ACA’s Industry Advancement Program Helps Member Score Another Judicial Victory for Industry

A federal district court in Florida ruled that no “magic words” are required to clearly identify the name of the creditor in compliance with the FDCPA.

3/12/2019 11:30 AM

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ACA’s Industry Advancement Program Helps Member Score Another Judicial Victory for Industry

The U.S. District Court for the Middle District of Florida ruled in favor of the accounts receivable management industry in the case of Encarnacion v. Financial Corporation of America, 17-566, 2019 WL 932263(M.D. Fla. Feb. 26, 2019). The key issue in Encarnacion was whether the collection agency complied with the requirements of § 1692g(a)(2) of the Fair Debt Collection Practices Act (to identify the name of the creditor on whose behalf it was collecting) when it sent the consumer a collection letter using the phrase “RE: [Facility Name],” but did not follow the phrase with the words “Current Creditor,” and did not state that the account was “placed with” with the collection agency for collection. The federal district court in Florida held that the collection agency’s letter adequately identified the creditor to the extent required by the FDCPA. 

In Encarnacion, the consumer filed a class action against the collection agency asserting that the collection agency violated the FDCPA by seeking to collect a debt allegedly without clearly and concisely identifying the current creditor.

The collection agency’s letter stated, in the relevant part:


Re: Lehigh Regional Medical Center

Account Number: 7490000003948

Patient Name: Omar Encarnacion

Date of Service: 11-07-16

Balance Due: $53.27

The consumer alleged that the collection agency’s letter “merely reference[d] the entity to whom the debt was incurred by stating ‘Re: Lehigh Regional Medical Center’ without otherwise identifying Lehigh Medical Center as the current creditor of the debt.” The consumer asserted that such “lackadaisical identification of the current creditor violates the FDCPA.”

Rejecting the consumer’s arguments, the district court explained that the statute requires only a debt collector “send the consumer a written notice containing . . . the name of the creditor to whom the debt is owed,” but, yet “’does not state how a creditor must be named in order to comply.’”

Determining that the “FDCPA requires no ‘magic words,’” the district court concluded that the collection agency was not required to include in its validation notice the word “creditor” or a statement that the “account was ‘placed with’ [the collection agency] for collection.”

As such, the district court found that the collection agency did not violate the FDCPA because it identified the creditor clearly enough that the least sophisticated consumer would understand – “even without the magic words” the consumer suggested.

In July 2016, in anticipation of convening a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for the Consumer Financial Protection Bureau’s debt collection rulemaking, the CFPB issued an outline of the proposals it was considering. The proposals included, among other things, revisions to the form and content of the validation notice. Almost three years later, ACA International and its members continue to wait for well-crafted, reasonable and workable debt collection rules from the bureau clarifying the FDCPA so that legitimate, compliant and law-abiding collection agencies can fulfill their vital role in the economy without the fear of opportunistic litigation. 

While it remains to be seen what the future will hold for the bureau’s debt collection rulemaking, ACA recognizes that the courts in the judicial system can provide another avenue for gaining FDCPA clarity to rein in FDCPA litigation abuse. Therefore, ACA International supported its member by providing Industry Advancement Funds to help defray the cost of litigation when it turned to the court for guidance in the Encarnacion case and obtained this important FDCPA decision positively impacting ACA’s members and the accounts receivable management industry. Had the consumer’s claims in Encarnacion been left unchallenged, the consumer’s counsel would be emboldened to continue developing a cottage industry of pursuing identical class actions lawsuits against various collection agencies on the same theory. And, ACA is delighted that the Encarnacion decision raises the industry-favorable decisions (wins) ACA has helped to achieve for its members through the Industry Advancement Program to a total of 47 in five years. 

ACA International’s efforts to proactively support the accounts receivable management industry are part of the association’s Industry Advancement Program and are made possible by funding through ACA’s Industry Advancement Fund. 

If you missed any of the articles previously published in ACA Daily that provided more detailed information about Industry Advancement Program supported cases, like the Encarnacion case, you can always see the archived articles on the Industry Advancement Program website. Watch for updates when decisions are issued in these cases and learn more about new cases supported by the Industry Advancement Program in the future by reading ACA Daily and logging onto the Industry Advancement Program website throughout the year. 

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