Debt Collection – FDCPA

October 2018

Plaintiff Can Sue as Consumer Under FDCPA Despite Claiming Debt Not His

Loja v. Main Street Acquisition
Reversed and remanded – Someone opened a Visa credit card under the name “Mario Loja,” an account that eventually fell into debt. Plaintiff-appellant Mario Loja claimed the debt was not his, and that in any event the collection action was time-barred under Illinois law. After a bench trial, the small claims court dismissed the collection case with prejudice in favor of plaintiff-appellant. Plaintiff-appellant then filed suit against Main Street, alleging FDCPA violations.

The district court ruled Loja did not meet the definition of a “consumer” under § 1692a(3) of the FDCPA, finding the phrase “obligated or allegedly obligated to pay any debt” meant a plaintiff had to allege he actually owed a debt. Because plaintiff-appellant claimed he did not owe any debt, he was not a “consumer” for purposes of the FDCPA.

The appellate court found the FDCPA defines “consumer” as “any natural person obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). The disjunctive “or” created two categories of persons that qualify as consumers, and did not limit “alleged” to debt obligations alleged by the consumer. Alleging that plaintiff-appellant owed the debt, Main Street suit in small claims court, but failed to prove its claim. This allegation by Main Street sufficiently qualified plaintiff-appellant as a consumer under the FDCPA.
[7th Circ.; 17-2477 (Orig: N.D. Ill.; 1:17-cv-01251)]
jbho: It appears the fact the Main Street had already taken plaintiff to court was critical to the determination of “allegedly obligated to pay any debt.” If a lower bar were adopted, this could make wrong number calls much more interesting. “You called me, alleging I owed a debt. I told you, you had a wrong number, but you kept calling. Does that makes me a “consumer” for purposes of the FDCPA?”


June 2018

Call Attempts Count Towards Two-Call Limit

Armata v. Target
Vacated and remanded (plaintiff’s MSJ granted) – Target allegedly made more than two debt collection (robo)calls per seven days. Target argued unanswered calls (calls where they were unable to reach the debtor) did not count against the two-call limit. The lower court agreed.

On appeal, the SJC found that in each call attempt by Target, communications were ‘initiated’ for the purposes of the Massachusetts debt collection regulations, irrespective of any answer by plaintiff. Where Target did not leave voicemail messages, it did so by choice – as a matter of internal policy – and not based on any inability to reach plaintiff. While the regulations provided exemptions in cases where creditors were “truly unable to reach the debtor or to leave a message for the debtor,” plaintiff was not “truly unreachable.” “Truly unreachable” were circumstances where a voicemail box was not setup or was full, or a number was disconnected. None were the case with plaintiff. Target could reach plaintiff, and could leave a message – it simply chose not to.

Nor could Target argue the calls were immune from liability through use of a predictive dialer. The SJC noted, “Target’s argument that the use of a predictive dialer shields it from liability contradicts the plain meaning of the regulation as well as its purpose.” The regulations applied irrespective of delivery method, whether live person, prerecorded message, or text message. “Target’s reading would create a loophole so large as to swallow the rule, such that nearly every creditor would be able to evade the limits imposed by the regulation simply by changing its dialing technology.”

Finally, the SJC found that Target’s argument “communications” did not take place fell flat, and the regulations did not limit “communications” in isolation, but the “initiation of communications.” In all cases communications were initiated. “A creditor can ‘harass, oppress, or abuse’ a debtor with its telephone practices by calling incessantly, even if it does not leave voicemail messages … (otherwise) … a creditor would be permitted to telephone a debtor unremittingly so long as it chose not to leave voicemail messages.”

Since it was undisputed that target attempted more than two calls in a seven-day period, the court granted plaintiff’s motion for summary judgement on liability. The matter was remanded to the lower court for rulings on damages, costs, and injunctive relief.
[MA Supreme Court; SJC-12448]
jbho: a reminder that call attempts should count towards your total call volumes.

If you’re interested, the AG’s guidance can be found here:

January 2018

Policy, Schmolicy – You Still Have To Notify Debt Is Time Barred

Pierre v. Midland Credit
Plainitff’s MSJ granted – Midland allegedly sent a letter seeking to collect a time-barred debt without disclosing:
• the debt was time-barred
• Midland could not sue on the alleged debt
• that making even a partial payment would revive Midland’s ability to sue

Pierre v. Midland Credit - disclosure

The court found Midland’s failure to warn plaintiff that a payment would restart the clock on the debt, allowing Midland to sue, made the letter misleading. Midland’s internal policy to never sue on a time-barred debt (“never to revive the statute of limitations after it expires“) was irrelevant. An unsophisticated consumer would not know the dangers of revival, and would not know about Midland’s internal policies – which offered no protection if the debt were sold to another, less principled collector.

