Plaintiff accused by Court of intentionally defaulting on debts in order to create FDCPA claims

The Fair Debt Collection Practice Act (FDCPA), enacted in 1977, aimed to "eliminate abusive debt collection practices.” Among many other reforms, the FDCPA prohibits harassing or oppressive conduct on the part of debt collectors, and it requires debt collectors to provide notice to debtors of their right to require verification of a debt. Both the text of the FDCPA and its legislative history emphasize the intent of Congress to address the previously common and severe problem of abusive debt collection practices and to protect unsophisticated consumers from unscrupulous debt collection tactics. The Act, as a U.S. District court recently stated, was not intended to enable plaintiffs to bring serial lawsuits against different debt collector defendants alleging various and often insignificant deviations from the Act’s provisions.

In Ehrich v. Credit Prot. Ass’n, 2012 U.S. Dist. LEXIS 134142 (E.D.N.Y. Sept. 19, 2012), accused the plaintiff in that case of abusing the FDCPA by, among other things, filing a total of nine complaints, including the present case, over the past seven years. The court stated that the record suggests that the plaintiff may be deliberately defaulting on his debts in order to provoke collection letters which are then combed by his lawyer for technical violations of the FDCPA.
The facts of this unique case are that Ehrich filed a complaint against Credit Protection Association, L.P., alleging violations of the FDCPA. Ehrich alleged that CPA sent him a collection note seeking to recover a debt owed to Time Warner Cable Company. Ehrich did not dispute the validity of the debt CPA sought to collect, nor did he claim that the primary text of the letter violates the FDCPA. Rather, Ehrich based his claim on two Spanish sentences at the top and bottom of the letter.
Printed at the top of the letter is the phrase “aviso importante de cobro,” which Ehrich, relying on a Google translation, translated as “important collection notice.” At the bottom of the collection notice were three Spanish phrases: “Opciones de pago,” “Llame” followed by a phone number, and “Envíe MoneyGram,” which Ehrich translated as “Payment options,” “Call" and “Send MoneyGram.” Ehrich, who does not speak Spanish, claimed that the notice’s inclusion of these Spanish phrases without a Spanish translation of the FDCPA-mandated disclosures and notices provided in English could mislead Spanish-speaking consumers and cause them to inadvertently waive their rights under the FDCPA.

CPA moved for summary judgment which was granted by the court based on lack of standing. The basis for the Court’s ruling was that the collection notice contained all disclosures required by the FDCPA and that Ehrich fully understood it. Therefore, he suffered no injury sufficient to support standing.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;

or
• Consumer Rights Orlando

Offer of Judgment Halts FDCPA Lawsuit

Federal Rule of Civil Procedure 68 provides that, at least fourteen days before trial, a defending party may serve a plaintiff with an offer to allow a judgment on specified terms.   Several recent district court opinions have rules that an offer of judgment providing the plaintiff with the maximum allowable relief will moot the plaintiff’s  FDCPA claim.  Moten v. Broward Cnty., No. 10-62398-CIV, 2012 U.S. Dist. LEXIS 19332, 2012 WL 526790, at 2 (S.D. Fla. Feb. 16, 2012); see also  Mackenzie v. Kindred Hosp. E., LLC, 276 F. Supp. 2d 1211, 1218-19 (M.D. Fla. 2003) (dismissing FLSA claim as moot after plaintiff rejected  Rule 68 offer where offer exceeded amount plaintiff could have received at trial).

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In Young v. AmeriFinancial Solutions, LLC, 2012 U.S. Dist. LEXIS 125661 (S.D. Fla. Sept. 5,2012), plaintiff filed an action against defendant under the Fair Debt Collection Practices Act which provides that damages in an action brought by an individual shall not exceed $1,000.00. Defendant served an Offer of Judgment proposing to have judgment entered in the about of $1,001, plus attorney's fees incurred prior to the date of the offer. Defendant then moved the trial court to dismiss the action for lack of subject matter jurisdiction contending that the action is moot because the Offer would grant Plaintiff more than the full amount of relief that Plaintiff could obtain under the FDCPA. The Court granted the defendant’s motion to dismiss for lack of subject matter jurisdiction because the offer of  judgment would provide plaintiff with the maximum allowable relief on her claims.  Therefore, the court concluded, that the action was moot and the Court would no longer have subject matter jurisdiction over the suit. 

