A summary of recent top cases from ACA. Editor’s note: This content is available for members only.
9/25/2020 9:00
Each week, ACA International’s Compliance Analysts Betsy Clarke, Laura Dadd and Andrew Pavlik compile relevant case summaries for ACA members. Here is a recap of the cases this week. Members may also submit cases for consideration to our compliance team at [email protected].
Similar FDCPA Violations not Required to be Treated as One Claim
This case started after a consumer’s parents fell behind on homeowner’s association (HOA) dues for a home they owned. The HOA contracted with a debt collector to collect the HOA dues. The debt collector sued the consumer’s parents and obtained a judgment against them in 2017. In September 2018, the HOA attached a lien to the property. The consumer became owner of the home around this time.
The consumer alleges that the debt collector tried to collect on his parents’ debts by calling his cellphone repeatedly. The calls began in October 2016, years before the consumer became the owner of the property. The consumer claimed that he told the debt collectors that they could not reach his parents at his number. The consumer also claimed that he paid the debt the debt collectors were attempting to collect. The debt collector disputed the consumer’s claim and continued collection efforts throughout the filing process of the consumer’s claim.
Phantom Resident not Enough to Keep Consumer’s FDCPA Case Alive
After a consumer incurred debt on a bank credit card and defaulted on the account, the bank retained a debt collector to recover the amounts owed. The sheriff indicated it successfully served a complaint on the consumer, and the debt collector sent additional communications to this address.
The consumer then filed a pro se action alleging the debt collector violated the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692-1692p, and committed an “invasion of privacy” in violation of North Carolina state law when the debt collector sent the complaint and subsequent mailings to the address used by the sheriff for service of process.
Before beginning its analysis of the consumer’s claims, the court briefly recited certain foundational legal rules.
Mortgage Servicer’s Convenience Fees Did Not Violate the FDCPA
In this case, a consumer defaulted on a loan secured by a mortgage, prompting their account to be transferred to a different loan servicer. The new servicer partnered with Western Union in order to allow consumers to make payments toward their loans through a “Speedpay service,” which comes with a convenience fee.
The consumer in the instant case made mortgage payments through the payment service and was subsequently charged at least $63 in convenience fees.
The consumer sued the servicer over the convenience fees, arguing that because the servicer received a portion of the convenience fees, the fees violated the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act (FCCPA). In the first count, the consumer claimed the servicer violated the FCCPA because there was no contract that would allow the servicer to charge a convenience fee or share in the convenience fees. The consumer also claimed the fees were excessive and constituted an illegal kickback.
Collector’s Notice Passes Muster Under FDCPA
This case originated after a debt collector sent a collection notice to a consumer. The entire notice was printed on one side of a single sheet of paper containing a notice of validation rights and other language in various type fonts, colors, and sizes.
The consumer filed suit in the Southern District of New York claiming the collection letter violated the requirements of the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692, in two respects, (1) the formatting of the letter overshadowed disclosure of rights required by Section 1692g, and (2) the notice falsely suggested the consumer could only dispute the debt in writing, in violation of sections 1692g(a)(3) and 1692e.
In evaluating potential violations of the FDCPA, courts apply an objective standard based on whether the “least sophisticated consumer” would be deceived by the collection practice. The “least sophisticated consumer” standard is consistent with the overall purpose of the FDCPA, which is to limit harassing, misleading, and deceptive communications with consumers. The statute “does not aid plaintiffs whose claims are based on bizarre or idiosyncratic interpretations of collection notices.”
Section 1692g requires a debt collector to provide consumers with written notice of their validation rights. However, the obligation is not simply to convey the validation rights, but rather to convey them clearly. A debt collection notice that overshadows or contradicts the validation notice violates Section 1692g. A debt collection letter is considered overshadowing or contradictory “if it would make the least sophisticated consumer uncertain as to her rights.”
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