The court found the disclosure was materially misleading, since a consumer unlikely to pay may be swayed by receipt and misunderstanding of the letter, leading to a real injury.

The court declined to consider consent decrees with the CFPB and FTC suggesting the “revival warnings” were not necessary, stating, “the Seventh Circuit’s explicit holding – that revival warnings are required – controls.”

Since the letter was misleading and deceptive as a matter of law, summary judgment as to Midland’s liability on plaintiff’s individual and class claims was granted.
[N.D. Ill; 1:16-cv-02895]
jbho: Midland tried to argue the disclosure language was mandated in a CFPB consent order. However, the court found Midland failed to explain how or if the disclosure language it proposed to the CFPB was ever adopted or endorsed by the CFPB. So I guess the lesson is just because the COP doesn’t object, doesn’t mean you are protected from litigation.

October 2017

Validation Notice Was Not ‘Sent’ When Emailed

Lavallee v. Med-1 Solutions
Plaintiff’s MSJ granted – Med-1 filed a lawsuit against plaintiff to collect medical debts after she failed to respond to validation notices. Med1 claimed the validation notices were sent via email, using a secure process that required the recipient to click on a link to download the actual validation notice(s). Plaintiff claimed she did not receive the emails, and thus no notice was ever given. Med-1 records confirmed that although the emails may have been received, plaintiff did not open the packages (e.g., click on the links) in those emails. Med-1 argued it was irrelevant that plaintiff failed to open the documents; it had met its obligation by sending the initial emails.

The court found that Med-1 failed to ‘send’ the validation notices. Each email merely stated there was an ‘important message’ waiting for plaintiff, and she would have to follow additional steps to ultimately reach the (compliant) validation notices. Thus, the emails did not contain the required validation notice. Moreover, Med-1 knew (or could have easily determined) the validation notices were not received (opened).

The court also stated documents delivered as a web-based email attachment could not be deemed as reliable as US Mail (“Indeed, in the court’s estimation, such attachments are more likely not to be opened and delivered than to be opened“). Additionally, the average user was less likely to open an email from an unknown sender, since security agencies warn suspicious email attachments are a common tool for attackers, and there was no evidence plaintiff should have recognized Med-1 as a trusted sender.

Finally, since the validation notices were never ‘sent,’ plaintiff did not need to show that she was misled or confused by the validation notices.

The court granted plaintiff’s motion for summary judgement and awarded her $1,000.00 in statutory damages, costs, and reasonable attorneys’ fees.
[S.D. IN; 1:15-cv-01922]
jbho: Unfortunate that a novel way to securely and conveniently deliver sensitive information was shot down.

I wonder if there would have been a different result if there were an eSign consent attached. Electronic signatures were not discussed, but the court did indicate in a footnote that it did not outright reject the idea that validation notices could be sent via email. It limited its analysis to the emails in question – emails that did not contain the required notice.

Perhaps a good idea to bake in account servicing messages (i.e., debt ‘communications’) into your eSign agreement? Just in case?

Update: 25Apr2018 – CFPB Amicus (Doc#19). Med-1 appealed, and the CFPB has chimed in, stating that while it is not unreasonable to deliver electronic notices, doing so requires a valid eSign consent. Absent that, Med-1’s arguments must fail.

The CFPB also dismissed Med-1’s arguments that the CFPB’s debt collection rulemaking was needed to clarify the matter, since nothing in the rulemaking related to, or was dependent on, eSign Act requirements. [7th Circ.; 17-3244]

29 Calls In 24 Days Might Be Harassment

Lundstedt v. I.C. System
Defendant’s motion for judgment on the pleadings granted in part – I.C. Systems allegedly made some 29 autodialed debt collection calls to plaintiff’s home regarding $160 debt, and continued calling (over a 24 day period) despite requests calls cease. Plaintiff claimed call were received via wireless internet (VoIP). Plaintiff filed claims under the TCPA, Connecticut’s ‘Telemarketing Law’ (Conn. Gen. Stat. § 42-288a), the Connecticut Unfair Trade Practices Act (CUTPA), and the FDCPA.