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Frequently Asked Questions about the FDCPA

Frequently Asked Questions

Q. What is the Fair Debt Collection Practices Act?

A. The Fair Debt Collection Practices Act ("FDCPA") requires that debt collectors treat you fairly by prohibiting certain methods of debt collection.

Q. What debts are covered?

A. Personal, family, and household debts are covered under the Act.  This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Q. Who is a debt collector under the FDCPA?

A. A debt collector is any person, other than the creditor, who regularly collects debts owed to others. Under a 1986 amendment to the Fair Debt Collection Practices Act, this includes attorneys who collect debts on a regular basis.

Q. Who is a debt collector under the Florida Consumer Collection Practices Act?

A. Under Florida law, the definition of a "debt collector" is much broader than under its federal counterpart. Under the Florida Consumer Collection Practices Act (“FCCPA”), a “debt collector” is defined as: “any person who uses any instrumentality of commerce within this state, . . . in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. The term ’debt collector’ includes any creditor who, in the process of collecting her or his own debts, uses any name other than her or his own which would indicate that a third person is collecting or attempting to collect such debts.”

So, the FCCPA applies to any person or persons, collecting his/her own debts. Under that broad definition, the FCCPA would apply to a law or accounting firm attempting to collect its own fees, as well as the employees engaged in such collection activity on the law firm's behalf.

Q. How may a debt collector contact you?

A.  A collector may contact you in person, by mail, telephone, telegram, or FAX. However, a debt collector may not contact you at unreasonable times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves.

Q. Can you stop a debt collector from contacting you?

A. You may stop a collector from contacting you by writing a letter to the collection agency telling them to stop.  Once the agency receives your letter, they may not contact you again except to say there will be no further contact. Another exception is that the agency may notify you if the debt collector or creditor intends to take some specific action.

Q. May a debt collector contact any person other than you concerning your debt?

A. If you have an attorney, the debt collector may not contact anyone other than your attorney. If you do not have an attorney, a collector may contact other people, but only to find out where you live and work. Collectors usually are prohibited from contacting such permissible third parties more than one. In most cases, the collector is not permitted to tell anyone other than you and your attorney that you owe money.

Q. What is the debt collector required to tell you about the debt?

A.  Within five days after you are first contacted, the collector must send you a written notice telling you the money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

Q. May a debt collector continue to contact you if you believe you do not owe money?

A.  A debt collector may not contact you if, within 30 days after you are first contacted, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

Q.  What control do you have over payment of debts?

A.  If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.

Q.  What can you do if you believe a debt collector violated the law?

A.  You have the right to sue a collector in a state or federal court within one year from the date you believe the law was violated. If your win, you may recover money for the damages you suffered. Court costs and attorney's fees also can be recovered.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Eleventh Circuit reaffirms application of FDCPA to mortgage foreclosure actions

Since 2009, debt collectors in the Eleventh Circuit (Florida, Georgia and Alabama) who were contacting consumers in connection with mortgage foreclosure actions relied on the decision of Warren v. Countrywide Home Loans, Inc. , 342 F. App’x 458 (11th Cir. 2009) for protection from suit because that decision held that enforcement of a security interest through the foreclosure process is not debt collection for purposes of the FDCPA.  However, creditors can no longer seek refuge in Warren v. Countrywide Home Loans, supra, since publication of the opinion in Reese v. Ellis, Painter, Ratterree & Adams, LLP , 678 F.3d 1211 (11th Cir. 2012).  Reese held that an entity that regularly attempts to collect debts can be a “debt collector” under the FDCPA even when that entity is also enforcing a security interest. 


