Debt Collector Not Required to Provide a Time-Barred Debt Disclosure in Telephone Communication
Court finds that debt collector was not required to explain the consequences of making a partial payment on a time-barred debt to the consumer.
11/21/2018 9:00 AM
Recently, a district court in the western district of Oklahoma ruled that a debt collector did not violate the Fair Debt Collection Practices Act when, during a telephone conversation, the debt collector did not provide the consumer with a disclaimer that the debt was out of statute and they would not sue her for it. The key issue in Douglas v. NCC Business Services, Inc., No. CIV-18-0005-F (W.D. Okla. Nov. 7, 2018) was the district court’s interpretation of § 1692(e), barring false and misleading communications to consumers, in light of a telephone conversation initiated by the consumer and her credit advisor.
In Douglas, the debt collector placed the consumer’s outdated account on her credit report. The consumer and her credit advisor called the debt collector, after she was denied a mortgage loan. The debt collector explained that he was attempting to collect a debt and asked how the consumer would like to, “close out the account.” The consumer replied that she did not want to pay the account and was trying to understand her situation. The consumer’s credit advisor then began to ask the debt collector questions about the debt. At the end of the call the credit advisor told the debt collector that he should have disclosed, “that if [the consumer] were to make a payment it would renew the statute of limitations, and that the debt collector cannot sue [the consumer] on the debt.” The debt collector replied that he was not required to provide such information and concluded the phone call.
The consumer filed suit against the debt collector for violating § 1692(e) of the FDCPA. The consumer claimed the debt collector, violated the FDCPA because, he failed to disclose certain information regarding the impact of the statute of limitations on the debt.
As the Tenth Circuit had not yet weighed in on this issue, the district court looked to cases from other circuits dealing with similar facts. In its review, the district court distinguished the facts in Douglas from the facts other cases, in that, they involved a written communication sent to the consumer by the debt collector. But in Douglas, the consumer and her credit advisor called the debt collector and engaged him in conversation concerning the debt. The district court stated, “there is no evidence that absent the call initiated by the [consumer that], the debt collector would have reached out to plaintiff in an effort to collect the old debt.” The district court further opined that, “…the phone call included no explicit or implicit threats of litigation. For example, the debt collector did not threaten suit or  offer a settlement.” Therefore, the district court held that the debt collector said nothing that was actionably misleading under the FDCPA.
ACA International attorney member Jeffrey Turner of Surdyk Dowd & Turner who litigated the Douglas case to victory offered the following analysis of the district court’s decision:
Collectors must be ever-mindful of the perils when it comes to collecting time-barred debt. This particular case involved one phone call that was initiated by the consumer and her “credit counselor.” Obviously it doesn’t take much to lead to the filing of a lawsuit. It’s also important to know the state law that applies to the debt at issue. In Oklahoma the debt is not extinguished when the statute of limitations expires. However, it is clear that the courts will at least entertain a claim that certain disclosures need to be made during a collection call. Fortunately, this court reached the correct decision, but also noted that nothing during the call could be construed as threatening litigation. An interesting observation given that the right to sue on the account is not extinguished in Oklahoma when the debt is time-barred.
ACA International Members Attorney Program members interested in contributing their insights on a case for the Daily Decision Deep Dive may contact ACA International’s Communications Department at firstname.lastname@example.org.
Jeffrey Turner may be reached at:
Surdyk Dowd & Turner Co LPA
8163 Old Yankee St Ste C
Dayton, OH 45458-1801
Phone: (937) 222-2333
Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to email@example.com. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse. Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training website to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.