The court found that the TCPA did not apply, since:
• the calls were to a residential line
• the calls were non-marketing
• the calls were only autodialed, and plaintiff did not allege the use of a pre-recorded voice
• plaintiff did not allege he was charged for the (VoIP) callss

Similarly, Connecticut’s ‘Telemarking Law’ did not apply, since debt collection calls did not fall under the scope of the statute.

On CUTPA claims, the court ruled plaintiff failed to allege any ascertainable loss, and only alleged he had sustained emotional injury from too many calls. Thus CUTPA claims must be dismissed.

The court did uphold FDCPA claims, finding:
• The debt was plausibly a consumer debt (and not a debt on a business account)
• Absence of a written cease and desist did not give I.C. Systems the right to “annoy and harass a debtor
• The volume and frequency of calls (up to 4 in one day, and two calls per day on 7 occasions) were plausible grounds for a claim of intent to annoy, harass, or abuse under the FDCPA.

However, the court dismissed Negligent Infliction of Emotional Distress claims, finding most calls were of minimal duration, and plaintiff did not detail the contents of any of the calls made by defendant.
[D. Conn; 3:15-cv-00824] 
jbho: another example to help set call threshold rules.

Also, an interesting result on the VoIP calls. Looks like the threshold may be charges on an individual call basis?

May 2017

$50,000 Jury Verdict For Incomplete Disclosures

Baez v. LTD Financial
Jury verdict – LTD allegedly sent a collection letter on a time-barred debt, but allegedly failed to disclose that a partial payment would revive LTD’s right to sue. The letter stated:

The law limits how long you can be sued on a debt. Because of the age of this account, you will not be sued for the debt. If you need information, please call today at 1-866-998-2500. We are not obligated to renew this offer.”

A jury found this language constituted a false representation and attempt to unfairly collect a debt. The jury awarded lead plaintiff $1,000 and statutory damages of $49,361 (1% of LTD’s net worth) to the class (~34,000 members).
[M.D. FL; 6:15-cv-01043]
jbho: make sure to review your copy before sending out any collection letters.

Also worth noting, the court found plaintiff had standing under Spokeo as an alleged FDCPA violation was the type of (concrete) harm Congress intended to prevent — abusive debt collection practices (here, re-initiation of collection efforts without properly verifying the debt).

Can’t Use A Middle-Man When Validating A Debt – Even If It’s The CFPB

Ghanta v. Immediate Credit
Plaintiff’s MSJ granted – Immediate Credit attempted to collect a debt from plaintiff. Plaintiff claimed he disputed the debt in writing, and that Immediate Credit resumed its attempt to collect the debt some five months later without sending him documentation validating the Debt. Proceedings revealed that plaintiff’s initial dispute was sent via email, and a second validation request was sent to defendant via the CFPB portal. Immediate Credit claimed it informed plaintiff by uploading a letter validating the debt to the CFPB portal.

The court found that the FDCPA required verification be mailed to the consumer. By using the CFPB portal, plaintiff did not waive his right to receive the verification by mail. The court further found that even if posting to the CFPB portal were sufficient, the letter itself did not meet the minimum standard for verification, as if failed to:
• provide information for Plaintiff to determine if he had already paid the alleged debt
• provide information on from whom Immediate Credit was trying to collect (i.e., whether collecting from a wrong consumer)
• indicate the amount of the debt
• indicate when the alleged debt accrued
• provide any description of the transaction resulting in the alleged debt
The letter only stated Immediate Credit’s belief that Plaintiff “does in fact owe the balance.”

Since Immediate Credit failed to notify and failed to provide enough information for Plaintiff to adequately dispute the debt, Summary Judgement was awarded on plaintiff’s claims. A notice of settlement has been filed (Doc #52).
[N.D. TX; 3:16-cv-00573]
jbho: for want of a stamp, we have this case?

A reminder to make sure to review your copy before sending out any verification letters.

April 2017

87 Calls Over 19 Days May Be FDCPA Violation

Losch v. Advanced Call Center Technologies
Defendant’s MSJ denied in part – Advanced allegedly made 87 autodialed debt collection calls to plaintiff’s mobile over a period of 19 days.