The Reese holding was recently reaffirmed in Birster v. Am. Home Mortg. Servicing, 2012 U.S. App. LEXIS 14660 (11th Cir. Fla. July 18, 2012).  In this recent case, the Birsters owned a home in Jupiter, Florida which they refinanced through Option One.  The Birsters ceased making mortgage payments on or around June 1, 2008.  The promissory note and mortgage provided that any missed payment by the Birsters places the loan into a default status.  On July 30, 2008, AHMSI began servicing the loan and initiating collection activities.  On February 2, 2009, U.S. Bank, N.A., as the trustee for the lienholder, initiated foreclosure proceedings against the Birsters. In their FDCPA lawsuit, the Birsters alleged that AHMSI began its relentless assault on them in 2008.  According to the Birsters, AHMSI called them multiple times on a daily basis to collect the past due amounts.  The Birsters further alleged that most of these calls occurred after AHMSI knew that Angela suffered from an inoperable glioma (brain tumor) that cannot be diagnosed as cancerous or non-cancerous.  As early as April 16, 2009, the Birsters informed AHMSI that they were represented by an attorney, and provided AHMSI with the attorney’s name and phone number.  The Birsters advised AHMSI to contact their attorney and to cease contacting them directly.  AHMSI nevertheless continued its direct communications with the Birsters.  The Complaint further alleged that during these calls, AHMSI used offensive and abusive language towards Mrs. Birster and made false representations that the Birsters’ home was scheduled for a foreclosure sale.  Mrs. Birster also alleged that after a particularly abusive call on May 5, 2009, she collapsed in her front yard and was rushed to a nearby hospital.  Once the calls ceased, the Birsters claim AHMSI then began intimidating and harassing them at their home.  AHMSI sent agents to “inspect” the property, despite knowing the Birsters resided there.  Although AHMSI was initially inspecting the property on a monthly basis, AHMSI soon began visiting the Birsters’ home every day or every other day.  AHMSI’s home inspections even occurred on Thanksgiving and Christmas days. The Birsters alleged AHMSI’s actions caused Angela to suffer a deep depression and anxiety, resulting in her attempted suicide. 


The district court granted summary judgment to AHMSI after concluding the Birsters’ allegations related solely to efforts by AHMSI to enforce a security interest, rather than to collect a debt. Thus, the district judge concluded that the actions of AHMSI were not covered by the FDCPA.  Based on the holding in Reese, supra, the Eleventh Circuit reversed the order granting summary judgment.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Confusing Debt Validation Notice violates FDCPA

The Fair Debt Collection Practices Act (“FDCPA”) requires, among other things, that debt collectors, within five days after first communicating with an individual debtor about a debt, to provide the debtor with a validation notice provides the consumer a written notice containing -- along with other information – the name of the creditor to whom the debt is owed and the amount of the debt. This notice is sometimes referred to as a debt validation notice. Simply stating the amount due is not enough, however. The notice must state the amount of the debt clearly enough that the recipient is likely to understand it. It is not enough for a debt collection agency simply to include the proper debt validation notice in a mailing to a consumer. Congress intended that such notice be clearly conveyed. Therefore, a notice that letter fails to state amount of debt where a consumer reading it could reasonably interpret the amount of debt in two ways, is a violation of the FDCPA. In Melillo v. Shendell & Assocs., 2012 U.S. Dist. LEXIS 9248 (S.D. Fla. Jan. 26, 2012), the plaintiff recieved a collection letter from a law firm representing his condominium association. Plaintiff alleged in his Complaint that the collection letter failed to state a clear amount of the debt owed because it referred to different amounts. The Court applied the objective "least sophisticated consumer" standard to the collection letter. In denying defendant’s motion to dismiss, the Court stated that in reading the complaint in the light most favorable to plaintiff, to the extent that the parties dispute factual issues regarding whether the collection letter was actually confusing will ultimately be for the jury to decide at trial.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

Does the FDCPA apply to mortgage foreclosures?

