Archive for August 2013

Trial Court Slams Professional Plaintiff, Awards Defendant Attorney’s Fees

Earlier this month, a Judge in the Eastern District of New York granted summary judgment to a defendant on technical e(11) violations finding that “his grievance is not merely meritless, it is frivolous.”[1]  In his decision, the Judge reiterated an observation that he had made seven years ago describing a rising tide of FDCPA complaints brought by a  “cottage industry” of “professional plaintiffs” who file suits for violations of the FDCPA.[2] BK-Court

In this case, the Plaintiff called the Defendant’s office and heard a recorded message identifying the Defendant as a debt collector and informing the Plaintiff that its communications were attempts to collect a debt.  Plaintiff entered into a settlement agreement with Defendant and Defendant agreed to call back later to confirm the settlement.  When Defendant called back later it left a message that identified itself but did not contain the e(11) disclosure.  The next day, Plaintiff called Defendant and again heard the recorded message with the e(11) disclosure, spoke with Defendant and finalized the settlement.  In addition, Defendant sent a letter to Plaintiff confirming the terms of settlement and said letter advised that it was a debt collector and that the communication was an attempt to collect a debt.  When the Plaintiff failed to submit his payments pursuant to the terms of the settlement, Defendant placed calls to Plaintiff and left messages that did not include the e(11) disclosure.

The court noted that Plaintiff was well aware of the Defendant’s status as a debt collector and that this type of conduct was decidedly NOT what the FDCPA was designed to protect against.  Further, it was evident from the record that Plaintiff was notified three times within the span of two days that the Defendant was a debt collector.  Citing the legislative history of the FDCPA, the Court reasoned that Plaintiff was not seeking redress for any of the abuses contemplated in the Senate Report but rather that his only complaint was that the Defendant did not disclose in every communication to him that it was a debt collector.

The court found that the Plaintiff was not the most gullible consumer and was exactly the hypothetical consumer that he envisioned seven years earlier.  Furthermore, the court took judicial notice of the fact that Plaintiff filed four additional complaints against other debt collectors on the same day as the one at hand, all of which alleged essentially the same claims.  As a result, the court granted the Defendant’s motion for attorney’s fees and costs.

The decision is available here.



[1] Majerowitz v. Stephen Einstein & Assocs., P.C., 2013 U.S. Dist. LEXIS 115664, *8 (E.D.N.Y., Aug. 15, 2013)

[2] Id. (citing Jacobson v. Healthcare Fin. Servs., Inc., 434 F. Supp. 2d 133, 138-39 (E.D.N.Y. 2006)

 

Third Circuit: TCPA Allows Consumers to Revoke Prior Express Consent

RobotYesterday, the Third Circuit Court of Appeals held that the Telephone Consumer Protection Act (47 U.S.C. § 227) allows a consumer to revoke her prior express consent to be called using an autodialer or prerecorded voice.

In its decision, Gager v. Dell Financial Services, the Circuit Court reversed a district court’s earlier finding that once a consumer provided consent to receive autodialed or prerecorded calls, a consumer cannot later revoke the consent.

Persons using autodialer technology or prerecorded messages are required by the TCPA to obtain the “called party’s” “prior express consent” before making their calls. While some types of calls are excepted from this requirement, telemarketing and debt collection calls are subject to the TCPA. 1

The decision does not provide guidance on whether the revocation of prior express consent can be made verbally or only in writing. However, the decision indicates the revocation can occur at any time. The decision is available here.

This decision is the first and only decision on the issue of revocation of prior express consent from a circuit court of appeals.

The TCPA was passed by Congress in 1991 in response to “[v]oluminous consumer complaints about abuses of telephone technology–for example, computerized calls dispatched to private homes . . .” requiring “federal legislation . . . . because telemarketers, by operating interstate, were escaping state-law prohibitions on intrusive nuisance calls.”

Although enacted more than 20 years ago, the TCPA only recently has resulted in a growing number of lawsuits. In 2010, 272 TCPA cases were either filed in or removed to the United States District Courts. The number exploded to 1101 cases in 2012. 2

 

Notes:

  1. The TCPA also subjects debt collectors and telemarketers to different requirements, including the requirements concerning obtaining prior express consent.
  2. As of July 31, 2013, 1002 TCPA cases have been filed or removed to U.S. District Courts. Statistics courtesy of www.webrecon.com.

Yes, the CFPB is Serious About Self-Reporting!

If your organization might have violated a consumer financial protection law, should it disclose that potential violation to the Consumer Financial Protection  Bureau? It seems that at least one CFPB insider believes that the potential violation should be self-reported.© olly - Fotolia.com

At today’s meeting of the Consumer Financial Services Committee in San Francisco, Peggy Twohig,  CFPB Assistant Director, Office of Supervision Policy, offered a few remarks on whether a covered entity should self-report conduct where the law is not clear on whether the conduct violates consumer financial protection law. In concluding that an entity should self-report even these “grey issues,” Twohig noted that covered entities should consider that the CFPB may discover the issue in a exam.  If the covered entity first self-reported the issue, it would allow for “a dialog” and engagement on what the appropriate result should be.

Twohig noted that self-reporting by US Bank weighed heavily in the CFPB’s decision to forgo imposing civil penalties against the institution for violating consumer financial services laws.

Twohig’s analysis offers a peek into the CFPB’s goals for self-reporting first laid out in its Bulletin 2013-06 titled Responsible Business Conduct: Self-Policing, Self-Reporting, Remediation and Cooperation. Clearly, if there is any question whether your entity should self-report, the CFPB believes it should err on the side of self-reporting.

Early this summer, Joann Needleman provided her analysis of the Bulletin, noting several “grey” areas within the Fair Debt Collection Practices Act and the challenges the Bulletin poses when deciding when to self-report. As Joann wrote, these grey areas are created by differing court rulings — what may be compliant in Jersey City, NJ, for example, would be non-compliant two miles away in Manhattan.

When building and executing a Compliance Management System, entities subject to the FDCPA should consider whether self-reporting should include its decision to adopt an operational model compliant with one set of case law, but non-compliant under another line of cases. Self-reporting may avoid, in the worst case, civil penalties, should the CFPB determine the conduct does violate a consumer financial protection law, despite court decisions finding the conduct compliant.

What do you think?