The court found that plaintiff had consented to the calls, as she provided her number on the credit application form that specified:

Consent To Communications. You consent to us contacting you using all channels of communication and for all purposes. We will use the contact information you provide to us. You also consent to us and any other owner or servicer of your account contacting you using any communication channel. This may include text messages, automatic telephone dialing systems, and/or an artificial or prerecorded voice. This consent applies even if you are charged for the call under your phone plan. You are responsible for any charges that may be billed to you by your communications carriers when we contact you.”

Since plaintiff only answered one call (the call on which she revoked consent), and Advanced stopped calling after that cease request, all calls were made with consent.

On FDCPA claims, the court found that harassment was a jury question. The Advance system was preset to make up to five calls a day, 90 minutes apart. The persistent nature of calls – at all times of day, and all days of the week – casted doubt on any belief  calls went unanswered due to being inadvertently missed or at an inconvenient time (or so a reasonable jury could find).
[N.D. Ill; 1:15-cv-06644]
jbho: another case to potentially include in the call volume harassment calculus (calls per day, calls per week). What are the magic numbers? Perhaps the CFPB debt collection rulemaking will clarify.

Action Filed For Confusing Debt Notification Letter

Charleston v. PRA
Class complaint – PRA allegedly sent “initial communication” debt collection notices that contained extraneous and misleading information. Plaintiff claimed the communication implied the debt must be disputed in writing by referring recipients to the back page of the letter with a bold DISPUTES CORRESPONDENCE ADDRESS.


Plaintiff further claimed the communication also failed to adequately disclose the amount of the debt by including $0.00 interest and fees, but failing to include language concerning the accrual of interest/fees, thus making the least sophisticated consumer unable to reasonably understand the actual “Total Now Due.”
[S.D. N.Y.; 2:17-cv-02190]
jbho: Maybe better to use the model validation notice proposed by the CFPB proposed in Appendix F of its SBREFA Process? . PRA’s form doesn’t seem to be that far off of the model, but it doesn’t quite have all the same information on the front page of the notice.

March 2017

49 Calls In 18 Days Not Harassment

Hinderstein v. Advanced Call Center
Defendant’s MSJ granted – Advanced allegedly made 49 debt collection calls to plaintiffs mobile in an 18 day period, and called as many as five times per day on four occasions. The court previously granted a motion to dismiss (leave to amend) on claims under:
• §1692e (false or misleading representations) – since plaintiff failed to allege he spoke with plaintiff, there were no representations to evaluate
• §1692f (unfair practices) – as there was no indication volume of calls created a cause of action under that section.
The court did allow claims under §1692d (harassment or abuse), finding allegations on the number and frequency of calls* were sufficient to state a claim at the motion to dismiss phase.

Plaintiff did not amend the complaint.

At motion for summary judgment on the remaining harassment claim, the court found persistent contact attempts alone were not sufficient to constitute harassment. Here the facts were:
• All calls were placed between 8:00 a.m. and 9:00 p.m.
• Advanced calls no more than five times per day
• Advanced allowed at least 90 minutes between calls
• Advance did not call plaintiff’s work, family, or friends
• Advanced never intentionally left voicemails
• Plaintiff answered only one call, and asked Advanced to stop calling (the only time plaintiff asked calls to stop), after which Advanced stopped calling
• Advance expressly notified plaintiff in writing of his rights under the FDCPA and RFDCPA
Based on the above, the court felt the volume of calls was the result if Advance’s inability to reach plaintiff, rather than from any intent to annoy, abuse, or harass. Since only one contact was made, with no allegations of threats or other improper statements, and Advanced immediately ceased calling, the calls did not constitute harassment.

As any Rosenthal Act claims hinged on FDCPA claims, there was no controversy under the RFDCPA, and judgment was awarded on those claims as well.
[C.D. CA; 2:15-cv-10017]
jbho: when someone says stop calling, STOP CALLING!

Interesting that the court found it relevant that other debtors were contacting plaintiff during the same time window. “Thus, it was not merely defendant that was causing plaintiff’s telephone to ring.” I’m not sure how to square this with the rest of the ruling.

