court found that ERC’s initials constituted a “true name” for the purposes of Section 1692e(14), and granted it  summary judgment on Hsu’s FDCPA claim.

Pfountz v. Navient Solutions, LLC

The issue: Was the collection agency a collection agency when it first began a relationship with the consumer?

The gist: A consumer claimed that Navient failed to advise it was a debt collector in its voice mails. Navient says its role in Pfountz’ account was not that of a debt collector because it began servicing the debt prior to the loan default. The court found that although the plaintiff's complaint had competing inferences as to when Navient was assigned the debt to collect, Pfountz has alleged a plausible claim under the FDCPA. Navient’s motion to dismiss is denied.

Panico v. Portfolio Recovery

The issue: Questions around statute of limitations -- specifically Delaware’s tolling statute.

The gist: A New Jersey consumer owed MBNA a substantial sum for credit card charges, and the bank assigned the rights to the debt to PRA, a debt collector. PRA was unable to recover the money, and more than three but fewer than six years after the debt went to collections, PRA sued. While NJ bars litigation on debts older than six years, Delaware’s statute, under which the MBNA credit agreement was governed, bars suits to collect these debts after three years. PRA agreed to a stipulated dismissal. In 2015, Panico filed suit alleging that PRA had violated the FDCPA in seeking to collect on a time-barred debt. The district court granted PRA summary judgment, finding that a Delaware tolling statute prevented the Delaware statute of limitations from running out on a party living outside that state during the credit relationship and ensuing litigation. The Third Circuit reversed the district court’s decision.

McKay v. Scott & Associates, P. C.

The issue: Collection agency filed suit in the right county, but in the wrong precinct.

The gist: McKay filed suit alleging defendants violated the FDCPA by filing a debt collection lawsuit in the wrong precinct of the justice court. The was filed in the correct county but in a precinct where consumer did not live. Judge found that for venue purposes, "judicial district" in this case applies to precincts and that the law firm did not file in the correct precinct.

Ceban v. Capital Management Services, L.P.

The issue: Collection agency correctly communicated tax implications of settlement offer.

The gist: Plaintiff claims that the statement, “[t]his settlement may have tax consequences” in the debt collection letter that he received was deceptive and misleading and constituted an unfair debt collection practice. Defendant  moved to dismiss plaintiff’s complaint for lack of standing and failure to state a claim upon which relief can be granted, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The Eastern District of New York agreed with the defendant.

For additional insight, read this article on insideARM.com

Clark v. Cavalry Portfolio Services

The issue: Vicarious liability when a debt buyer’s law firm files suit in the wrong venue.

The gist: Plaintiff alleged defendants violated the FDCPA by 1) bringing state court action in a judicial district where plaintiff did not reside, 2) falsely stating that plaintiff owed interest on the underlying debt and seeking such interest in the state court action 3) attempting to collect a debt they did not have a legal right to collect or standing to pursue, 4) threatening to take action they could not legally take, and 5) that it all amounted to a deceptive act and practice. The judge granted the defendant’s motion to dismiss on items 2, 3, and 4. Items 1 and 5 will proceed to trial.

Benjamin Fish v. Stone, Higgs & Drexler, P.C

The issue: Garnishment isn’t a legal action against a consumer.

The gist: To establish a violation of the FDCPA, a plaintiff must prove three elements. First, plaintiff must be a "consumer." 15 U.S.C. § 1692a(3). Second, plaintiff must show that the money being collected is a "debt." 15 U.S.C. § 1692a(5). Third, Plaintiff must show that defendant is a "debt collector." 15 U.S.C. § 1692a(6). Section 1692i applies to "[a]ny debt collector who brings any legal action on a debt against any consumer." Fish argued that Stone violated the venue provision in Section 1692i by filing a domestication action, and a garnishment action against him in Tennessee to collect on a personal loan. Stone requested summary judgment because "a garnishment proceeding is against the garnishee, not the judgment debtor, and therefore does not qualify as a `legal action on a debt against any consumer'" under § 1692i(a).  The Court agreed with Stone, finding that a garnishment proceeding is not a legal action "against a consumer."

Watkins v. Investment Retrievers

The issue: Collection agency gets the facts wrong in its letter to a consumer.

The gist: Debt collector sent consumer a letter stating they held the title to his vehicle, and that Watkins still had it in his possession. In fact, Watkins did not have possession of the vehicle. He filed suit alleging the letter contained a false statement that violated 15 U.S.C. § 1692 of the FDCPA. The debt collector claims the consumer’s suit is immaterial and consumer suffered no harm, but the court disagreed. The court’s interpretation is that although letter would not lead the "least sophisticated consumer" to believe he now possessed a car he knew he no longer possessed, it might confuse the least sophisticated consumer—and any consumer—about whether his creditor believes he is in possession of the debt collateral. Further, the false statement could disadvantage plaintiff “in charting a course of action in response to the collection effort” by, for example, leading him to contact the debt collector to correct the mistake when plaintiff otherwise would refuse such contact or not take the time to initiate contact. The defendant’s motion to dismiss this portion of the suit was denied and the case will proceed to trial.

Ben-Davies v. Blibaum & Associates, P.A.

The issue: Law firm was correct in how it charged post-judgment interest.

The gist: Tenants brought FDCPA action in Maryland Federal court for improperly charging post-judgment interest. The case was remanded to state court on the sole issue of whether post-judgment interest rate of 6% applies to judgments that comprise unpaid rent and other expenses that are due under residential leases. The Appeals court held that it does.

Skinner v. LVNV Funding, LLC

The issue: Debt buyer was able to prove that its primary business was not debt collection.

The gist: A debt buyer was found not to be a debt collector, because consumer failed to establish that primary purpose of debt buyer's business was debt collection. Evidence of collection lawsuits filed and a collection license was not enough to demonstrate the percentage of the debt buyer's operations are involved debt collection as compared to their operations as a whole.

For additional insight, read this article on insideARM.com.