FDCPA Case Law Review for April 2016

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 it here or find it in our main navigation bar from any page on insideARM.com. 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.

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.

April FDCPA Cases in the Spotlight

April’s FDCPA-related cases include some positive outcomes and some negative outcomes for the industry.

Anarion Investments, LLC v. Carrington Mortgage Services

The gist: In a foreclosure action, a creditor who was assigned interest in real property of the consumer brought FDCPA claims against a lender. The District Court for the Middle District of Tennessee held that the creditor did not have standing and was not “any person” under Section 1692(k) of the FDCPA.

Blanchard v. North American Credit Services

The gist: The District Court for the Southern District of Illinois held that the phrase “we want to offer you the chance to pay what you owe voluntarily…” is not a threat of litigation, and that advising consumers to go to a website in order to dispute debt is not a violation of Section 1692(g) of the FDCPA and satisfies the writing requirement.

Bloodworth v. United Credit Service, Inc.

The gist: The District Court for the Eastern District of Washington affirmed that use of the language “will consider other methods of enforcing collection” constitutes a threat under FDCPA.

Butler v. J.R.S-I, Inc.

The gist: The District Court for the Northern District of Illinois allowed equitable tolling of the statute of limitations for FDCPA claims where the consumer did not learn of the collection action because they were not served with a complaint.

Carmichael v. Pressler & Pressler, LLP

The gist: The Third Circuit held that a New Jersey resident employed in Pennsylvania is subject to wage garnishment and to out-of-state judgment. Executing wages was not an FDCPA violation.

Casso v. LVNV Funding, LLC

The gist: Plaintiff alleged that a debt buyer’s affidavit in support of litigation which stated that it accessed and reviewed “business records” is fraudulent, because the affidavit implied the records reviewed contained full details of the debt which could be proven at trial. The District Court for the Northern District of Illinois disagreed, as the affidavit made no such representations and there was no evidence that the least sophisticated consumer would be misled by the term “business records.” The District Court also rejected claims that CFPB consent orders were dispositive that affidavits like the one in question were false and misleading.

Filgueiras v. Portfolio Recovery Associates, LLC

The gist: The District Court in New Jersey found that offers to “settle” a time-barred debt implies that the debt is legally enforceable, following the rulings in McMahon & Buchanan and distinguishing Huertas because it did not involve a settlement letter.

Foster v. AllianceOne Receivables Management, Inc.

The gist: Plaintiff who received a letter stating “please be advised that any settlement which waives $600.00 or more in principal of a debt may be reported to the Internal Revenue Service by our client” stated a claim under the FDCPA. The District Court for the Northern District of Illinois found that it is plausible that mention of the IRS in a situation where there is no set of circumstances in which the IRS would be involved could possibly mislead “the least sophisticated consumer”

In re White

The gist: The Bankruptcy Court for the Eastern District of North Carolina affirmed that the filing of out-of-stat proof of claim is not an FDCPA violation and no sanctions were awarded to the plaintiff.

Janetos v. Fulton Friedman & Gullace, LLP

The gist: The Seventh Circuit reversed the decision by the District Court for the Northern District of Illinois that the failure to identify current creditor when validating debt was material and that additional evidence of confusion was required by Section 1692(g) of the FDCPA.

Rainey v. Education Credit Management Corp.

The gist: The District Court for the Eastern District of Michigan affirmed that the defendant was not a debt collector because it was a guarantee agency under the Higher Education Act and owed a fiduciary obligation to the Department of Education. Thus, the plaintiff had no claim under Section 1692(a)(6) of the FDCPA.

United States v. Commercial Recovery Systems, Inc.

The gist: Summary judgment by the District Court for the Eastern District of Texas in favor of the FTC for claims against a collection agency over violating the FDCPA by impersonating attorneys and threatening arrest.

Velez v. Enhanced Recovery Company, LLC

The gist: The District Court for the Eastern District of Pennsylvania held that a 1099(c) disclosure in an initial letter was a statement that could mislead or deceive “the least sophisticated consumer” into believing that a certain amount had to be paid in order to avoid IRS reporting, and that there could be adverse consequences for settling a debt.

Wittman v. CB1, Inc.

The gist: The District Court in Montana held that an agency which charged a transaction fee for certain payment methods can be considered incidental to the principal obligation and thus fall within the FDCPA. The Court also held that the plaintiffs adequately stated a claim.

By Doug Johnson