The U.S. Supreme Court handed down its much-anticipated opinion in Obduskey v. McCarthy & Holthus LLP on March 20, ruling the federal Fair Debt Collection Practices Act does not cover persons engaged in “non-judicial foreclosures” except with respect to a single provision contained in the FDCPA. Colorado, like many western states, has a procedure that allows a lender to foreclose property without the need to file a lawsuit. Here, as you may recall, a Colorado borrower defaulted on his home loan and the mortgage servicer hired a law firm to pursue a non-judicial foreclosure. The borrower informed the law firm he was disputing…
Posts tagged as “FDCPA”
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…
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…
The U.S. Court of Appeals for the Second Circuit recently affirmed entry of summary judgment in favor of the Federal Trade Commission and against 13 corporations and their two co-owners for violations of the Federal Trade Commission Act and the federal Fair Debt Collection Practices Act for allegedly placing unlawful and threatening collection calls to consumers seeking to collect payday loan debt. In so doing, the Second Circuit concluded that the trial court did not err in holding the offending corporations’ owners jointly and severally liable for the disgorgement assessed against all defendants, which was affirmed as an appropriate amount…
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a consumer’s complaint alleging that a collection letter violated the federal Fair Debt Collection Practices Act, 15 U.S.C. 1692, et seq., by failing to meaningfully convey the name of his creditor, as required. In so ruling, the Eleventh Circuit concluded that dismissal was appropriate because the consumer did not claim that the collector misidentified his creditor, and the ‘least sophisticated consumer’ who had been a patient at a hospital would surely understand the hospital to be the creditor when its name was listed next to the…
On Dec. 28, 2018, New York Senate Bill 3491 was signed into law and will become effective March 29, 2019. The legislation, in its final form, simply prohibits “principal creditors” and debt collection agencies from: (a) making any representation that a person is required to pay the debt of a family member in a way that contravenes the FDCPA; and (b) making any misrepresentation about the family member’s obligation to pay such debts. A “principal creditor” is defined under current law as “any person, firm, corporation or organization to whom a consumer claim is owed, due or asserted to be…
In an unpublished ruling, the U.S. Court of Appeals for the Second Circuit held that when a debt collector did not seek to collect fees and interest after default, its letter to a borrower that did not state whether fees and interest continued to accrue after default did not engage in deceptive or misleading conduct in violation of the FDCPA. A copy of the opinion in Derosa v. CAC Financial Corp. is available at: Link to Opinion. After a borrower defaulted on her credit card account, the original creditor assigned the account to a debt collector. The debt collector sent a letter…
A debt collector sent a letter to a consumer stating: “We can’t change the past, but we can help with your future.” The letter contained three payment options that were described as “discounts,” though one was merely a payment plan for the full balance. The letter advised “[i]f you pay your full balance, we will report your account as Paid in Full. If you pay less than your full balance, we will report your account as Paid in Full for less than the full balance.” The consumer filed a complaint in the U.S. District Court for the Eastern District of…
The U.S. Court of Appeals for the Seventh Circuit held that a defendant waived its right to arbitrate due to its “gratuitous delay” in seeking arbitration, where it waited 13 months after the filing of the lawsuit before moving to compel arbitration, and that any showing of prejudice to the non-moving party was not required. Accordingly, the Seventh Circuit affirmed the trial court’s ruling denying a motion to compel arbitration. A copy of the opinion in Smith v. GC Services Limited Partnership is available at: Link to Opinion. The plaintiff applied for and received a credit card from a bank. The credit…
The U.S. Court of Appeals for the Seventh Circuit held that a plaintiff’s oral testimony that a $100 payment was demanded of her in violation of the federal Fair Debt Collection Practices Act (FDCPA) was insufficient to withstand summary judgment where the debt collector defendant produced documentary evidence to support its testimony that no such demand was made. Accordingly, the Seventh Circuit affirmed the ruling of the trial court granting summary judgment in favor of the defendant. A copy of the opinion in Duncan v. Asset Recovery Specialists, Inc. is available at: Link to Opinion. After the plaintiff fell behind on her…
The U.S. Court of Appeals for the Third Circuit held that a statement in a letter to the effect that forgiveness of the debt “might” be reported to the Internal Revenue Service may constitute a violation of the federal Fair Debt Collection Practices Act (FDCPA). In so ruling, the Court reiterated that “even if the language in a letter is true, it can still be deceptive where ‘it can be reasonably read to have two or more different meanings, one of which is inaccurate.’” Accordingly, the Third Circuit reversed the trial court’s dismissal of the action and remanded for further…
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…