A recent Eleventh Circuit decision responded to this question in the affirmative. In Reese v. Ellis, Painter, Ratterree & Adams LLP, 678 F.3d 1211 (11th Cir 2012) the Reeses defaulted on a loan and mortgage. A law firm representing the lender sent the Reeses a letter and documents demanding payment of the debt and threatening to foreclose on the property if they did not pay it. The Reeses then filed a lawsuit against the law firm alleging that the communication violated the Federal Debt Collection Practices Act. The district court dismissed the complaint finding that the law firm was not a “debt collector” under the FDCPA and that the letter and documents it sent were not covered by the FDCPA. The basis for the trial Court’s dismissal was, in part, based on the decision in Warren v. Countrywide Home Loans, 342 Fed. Appx. 458 (11th Cir. Ga. 2009) which held that the FDCPA, except for limited circumstances, does not apply to mortgage foreclosures and such collection activity does not constitute debt collection activities governed by the FDCPA. In holding that the FDCPA applied to the collection efforts of the lender’s law firm, the Court rejected defendant’s arguments that the purpose of the letter was to inform the Reeses that the lender intended to enforce its security deed. That argument, the Court observed, wrongly assumed that the letter could not have had a dual purpose – to give notice of foreclose and to demand payment on the note. The Court went on to state that the rule the law firm was asking the Court to adopt would exempt from the provisions of the FDCPA any communication that attempted to enforce a security interest regardless of whether it also attempted to collect the underlying debt. That rule, the Court said, would create a loophole in the FDCPA and the practical result of such a rule would be that the FDCPA would apply only to efforts to collect unsecured debts. Under such a rule, the court noted, a lender (or its law firm) could harass or mislead a debtor without violating the FDCPA as long as a debt was secured. That, the Court said: “can’t be right.” In summarizing its ruling on this point, the Court said: “A communication related to debt collection does not become unrelated to debt collection simply because it also relates to the enforcement of a security interest.”

Creditors still trying to collect debts after bankruptcy

James and Shannon Humphrey filed bankruptcy on October 4, 2010 listing Bank of America as a creditor.  After the bankruptcy was filed, Bank of America, illegally contacted the Humphreys on 38 separate occasions.  Bank of America ignored protests from the Humphreys and their lawyer, telling them they didn't care about the bankruptcy and that phone calls would continue until the Humphreys contacted the bankruptcy department so Bank of America could update its computer system. The Court only penalized Bank of America $10,000 plus attorney's fees for these violations. 
Portfolio Recovery, a debt collector, purchased $1.52 billion of bankruptcy debt in 2011 for 9 cents on the dollar.   In the first quarter of 2012 alone, Portfolio Recovery reported earnings of $79,994,000 in fees collecting on bankruptcy debt.  In 2011, Capital One had to refund $2.35 million for illegally collecting on 15,500 claims already discharged in bankruptcy.  Capital One received $3.55 billion in bailout money from the federal government in 2008. EMC Mortgage -- a company purchased by JP Morgan Chase from Bear Stearns -- has illegally billed debtors in bankruptcy so often that bankruptcy judges have assessed punitive damages against it in four different court cases. Gagliardi v. EMC Mortgage, 290 B.R. 808 (Bankr.D.Colo. 2003); Curtis v. EMC Mortgage, 322 B.R. 470 (Bankr.D.Mass.2005); Castro v. EMC Mortgage, 08-01135 (Bankr.D.N.C. 2008); Harlan v. EMC Mortgage, 402 B.R. 703 (Bankr.W.D.Va.2009).   JP Morgan Chase obtained a bailout of $25 billion.   Despite reliance on the public dole to cure their own financial problems, banks have become more voracious in collecting consumer debt.

Excerpted from article written by Richard Gaudreau of the Huffington Post.

For more information about the Fair Debt Collection Practices Act, or, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

• Stop Collection Harassment;
or
• Consumer Rights Orlando

The twists and turns of the Colorado River Doctrine

A Property Owners Association (Alaqua) retained a law firm to recover delinquent homeowner association maintenance assessments from plaintiff. The law firm mailed to plaintiff a letter demanding payment of the assessments, interest, and other charges.  The debt remained unpaid so the law firm sued the plaintiff Acosta on behalf of Alaqua in Florida state court to foreclose a lien on Acosta’s property or recover a money judgment (the “State Action”).  Alaqua later replaced the first law firm with James A. Gustino and his law firm to litigate the State Action.

While the State Action was pending against him, Acosta filed suit in federal court alleging that Alaqua, the first law firm and Gustino, violated, among other state and federal statutes, the Fair Debt Collection Practices Act in attempting to collect the assessments.  The defendants filed a motion to dismiss the amended complaint.  In the alternative, the motion asked the court to stay the action pursuant to the Colorado Riverabstention doctrine pending the outcome of the State Action.

