Seventh Circuit Rules in Favor of a Debt Collector Regarding Steps to be taken in Compliance with the FDCPA and FCRA when a Debtor Disputes a Debt

Hinshaw obtained a significant ruling in the Seventh Circuit in Walton, which involved claims under both the FDCPA and the FCRA. The Defendant sent Deborah Walton a dunning letter, which stated she owed delinquent debt on an AT&T account. But the letter listed an invalid account number—the first three digits of the account number were transposed with the middle three digits. Walton called Defendant to dispute that the debt belonged to her, she acknowledged that her name and address were correct, but falsely denied that the last four digits of her social security number matched those given by the representative. Walton also sent a letter to Defendant asserting that she did "not own [sic] AT&T any money under the account number listed above." Defendant checked the information it had received from AT&T and sent Walton a letter reporting that, based on a records review, it had verified Walton's name, address, social security number, and the amount of the debt. Defendant also reported Walton's debt as disputed with two credit reporting agencies. Walton then disputed the debt to the credit reporting agencies, which triggered an ACDV[1] report to Defendant about Walton's dispute. The notice simply stated that the debt did not belong to her. More ›

Second Circuit Resolves Uncertainty Surrounding "Reverse Avila" Claims

The Court of Appeals seems to have halted much uncertainty surrounding "reverse Avila" claims by unanimously affirming the New York federal court's decision in Taylor v. Financial Recovery Services, Inc., No. 17-1650, 2018 U.S. Dist. LEXIS ------- (2d Cir. March 29, 2018) (found here). In the wake of Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir. 2016), savvy plaintiffs have argued that the failure to disclose that a debt is no longer accruing interest is false and misleading in violation of Section 1692e of the Fair Debt Collection Practices Act (FDCPA). The Second Circuit disagreed and held that "a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading " when the letter correctly states a consumer's balance when the letter was issued.

Distinguishing Avila, the Second Circuit explained that the collection letter in Avila was misleading because a consumer could pay the full amount listed on the letter but such payment would not settle the debt. Under the facts of Avila, a consumer who paid the amount due on the collection letter would still be on the hook for an unpaid balance because interest and fees "accumulated after the notice was sent but before the balance was paid." In Taylor, the creditor instructed the collector not to accrue interest or fees on the underlying debt. Thus, because a consumer could have satisfied their debt by "making reasonably prompt payment" of the balance stated on the collection letter, it was not misleading notwithstanding the creditor's right to accrue post-placement interest on that same debt. The Second Circuit noted that the worst "harm" to plaintiffs in Taylor would be to pay sooner rather than later in order to avoid interest or fees accruing, but acceleration of payment "falls short of the obvious dangers facing consumers in Avila." More ›

California Appellate Court Permits Debt Collection Suit against Mortgage Loan Servicer

Acknowledging a split of authority among the many federal courts reviewing whether a mortgage loan servicer falls within the FDCPA's definition of a "debt collector," one California appellate court has revived a putative class action dismissed at the trial court through which borrowers pursued fair debt claims under the Rosenthal Act. The decision issued in Davidson v. Seterus is significant because borrowers could not pursue these claims under the more restrictive FDCPA. More ›

Read Before You Leap: Providing Telephone Number To Communicate With Collector Does Not Overshadow Validation Rights

The New Jersey federal court has rejected a claim that providing a debtor with a telephone number and other options to communicate with a collector does not overshadow required language that the debtor must dispute the debt in writing within thirty days. The court found that the validation language concerning a consumer's right to dispute the debt under the Fair Debt Collection Practices Act (FDCPA) must be construed by considering as a whole the letter to the debtor. More ›

New Jersey Federal Judge Dismisses RICO suit against FDCPA Plaintiff Law Firms

Late last year, a debt collection agency went on the offensive and filed a RICO lawsuit against three FDCPA Plaintiff Law Firms, alleging that the Plaintiff Firms filed frivolous class action lawsuits under the FDCPA as a way to generate a quick settlement from them. Last week, Judge Michael Vazquez, in a sometimes scathing opinion, dismissed the suit, siding with the Plaintiff Firms. Judge Vazquez ultimately concluded that the filing of numerous class action lawsuits violates no laws, but is actually "standard practice." He found that the Amended Complaint was both factually and legally deficient, and the allegations that the Plaintiff Firms engaged in frivolous litigation were baseless. Moreover, Judge Vazquez concluded that filing litigation cannot form a basis for mail or wire fraud under RICO.  More ›

Invoking Bigfoot, the Eastern District of New York Highlights the Absurdity of New FDCPA Theories

Suggesting that the latest FDCPA plaintiff's theories in New York have morphed into something other than consumer protection, Judge Glasser of the Eastern District of New York ("EDNY") penned an extensive (and rather scathing) decision detailing the abuse by plaintiffs-consumers (or more precisely, their counsel) in filing lawsuits for non-existent harms. More ›

Bill Introduced in Congress to Exclude Attorneys and Law Firms from the FDCPA's Definition of "Debt Collector"

Yesterday, December 5, 2017, Texas Democrat Vincente Gonzalez introduced a bill in the House of Representatives to amend the Fair Debt Collection Practices Act’s definition of a "debt collector." The Bill also seeks to amend the supervisory and enforcement authority that the Consumer Financial Protection Bureau has with respect to attorneys. More ›

New York Federal Court Demands that FDCPA Plaintiffs Read Entire Debt Collection Letter to Determine Creditor's Identity

In Goldstein v. Diversified Adjustment Serv., the Eastern District of New York may have walked back one of the new favorite Fair Debt Collection Practices Act  (the "FDCPA") claims—namely that the creditor was not properly identified pursuant to § 1692g of the FDCPA. Although the debt collection letter at issue listed Sprint several times, Goldstein's complaint nonetheless alleged that the debt collection letter violated the FDCPA by failing to adequately identify to whom the debt was owed and what Sprint's role was. More ›

Overshadowed and Contradicted: Third Circuit Rules Second Demand Letter Violated FDCPA's "Validation Notice" Requirement

The Third Circuit Court of Appeals recently reiterated how a debt collector may run afoul of the Fair Debt Collection Practices Act ("FDCPA") by sending a misleading follow-up, even if it served a compliant demand letter weeks earlier. More ›

Illinois Federal Court Dismisses FDCPA Claims Focused on "Bounced Check" Language in Collection Letter

Recently, an Illinois federal court denied and dismissed two plaintiffs' Fair Debt Collection Practices Act (FDCPA) claims after the plaintiffs failed to present evidence sufficient to establish materiality. More ›