Some claims commonly made by debtors under the Fair Debt Collection Practices Act (FDCPA) were rejected in two recent federal court decisions. One decision involves communications with the debtor’s counsel and the other involves the effect of a validation request made to a prior collection agency.
Angel v. American Recovery Inc. The debtor’s complaint claimed that a message left by a debt collector on her attorney’s voicemail violated the FDCPA by falsely representing the character, amount, or legal status of her debt. In the message, the collector stated incorrectly that it had not received a monthly payment due under the debtor’s payment plan and that her account might be sent to the legal department for further action.
The U.S. District Court for the Western District of Washington held that since the only communication alleged to have violated the FDCPA was made to the debtor’s attorney, her FDCPA claim was not actionable. In dismissing the complaint, the district court relied on the Ninth Circuit’s decision in Guerrero v. RJM Acquisitions, in which an alleged misrepresentation made to a debtor’s attorney was held not to violate the FDCPA.
Observing that the debtor had not alleged that the debt collector had taken any legal action or that she was served with legal process, the district court also rejected the debtor’s argument that, because the collector threatened to send the matter to its legal department, the message was actually directed at her. In addition, the court rejected the debtor’s claim that the collector had engaged in “unfair and unconscionable” conduct in violation of the FDCPA, noting that the Ninth Circuit’s holding in Guerrero was not limited to specific FDCPA provisions and instead precluded any FDCPA claims based on communications directed solely to a debtor’s attorney.
Jacques v. Solomon & Solomon P.C. The debtor’s complaint alleged that the FDCPA barred the debt collector from attempting to collect the debt because she had previously disputed the debt with the creditor and other debt collectors. She also alleged that the debt collector violated the FDCPA by failing to validate the debt upon receiving her dispute.
The U.S. District Court for the District of Delaware held that the disputes previously sent to the creditor and other debt collectors did not bar the current debt collector from attempting to collect the debt. Because the debtor did not allege the current debt collector knew about the prior disputes, the court refused to impute the knowledge of the creditor or other debt collectors to the current debt collector. The court also held that the current debt collector had no duty under the FDCPA to validate the debt so long as it ceased collection efforts after receiving the debtor’s dispute.
The court also rejected the debtor’s claims that the debt collector had used false, deceptive, or misleading representations or means to collect the debt by failing to show that it had a contract with the creditor and by failing to notify credit reporting agencies of the dispute. According to the court, the debtor conceded that the creditor had placed the account with the debt collector and had not identified any FDCPA provision requiring a debt collector to prove its collection authority. The court also found that since the debt collector was not alleged to report credit information to consumer reporting agencies, it had no duty under the FDCPA or the Fair Credit Reporting Act to report the dispute.
Ballard Spahr lawyers regularly advise clients engaged in consumer debt collection on compliance with the FDCPA and state debt collection laws. As we summarized in a prior legal alert, the Consumer Financial Protection Bureau has issued a proposal to supervise certain debt collectors and debt buyers as “larger participants.” The CFPB will soon be examining debt collectors and debt buyers who qualify as “larger participants.” We are currently conducting compliance reviews for debt collectors and debt buyers in anticipation of their first CFPB examinations.
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