The district court granted the motion insofar as it sought dismissal pursuant to theColorado River doctrine and dismissed the case without prejudice.  Acosta appealed and the Court of Appeals framed the issue as having to decide whether the federal and state proceedings were parallel for purposes of the Colorado River abstention doctrine.   The court concluded they were not parallel and reversed the trial court’s dismissal, without prejudice.

The Court first emphasized the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.  It stated that “The doctrine of abstention . . . is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it.”   Furthermore, the Court stated, that the threshold requirement for application of the Colorado River doctrine is that the federal and state cases be sufficiently parallel.    In other words, whether the cases “involve substantially the same parties and substantially the same issues.”   And, if the federal and state proceedings are not parallel, then, the Court opined, that the Colorado River doctrine should not apply.

On appeal, plaintiff, Acosta, argued that the district court erred by applying theColorado River doctrine because the State Action and his federal suit were not parallel because, the two actions involve different parties because the federal action is against Alaqua’s attorneys, not Alaqua.   He also maintained that the two cases presented different legal issues.

The Court of Appeals stated that the district court’s decision depended on its conclusion that if the State Action were decided against Acosta, he would have no viable claims in federal court.  However, the appellate Court observed that the key to the federal case is not only whether the debt was enforceable but also whether the defendants’ conduct when collecting that debt complied with the Fair Debt Collection Practices Act.   This, according to the reviewing panel, raises some doubt about whether resolution of the State Action would decide the FDCPA issues along with the other federal claims that were brought.  Based on its analysis, the Court of Appeals reversed the trial court’s order dismissing the complaint, without prejudice. 

Acosta v. Gustino, 2012 U.S. App. LEXIS 11339 (11th Cir. Fla. June 6, 2012)

Plaintiff sues surety and law firm over bond forfeiture that was set aside

Plaintiff paid a bail bondsman a premium for a bond to bail her son out of jail. At the time she obtained the bond, she signed papers which had the legal effect of holding her responsible for the full amount of the bond, $3,500, if her son failed to appear. Plaintiff’s son failed to appear for his arraignment and he bond was revoked. Thereafter, the Court executed a judgment against plaintiff’s son as principal and National Casualty Corporation as surety for $3,500. However, plaintiff’s son eventually appeared in court and the bond forfeiture judgment was set aside. A law firm and two collection agencies sent correspondence and made telephone calls to the plaintiff claiming that she owed National Casualty Corp. $3,500.00. The law firm later sued the plaintiff on this alleged debt. Plaintiff filed suit against National Casualty, the law firm and the debt collectors for violations of the Fair Debt Collection Practices Act principally because they were trying to collect a debt that, as she alleged, did not exist. The Defendants moved to dismiss on various grounds. The Court, in denying the motions to dismiss the FDCPA claims stated that it was bound to accept as true all of the allegations in the plaintiff’s complaint and that if true, would constitute violations of the FDCPA. In its ruling, the Court stated: “An amount misstated by the debt collector need not be deliberate, reckless, or even negligent to trigger liability – it need only be false. Id. In other words, the FDCPA recognizes a strict liability approach.” Barlow v. Safety Nat’l Cas. Corp., 2012 U.S. Dist. LEXIS 75585 (decided May 30, 2012))

Dunning letter from attorney falls under Fair Debt Collection Practice Act

Before the creditor sends a delinquent account to a collection agency, the creditor can send a dunning notice to a consumer. However, when a lawyer attempts to send a similar communication, according to recent case law, it can be considered an attempt at debt collection under the Fair Debt Collection Practices Act.


When Izell and Raven Reese defaulted on a loan obtained from Provident Funding Associates, L.P. after giving the lender their mortgage, the lender's law firm sent a letter looking for the missed payment and threatening to foreclose on the Reeses' home if the sum was not attained, the written opinion of the court explained. The Reeses claimed this was an attempt at a collection and violated the Fair Debt Collection Practices Act, though a district court disagreed.


A panel of judges in the Eleventh Circuit court of appeals reversed the district court's ruling. The written opinion of the court cited the fact that the letter sent to the Reeses featured the disclaimer reading "This law firm may be attempting to collect a debt on behalf of the above-referenced lender."


