A summary of recent top cases from ACA. Editor’s note: This content is available for members only.
9/11/2020 10:30
Each week, ACA International’s Compliance Analysts 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].
The FDCPA Does Not Aid Plaintiffs Whose Claims are Based on ‘Bizarre or Idiosyncratic Interpretations of Collection Notices’
In this case, a consumer fell behind in her rental payments and a debt collector sent her a notice seeking payment and stating the consumer had “30 days from receipt of this notice to dispute the debt.”
The consumer sued the debt collector for allegedly violating 15 U.S.C. Section 1692g and 1692e of the Fair Debt Collection Practices Act by not including statutorily required information in the debt collection notice.
Specifically, the consumer alleged the notice was deficient because it failed to convey to the consumer she had a right to dispute a portion of the debt, consistent with the requirement of the act that the notice contain the following:
(3) A statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; and
(4) A statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector[.] 15 U.S.C. Section 1692g(3)-(4) (emphasis added).
Citing this same failing, the consumer alleged the debt collector violated 15 U.S.C. Section 1692e(10)2 by attempting to collect a debt with a notice that was false and misleading.
Statement to “SEE REVERSE SIDE…” of a Collection Letter Did Not Violate the FDCPA
In this case, a consumer alleged a two-page collection letter he received violated Section 1692g(a) of the Fair Debt Collection Practices Act because the required validation notice was overshadowed by additional language in the letter. The first page of the letter identified the current and original creditors and itemized account details, including the total amount due on the debt. The required validation notice was set out in the second paragraph of the letter's first page, and the remaining three paragraphs (none of which was longer than two lines) informed the consumer of how he can manage his account and contact the debt collector.
In all caps the letter then stated, “NOTICE: SEE REVERSE SIDE OF THIS LETTER FOR IMPORTANT INFORMATION. The reverse side of the notice provided state specific disclosures. With the exception of the language emphasized in bold, the typeface used in the letter was 12-point font size throughout, without any variation.
The crux of the consumer’s argument was that the emphasized bolded text instructing the consumer to see the reverse side of the letter operated to overshadow the validation notice and constituted intentional misdirection away from the validation notice on the front page of the letter. The court disagreed with this assertion, observing that the letter was brief, and the validation rights were in the second short paragraph of the text. The court noted that there was nothing in the letter that contradicted the validation rights, all the text was of uniform font and size, and there was no formatting that would distract the least sophisticated consumer.
Reporting a Settled Debt as Assigned to Collections Violates the FDCPA
In this case, the consumer obtained a credit card for household purchases. The consumer defaulted on the balance and the debt was charged off and purchased by Midland Credit Management. The debt collector was unable to collect the debt and sent it to their debt collection attorney, who initiated a lawsuit to collect the consumer’s debt. The lawsuit was withdrawn after the consumer reached a settlement with the law firm for less than the amount owed. The consumer sent his settlement payment to the collection attorney on Aug. 21, 2017, and it was deposited two days later. The debt collector should have been informed of the consumer’s payment on Aug. 24, 2017 and knew with certainty that it had received settlement in full of the consumer’s debt by Aug. 31, 2017.
On Aug. 25, Sept. 8, and Sept. 22, 2017, the debt collector reported the consumer’s account as “assigned to internal or external collections,” which was how it had been reporting the debt previously. The debt buyer closed the consumer’s account on Sept. 25, 2017 and on Oct. 9, 2017 reported the consumer’s account as, “paid with less than full amount.”
The consumer filed a lawsuit claiming that the debt collector reporting the settled debt as “assigned to internal or external collections,” was an attempt to collect that debt. The debt collector claimed that they did not use credit reporting as a means of collecting from consumers.
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