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11th Cir. Holds Failure to Disclose Disputes Must Be ‘In Writing’ Violates FDCPA

The U.S. Court of Appeals for the Eleventh Circuit recently held that a collection letter sent to the consumer’s attorney is a “communication with a consumer” within the meaning of §1692g of the federal Fair Debt Collection Practices Act (FDCPA).

Additionally, the Court held omitting a statement that disputes must be “in writing” in a disclosure under 15 U.S.C. §1692g does not amount to waiver of that requirement by the debt collector, and is instead an omission of a material term in violation of the FDCPA.

A copy of the opinion in Connie Bishop v. Ross Earle & Bonan, P.A., et al. is available at:  Link to Opinion.

On Dec. 23, 2014, the defendant debt collectors sent a collection letter to the plaintiff debtor’s attorney. The letter informed the plaintiff debtor that she had 30 days to dispute the debt, but did not inform her that she must dispute the debt in writing.

On Feb. 18, 2015, the plaintiff debtor filed a complaint against the debt collectors under the FDCPA, alleging that the letters violated 15 U.S.C. §1692g  by failing to notify her about the “in writing” requirement. The plaintiff also alleged that the debt collectors violated 15 U.S.C. §1692e(10), which prohibits using a false representation or deceptive means to collect or attempt to collect any debt.

The trial court dismissed the complaint with prejudice for failure to state a claim. The plaintiff debtor appealed.

As you may recall, 15 U.S.C. §1692g of the FDCPA requires a debt collector to provide a consumer with a notice of debt that contains:

a statement that if the consumer notifies the debt collector in writing within [a] thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector.

15 U.S.C. §1692g(a)(4).  This notice must be either contained in the “initial communication with a consumer” or provided within five days of such communication. §1692g(a).

The Eleventh Circuit first looked to whether a debt collection letter sent to the consumer’s attorney qualifies as a debt collection communication with a consumer to trigger the FDCPA. The debt collectors argued that, because the letters were sent to the plaintiff debtor’s counsel, and not to the debtor herself, there was no debt collection communication with a consumer.

The Eleventh Circuit previously addressed this issue in Miljkovic v. Shafritz & Dinkin, P.A., Case No. 14-13715 (11th Cir., June, 2015), holding that conduct directed toward the consumer’s attorney is covered by the FDCPA.

Under Miljkovic, the FDCPA still applies even though the communications are sent to the consumer’s attorney.  The Eleventh Circuit noted that the FDCPA defines a “communication” as “the conveying of information regarding a debt directly or indirectly to a person through any medium” §1692a(2).  Therefore, the Court held, it follows that §1692g, which applies to the “initial communication with a consumer,” can be triggered either by a direct communication to the consumer or by an indirect communication to the consumer’s counsel.

The Eleventh Circuit joined the Third, Fourth, and Seventh Circuits in holding a collection notice sent to a consumer’s attorney is an indirect communication. The Court held that an attorney is a channel to the consumer, and thus a collection letter sent to the consumer’s attorney is an indirect communication with the consumer.

Additionally, the Eleventh Circuit noted that 15 U.S.C. §1692c states that “a debt collector may not communicate with a consumer . . . if the debt collector knows the consumer is represented by an attorney . . . unless the attorney consents to direct communication with the consumer.”  By employing the word “direct” in this manner, the Court held that §1692c distinguishes between “direct” communication with the consumer — permitted only with attorney consent — and “indirect” communication through the consumer’s attorney.

The defendant debt collectors argued that the “in writing” requirement should be analyzed separately from the other 15 U.S.C. §1692g protections.  However, the Court held that there is no textual basis for treating the “in writing” requirement differently from the other rights.  Instead, the Court held, only by applying §1692g to attorney communications can it be ensured that consumers receive both legal representation and the full protections intended by Congress.

Thus, the Eleventh Circuit held that a collection letter sent to the consumer’s attorney is a “communication with a consumer” within the meaning of §1692g.

The Court then looked to whether omitting the “in writing” requirement amounts to waiver of that requirement by the debt collector. The debt collectors argued that debt collectors may waive the “in writing” requirement by omitting it from the notice of debt, and thereby offer more protection to customers by accepting a less demanding means of dispute than debt collectors are otherwise entitled to require. Thus, the debt collectors argued, omission of the “in writing” requirement does not violate §1692g.

The Eleventh Circuit held that §1692g is clear that the debt collector “shall” notify the consumer of her right to dispute the debt in writing, and that nothing in the statute suggests that the debt collectors may relax these requirements.

Moreover, the Court held that the FDCPA already specified a remedy for violations of §1692g, and refused to create a waiver remedy as argued by the defendant debt collectors here. Thus, the Eleventh Circuit held that omitting the “in writing” requirement does not amount to waiver, but instead violates the FDCPA.

Lastly, the Court looked to whether the omission of the “in writing” requirement states a claim under §1692e.

The Eleventh Circuit recited that, in evaluating a communication under the FDCPA, courts use the least sophisticated consumer standard.

As you may recall, the “least sophisticated consumer” may be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care. However, the test has an objective component in that while protecting naive consumers, the standard also prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness.

The defendant debt collectors argued that the Eleventh Circuit should adopt a “competent lawyer” standard for attorney communications. The Eleventh Circuit declined.

The Eleventh Circuit noted that few circuits have adopted the competent lawyer standard. The Seventh Circuit limited the “competent lawyer” standard to misleading and deceptive behavior, but actual misrepresentations are not subject to this standard.  In addition, the Tenth Circuit embraced the “competent lawyer” standard only insofar as it relied on the professional competence of attorneys to hold that explicit disclosure is not always necessary under §1692e(11). Both circuits excluded actually false statements from the competent lawyer standard.

The Eleventh Circuit found that the instant case is not one in which a lawyer would be less likely to be either deceived or misled than a consumer. The Court also found that the omission of “in writing” is also not innocent or sufficient in context.

The Court held that, by omitting the “in writing” disclosure, the debt collectors misstated the law surrounding debt verification requests. Such a misrepresentation, the Court noted, was not apparent on the face of the letter, which the Eleventh Circuit suggested would state a claim even in jurisdictions that apply the competent lawyer standard.

The Eleventh Circuit found no basis in the FDCPA to treat false statements made to lawyers differently from false statements made to consumers themselves. Therefore, Court held that the instant case is not an appropriate vehicle to adopt the “competent lawyer” standard in any form.

In sum, the Court held that the initial communication here omitted a material term required by §1692g(a), and misrepresented consumer rights under the FDCPA.  Accordingly, the Eleventh Circuit held that the trial court erred in dismissing the plaintiff’s claims, and reversed the trial court’s ruling.

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