I also found instructive the specific numbers quoted in the dicta:

Not Harassment
• 29 calls over 115 days, all between 8:ooa.m. – 6:00p.m., at least two hours between same-day calls
• 30 calls in one month (all unanswered), at reasonable hours, max 3 calls per day, no stop request recieved
• 114 calls, almost daily, multiple times per day, no messages left, no stop request received, no substantive communication with plaintiff, no threatening, profane, or insulting statements to plaintiff

Likely Harassment
• Calling twice at work after stop request
• Repeated calls after stop request
• 54 calls at work; 24 message left
• Calls every 15 minutes, between 7:00a.m. – 10:00p.m.
• 134 calls in one month, up to 5 calls per day
• 5-6 calls per day, 7 days a week, for 4 months
• 6 times per day, twice within a matter of minutes
• 6 times in 24 minutes

February 2017

How Can I Harass You If You Won’t Answer The Phone?

Chisholm v. AFNI
Defendant’s MSJ granted – AFNI allegedly made autodialed, prerecorded debt collection calls to plaintiffs mobile, multiple times per day, despite plaintiff’s request for calls to cease. It was later revealed – according to the court – plaintiff had a delinquent DirecTV account, and despite plaintiff’s recollections, plaintiff’s own phone records showed only 18 calls over 13 days:
– one answered, but plaintiff hung-up;
– 17 unanswered.
The court found no evidence that plaintiff had revoked consent on the answered call.

The calls were made (between 9:30 and 19:00, with at least three hours between attempts):
• 30Apr2015 (Th) – 2 calls
• 01May2015 (Fr) – 1 call
• 02May2015 (Sa) – 1 call
• 04May2015 (Mo) – 2 calls
• 05May2015 (Tu) – 3 calls
• 06May2015 (We) – 1 call
• 07May2015 (Th) – 2 calls
• 08May2015 (Fr) – 2 calls
• 09May2015 (Sa) – 1 call
• 11May2015 (Mo) – 1 call
• 12May2015 (Tu) – 1 call
On 18 May, AFNI received a letter informing them Plaintiff was represented by an attorney, and AFNI immediately ceased calling.

The court found the number of calls alone could not violate the FDCPA, there must be some other ‘egregious’ behavior to constitute harassment. Plaintiff produced no evidence of harassing, threatening, or vulgar language.

On TCPA claims, the court found that knowing provision by Plaintiff of his number to DirecTV* evidenced prior express consent. And since the one call answered was a hang-up, there was no evidence consent had been revoked.
[D. N.J. 1:15-cv-03625]
jbho: the importance of call recording? Apparently, AFNI was able to produce a recording of the one connected call, and use this to show plaintiff didn’t say anything.

* Although Plaintiff contested whether his number was provided at the time he created his account, he was unable to produce evidence he provided it at some later date.

125 Calls in 135 Days is Not FDCPA Violation

Reed v. IC Systems
Defendant’s MSJ granted – IC systems allegedly made debt collection calls to plaintiff’s mobile about a disputed debt. Although the court found plaintiff had standing (“even though Plaintiff did not answer the calls in question, for she still had to spend time addressing them”), the 125 calls in 135 days did not constitute harassment since:
• number of calls alone cannot violate the FDCPA – plaintiff must also show some other egregious or outrageous conduct
• there was always at least 2 hours between calls
• calls were always in the statutorily permitted time frames (majority during business hours)
• only one message was left (next call occurred three days later)
• plaintiff could have blocked calls with the “Block Calls Get Cash” app
• calls ceased once plaintiff’s attorney contacted defendant
[W.D. PA; 3:15-cv-00279]
jbho: always good to have another example of the number and frequency of calls that may or may not ultimately constitute harassment.

July 2016

Call Attempts Count As Calls (Massachusetts)

Watkins v. Glenn Assoc
Plaintiff’s MSJ granted – Glenn Associates called and spoke with plaintiff one time about his student debt. Glenn then made an additional four call attempts during the same seven-day period. The four calls successfully connected to plaintiff’s voicemail system, but Glenn Associates left no message.

The court found the repeated calls indirectly conveyed Glenn’s demand that plaintiff speak with Glenn. This was sufficient to make the calls a ‘communication.’ Furthermore, AG guidance stated that unsuccessful attempts would not count as a communication only if a creditor “is truly unable to reach the debtor or to leave a message for the debtor.” Thus Glenn could not circumvent Debt Collection law merely by choosing not to leave a voicemail.
[MA Superior Ct; 15-CV-3302-H]
jbho: remember, MA Debt Collection regulations (940 Code Mass. Regs. § 7.04) states it is an “unfair and deceptive act or practice for a creditor to … initiat[e] a communication with any debtor via telephone … in excess of two such communications in each seven-day period …”

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