The court said the Reeses were correct in asserting there were misleading representations in violation of Section 807 of the FDCPA. According to the opinion, the couple owed a debt to the company, so asking for repayment essentially made the lawyers debt collectors under the FDCPA.


Lawyers may want to cite this case and take care in the future to abide by the FDCPA when contacting any individual who has the possibility of owing a debt to the attorney's client.


Reese v. Ellis, 2012 U.S. App. LEXIS 8839 (11th Cir. Ga. May 1, 2012).

Defendant was not a "debt collector" under the FDCPA

Plaintiff secured a line of credit with Defendant to purchase computer equipment.  Thereafter, Plaintiff became delinquent in her payments to Defendant, and Defendant began calling Plaintiff's mobile phone with prerecorded messages regarding the debt.  Plaintiff sent Defendant a letter asking Defendant to cease calling her which was received by Defendant.  Plaintiff asserts that this "letter revoked her consent that she had previously given to the Defendant to place calls to her cellular telephone number."   Plaintiff maintains, however, that Defendant continued to place an additional "forty calls to her cellular phone in less than three weeks.

Defendant filed a Motion to Dismiss the Complaint.  The Court held that Defendant did not qualify as a "debt collector" under the FDCPA.   Creditors who collect in their own name and whose principal business is not debt collection . . . are not subject to the [FDCPA]. . . . Because creditors are generally presumed to restrain their abusive collection practices out of a desire to protect their corporate goodwill, their debt collection activities are not subject to the [FDCPA] unless they collect under a name other than their own.  "Creditors—as opposed to debt collectors—generally are not subject to the FDCPA."   "A 'debt collector' is broadly defined as one who attempts to collect debts 'owed or due or asserted to be owed or due to another.'"   A "creditor," on the other hand, is one who "offers or extends to offer credit creating a debt or to whom a debt is owed."  One cannot be both a "creditor" and a "debt  collector" as defined under the FDCPA because the terms are mutually exclusive.

Motion to Dismiss was granted.

Gager v. Dell Fin. Servs., 2012 U.S. Dist. LEXIS 73752 (M.D. Pa. May 29, 2012).

Supreme Court Grants Certiorari in FDCPA Case on Awarding Costs

On May 29, 2012, the U.S. Supreme Court announced it would hear a case in which a debt collection agency was awarded costs in a Fair Debt Collection Practices Act (FDCPA) lawsuit pursuant to Federal Rule of Civil Procedure 54(d). The question before the Supreme Court is whether a prevailing defendant in an FDCPA case is entitled to costs, regardless of whether the plaintiff brought the suit in bad faith and for the purpose of harassment.

The case, Marx v. General Revenue Corp., No. 11-1175, was originally brought by a consumer who defaulted on her student loan and alleged that a debt collection agency violated the FDCPA by sending a fax to her workplace that requested information about her employment status. The district court dismissed the consumer’s claim and concluded the collection agency’s fax did not violate the FDPCA because it was not a “communication” as defined by the Act. The district court awarded the collection agency costs pursuant to Federal Rule of Civil Procedure 54(d) and did not find that the consumer’s action was not brought in bad faith and for the purpose of harassment. The consumer appealed.

Although Federal Rule of Civil Procedure 54(d) allows a prevailing party to recover costs, the consumer argued the FDCPA’s cost provision, § 813(a)(3), makes clear that a court may award costs to a successful defendant only if the court finds that the plaintiff brought the action in bad faith and for the purpose of harassment.

The U.S. Court of Appeals for the Tenth Circuit affirmed the district court’s decision and held that the FDCPA’s cost provision does not supersede Rule 54(d). The appellate court reasoned that although the FDCPA’s cost provision only provides for an award to the defendant when a court finds the plaintiff brought the case in bad faith and for the purpose of harassment—which was not the case here—it does not specifically prohibit a court from awarding costs to a prevailing defendant in other instances.

