The U.S. Court of Appeals for the Seventh Circuit recently held that the trial court did not abuse its discretion when it reduced the plaintiff’s counsel’s $187,410 fee claim to $10,875 after the debtor recovered only a $1,000 statutory damages award on his federal Fair Debt Collection Practices Act claim at trial and the debt collector had issued a Rule 68 offer of judgment early in the case that exceeded the amount the debtor recovered. A copy of the opinion in Paz v. Portfolio Recovery Associates, LLC is available at: Link to Opinion. After a debt collector purchased a debtor’s…
Posts published in “Debt Collection”
The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court’s order requiring a law firm to respond to interrogatories and requests for production of documents pursuant to a civil investigative demand promulgated by the Consumer Financial Protection Bureau. In so ruling, the Ninth Circuit cited prior Supreme Court separation-of-power opinions which indicate that the bureau’s restriction permitting removal of its director only by the president “for cause” did not violate the Constitution’s separation of powers doctrine to conclude that its structure was constitutionally permissible. The Ninth Circuit also held that the civil investigative demand was proper…
The Appellate Court of Illinois Fifth District affirmed the dismissal of a borrower’s alleged putative class action alleging that the successor to a credit card issuer violated various state and federal laws when it filed suit to collect the debt past the four-year statute of limitations for the sale of goods under the Illinois version of the UCC (810 ILCS 5/2-725). In so ruling, the Appellate Court held that the issuer properly filed suit within the five-year statute of limitations that applies to credit card agreements under 735 ILCS 5/13-205. In addition, the Appellate Court ruled that advancing money to pay…
The U.S Court of Appeals for the Eighth Circuit recently affirmed dismissal of a consumer’s suit against a debt collector, alleging that its collection letter violated the federal Fair Debt Collection Practices Act. In so ruling, the Court concluded that the debt collector’s use of the term “PROFESSIONAL DEBT COLLECTORS” and the initials of its “doing business as” name would not mislead or deceive an “unsophisticated consumer,” and the letter’s inclusion of a signature of an individual not registered to collect debts in Minnesota was irrelevant and did not violate section 1692f, because the collection company and two other signatories…
The Consumer Financial Protection Bureau today released its Notice of Proposed Rulemaking to implement the Fair Debt Collection Practices Act. Years in the making, the proposed rules if adopted would bring significant changes to the form and manner of debt collector communications to consumers, credit reporting and litigation activity. Interested parties will have 90 days from publication in the Federal Register to submit comments to the rules. The rules are available here. The Notice of Proposed Rulemaking covers a wide array of material; we look at a few of the most significant proposals below. Call Frequency Cap The NPRM would…
The Supreme Court of Missouri recently held that a trial court abused its discretion by certifying an overly broad class with a class representative whose claims against the debt collector defendant were not typical of the class. More specifically, the class definition was deemed overbroad because approximately 87 percent of the class members’ claims were either precluded by final deficiency judgments, or estopped by their failure to disclose the claims in bankruptcy, and the class representative failed to meet typicality requirements, because she did not suffer the same alleged injury as the class members. A copy of the opinion in…
The U.S. Court of Appeals for the Eleventh Circuit recently ruled that an offer to “resolve” a debt without disclosing its time-barred status may be deceptive or misleading under the federal Fair Debt Collection Practices Act (FDCPA) even in the absence of an express threat of litigation. A copy of the opinion in Holzman v. Malcolm S. Gerald & Assocs., Inc. is available at: Link to Opinion. The letter at issue stated the debt collector wanted to “resolve” the consumer’s account by accepting a reduced amount by a specific date. The consumer filed a lawsuit alleging the letter was false and misleading in…
The U.S. Court of Appeals for the Second Circuit held that a debt collection letter that informs the consumer of the total, present quantity of his or her debt satisfies section 1692g of the federal Fair Debt Collection Practices Act (FDCPA) notwithstanding its failure to inform the consumer of the debt’s constituent components or the precise rates by which it might later increase. The Court further held that such a letter does not violate section 1692e of the FDCPA for failure to inform the consumer that his or her balance might increase due to interest or fees when the letter…
The U.S. District Court for the Southern District of Florida recently denied a consumer’s motion for class certification in a putative class action against a debt collector. In so ruling, the Court concluded that the plaintiff consumer’s proposed class — which included members who did not make payments to the debt collector while also seeking actual damages as to proposed members who did make payments — presented individual issues concerning causation as to actual payments made in response to the collection letters at issue, and thus failed to overcome the predominance requirement under Fed. R. Civ. P. 23(b)(3). A copy…
An entity whose principal business is to purchase debt, but did not itself collect the debt it purchased, was found to be a debt collector subject to the federal Fair Debt Collection Practices Act (FDCPA), even though the collection activity was undertaken by other entities. The Third Circuit Court of Appeals reached this decision by expanding the scope of the statute’s liability so far that it now falls into conflict with itself. Put another way, a creditor can be a debt collector of its own performing debt which it assigned to a third party to collect. But the third party…
A trio of bills currently pending in the New York State Senate would extinguish debt, require licensing and impose additional requirements in collection litigation. New York Senate Bill 691 and Senate Bill 2239 would completely extinguish the right to collect debt arising from a consumer credit transaction upon expiration of the statute of limitations. Senate Bill 691 goes a bit further by proposing to reduce the statute of limitations in “consumer credit transactions” to three years although it does provide certain exceptions. In addition, Senate Bill 691 would require certain disclosures to be provided to defendants in lawsuits brought on…
The U.S. Court of Appeals for the Seventh Circuit reversed a trial court judgment in favor of a borrower and against a debt collector, and ruled that reporting to a credit reporting agency that a debtor owed nine unpaid bills of $60 instead of one unpaid bill of $540 did not misstate the character of the debt in violation of the federal Fair Debt Collection Practices Act (FDCPA). A copy of the opinion in Rhone v. Medical Business Bureau, LLC is available at: Link to Opinion. A debt collector reported to a credit reporting agency that a debtor owed nine debts of…