FDCPA Caselaw Review for November 2017

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. See the page here or find it in our main navigation bar from any page on insideARM under Compliance Resources.

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. Click on the link in the chart for the complete text of the decision. Where insideARM has already published a story on the case, we provide a link to the story.

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Here’s a rundown of just some of the FDCPA cases in the spotlight as 2017 draws to a close.

Rhein v. Forster, Garbus & Garbus, LLP

The gist: A settlement letter did not provide details on potential tax consequences of taking a settlement offer. The court determined that this failure alone is not sufficient to state a claim under the FDCPA.

Richard Leonard V. Zwicker & Associates, P.C.

The gist: Circuit court affirmed dismissal of a class action based on an allegation that the collector did not identify a creditor’s full business name. In this case, the letter identified the creditor as American Express, which court felt was sufficient.

Bernal v. NRA Group, LLC

The gist: This bench trial centered on whether creditor's legal counsel expenses can be considered “costs,” eligible to be collected from a consumer. Turns out, the creditor's contract specifically provided that consumer would pay all costs of collection, which made it easy for the court to side with the defendant.

McAdory v. M.N.S & Associates, LLC

The gist: This case contemplated the role of active debt collectors versus passive debt buyers. The court found that a passive debt buyer defendant was not considered a debt collector, since it had no interaction with consumers and did not directly engage in collection activities.

Macelus v. Capital Collection Service

The gist: Court found that a dunning letter sufficiently identified the defendant as the current creditor even though both the creditor medical facility and agency debt collector are both identified in the letter. While the court did not see any reason for the confusion and found the suit frivolous, it stopped short of issuing sanctions.

Frank Bandas, Plaintiff, v. United Recovery Service, L.L.C., Defendant

The gist: In this case, plaintiff alleged that a collection letter threatened litigation in stating, "We wish to make this appeal to you as one reasonable party to another. Send us your full payment today or contact this office at once to make suitable payment arrangements so that no further procedures need to be taken in this matter." The court agreed with the plaintiff.

Homer v. Law Offices of Frederic I. Weinberg & Associates, P.C.

The gist: In this case bound for the appellate division, a validation notice that began with, "unless we hear from you" was found to have implicitly confused and shortened the time period that a least sophisticated consumer would normally have to dispute a debt. In addition, the court found that this language overshadowed the validation notice. Court noted that section 1692g is susceptible to two interpretations—one that a debtor may dispute the debt orally, and the other that he may dispute it either orally or in writing. Since this can cause confusion for a consumer about his rights, the third circuit has found that mirroring statutory language does not excuse the debt collector from explicitly advising consumers that a dispute must be in writing to be valid.

Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP

The gist: In this case, a law firm garnished a consumer’s bank account to satisfy an outstanding debt. The consumer’s bank noted that some of the consumer’s funds were subject to exemption from garnishment, and the debtor filed an exemption, to which the law firm objected. At the state court level, the law firm withdrew its objection and released the account. However, the consumer filed suit, claiming that the law firm’s objection was false, misleading and unconscionable. The lower court dismissed the case, finding that the law firm was not in violation of state law. Later, the second circuit reversed on that decision, holding that the law firm had no good faith basis for its objection, and that its actions would mislead a “least sophisticated consumer” even if it did not mislead this consumer.

Nieasha Thomas v. Midland Credit Management, Inc.

The gist: In this case, the plaintiff received a collection letter stating that the interest on her outstanding debt was $0.00, leaving her in doubt about whether or not interest was accruing on her debt. The court ultimately found that the consumer had a claim, and the right to know whether interest would accrue on the account into the future.