The Supreme Court’s decision will determine whether a debt collector who prevails in an FDCPA action may recover the costs incurred in defending the action, even when a court does not find that the consumer brought the action in bad faith and for the purpose of harassment. ACA will continue to monitor this appeal and update the membership of new developments.

www.consumerlaworlando.com

Calling debtor at home and at work 82 times attempting to collect debt is not harassment

Yalitza Valle sues National Recovery Agency ("National")  alleging violations of the Fair Debt Collection Practices Act by calling Valle at home and at work eighty-two times in an attempt to collect debt incurred from emergency medical service.  The parties dispute no fact.   The telephone log confirms that between December 30, 2009, and September 7, 2010, National telephoned Valle at home and at work for a total of eighty-two calls, twenty-two of which occurred in February, 2010.  On seventeen occasions, National called both Valle's home telephone number and work telephone number during the same day.  National never called the same number more than once per day.  Valle never answered.  National never left a voice message. Speaking with National for the first and only time, Valle telephoned National on September 9, 2010, and National stopped calling Valle.  Valle produces no other evidence of potentially harassing conduct.   National never called Valle twice at the same phone number during the same day. National conversed with Valle only once and only when Valle called National, who never again called Valle.   National never threatened Valle; never called Valle at an odd hour; never contacted a friend, employer, co-worker, or family member; and never engaged in other conduct "naturally" resulting, or intending to result, in harassment, oppression, or abuse. Valle never disputed the debt, never demanded cessation of the calls, and never answered the phone.     Judgment for Debt Collector, National.

Valle v. Nat'l Recovery Agency, 2012 U.S. Dist. LEXIS 69564 (M.D. Fla. May 18, 2012).

Post Discharge Collection Activities

Many debtors who file for bankruptcy and obtain a discharge still receive collection letters or calls from creditors.  This is a clear violation of the FDCPA.  It is anticipated that most debt collectors will claim as a defense to a FDCPA that the collection activities were a result of a bona fide error in that they had no actual knowledge of the bankruptcy.

Hyman v. Tate,  362 F.3d 965, 968 (7th Cir. 2004) holds that (a) an understanding with creditor-clients that they will not knowingly refer accounts subject to a bankruptcy filing and will notify the debt collector if they afterwards discover the fact together with (b) prompt cessation of collection efforts upon notification of a bankruptcy filing are procedures reasonably adapted to avoid errors of this kind.

In Bacelli v. MFB, Inc., 729 F. Supp. 2d 1328 (M.D. Fla. 2010), the debt collector claimed that it had no actual knowledge of the debtor's bankruptcy which fact was undisputed.   However, the Court denied summary judgment on the bona fide error defense because the debt collector/defendant presented no evidence of an agreement or understanding with the original creditor that it would not to refer accounts in bankruptcy and no evidence that its reliance on the original creditor had proved effective in avoiding errors in the past.   Lastly, the Court stated that the debt collector/defendant presented no evidence whatsoever to show that its reliance on the original creditor about knowledge of the plaintiff's bankruptcy discharge was reasonable.

  

Can you sue for mistakes in collection letters?

The plaintiff debtor in  Jerman sued a law firm and an attorney for FDCPA violations, committed while they were acting as debt collectors. The FDCPA has a notice provision that requires debt collectors to send written notice to the debtor that the debt will be assumed valid unless the debtor disputes it.  15 U.S.C. § 1692g(a).  The collection attorney’s notice letter in  Jerman stated that the mortgage debt at issue would be assumed valid unless the debtor disputed that debt  in writing. 
The  Jerman plaintiff debtor contended that the collection attorney violated the FDCPA by imposing a requirement that the debtor dispute the debt  in writing, when the FDCPA required only that the debtor dispute the debt and did not specify that it be in writing.  Observing that authority was split on the issue, the district court ultimately agreed with the plaintiff debtor that this writing requirement in the collection attorney’s notice letter constituted an FDCPA violation. ).  In a later proceeding, however, the district court held that the collection attorney was entitled to the bona fide error defense. 

The Supreme Court ruled that the FDCPA’s bona fide error defense does not encompass mistakes of law or misinterpretations of the requirements of the Act itself.  Instead, the seven-member majority concluded that  § 1692k(c)’s requirement that debt collectors maintain procedures reasonably adapted to avoid any bona fide errors referred only to measures designed to avoid errors like clerical or factual mistakes.

Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. , 130 S. Ct. 1605, 176 L. Ed. 2d 519 (2010).