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8th Cir. Rules Against Debtor Who Tried to ‘Provoke’ FDCPA Violation

The U.S. Court of Appeals for the Eighth Circuit recently held that a consumer waived his right under the federal Fair Debt Collection Practices Act (FDCPA) to cease further communications by calling the debt collector and asking questions about the underlying debt.

A copy of the opinion in Scheffler v. Gurstel Chargo, P.A. is available at:  Link to Opinion.

A law firm obtained a judgment against a debtor in connection with a credit card debt.  The debtor was a former debt collector and had litigated a number of FDCPA claims against other debt collectors.

The law firm mailed a garnishment notice to the debtor’s credit union in attempt to collect on the judgment.  Each time, the law firm also mailed a copy of the garnishment summons to the debtor, along with a similar cover letter.  The cover letter stated “[t]hese documents were served upon [the credit union].  If you have any questions, please contact one of our collection representatives …”

The debtor called the telephone number on the cover letter and spoke with a representative of the law firm.  The representative broached the possibility of settling the debt, but only in response to the debtor’s questions about the debt.  The debtor immediately told the representative that he had sent the law firm a cease and desist letter and suggested that the representative violated its directive.

The debtor filed a complaint alleging that the law firm violated sections 1692c(c) and 1692e(10) of the FDCPA by sending the garnishment summons cover letter and attempting to collect the debt over the phone.  The debtor alleged that this was a “bait-and-switch” scheme designed to deceive unsophisticated consumers.

The debtor sued the law firm in state court and the law firm removed the case to federal court.  The trial court granted the law firm’s motion for summary judgment and dismissed the case with prejudice.

This appeal followed.

As you may recall, section 1692c(c) of the FDCPA requires a debt collector to cease further communications if the consumer notifies the debt collector in writing that he wishes to cease further communications with respect to such debt.  15 U.S.C. § 1692c(c).

Section 1692e of the FDCPA prohibits a debt collector from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt,” including the use of any false representation or deceptive means to collect or attempt to collect any debt.”  15 U.S.C. § 1692e(10).

The Eighth Circuit applies the unsophisticated consumer standard to FDCPA claims.  Strand v. Diversified Collection Serv., 380 F.3d 316, 317 (8th Cir. 2004).  “This standard protects the uninformed or naive consumer, yet also contains an objective element of reasonableness to protect debt collectors from liability for peculiar interpretations of collection letters.”  Id., at 317-18.

The debtor argued that the law firm violated section 1692c(c) because the cover letter directed him to call the law firm, but rather than connecting him to someone who could answer questions about the garnishment summons, he was subjected to efforts to collect the debt.

The debtor also argued that the law firm violated his rights under section 1692c(c) because he called only about the topic of the garnishment summons and did not wish to talk about the debt.

The trial court found that the debtor initiated the call “and the brief conversation regarding settling the underlying debt occurred only in response to [the debtor’s] direct questions of what he was ‘gonna do about’ the debt.”  The representative answered the debtor’s questions by stating that the law firm was willing to settle the debt and asked if he was interested in doing so.

The trial court noted that the law firm did not pressure or badger the debtor in any way.  It held that the debtor waived his cease communication directive by asking questions about the debt.  The trial court described the call as “an unsubtle and ultimately unsuccessful attempt to provoke [the law firm] into committing an FDCPA violation.”

The Eighth Circuit agreed and found nothing improper about providing the debtor with a contact number in the cover letter.  Further, the Eighth Circuit determined that “[the debtor’s] waiver of his cease letter was ‘knowing and voluntary, just as it would be were he an unsophisticated debtor.’

Thus, the Eighth Circuit held that the law firm did not violate section 1692c(c).

Next, the debtor argued that the law firm violated section 1692e(10), by falsely or deceptively communicating through the cover letter, that a collection representative could answer garnishment summons questions “when in fact the telephone number provided reaches those unable to discuss legal documents.”

However, the Eighth Circuit did not find any inaccurate information in the cover letter.  The letter did not state that the number provided will be answered by an attorney prepared to answer questions solely about garnishment.  Instead, it suggested that a collection representative could be reached at the listed number, and that proved to be true.

Regarding the debtor’s allegation that the letter accompanying the garnishment summons was a scheme to work around his directive to cease communication, the Eighth Circuit stated that “this is the exact sort of peculiar interpretation against which debt collectors are protected by the objective element of the unsophisticated consumer standard.”

Accordingly, the Eighth Circuit affirmed the trial court’s order granting the debt collector’s motion for summary judgment.

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Eric Tsai practices in Maurice Wutscher’s Commercial Litigation and Consumer Credit Litigation groups, and in its Regulatory Compliance group. He concentrates his practice primarily on the defense of consumer and commercial financial services companies, including mortgage lenders and servicers, mortgage loan investors, third party debt collectors, and other financial services providers. He also counsels clients on regulatory compliance, licensing, and other consumer protection matters. Eric earned his undergraduate degree from the University of California, Irvine. Prior to attending law school, he worked as a loan officer for national direct lenders. He earned his Juris Doctor from California Western School of Law and thereafter obtained a Master of Laws (LLM) in Taxation from the University of San Diego School of Law. Eric publishes extensively on various issues affecting consumer lending and litigation, including both federal and California-specific developments. He is licensed to practice law in California, Nevada, and Oregon, and is admitted in all United States District Courts in the State of California, the United States District Court for the District of Oregon, the United States District Court for the District of Nevada, the U.S. Tax Court, and the Ninth Circuit Court of Appeals. He is also a licensed real estate broker in the State of California.

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