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Financial Services Law Insights and Observations

District court dismisses CFPB suit against law firm over debt collection letters

Courts CFPB Debt Collection FDCPA CFPA


On July 25, the U.S. District Court for the Northern District of Ohio entered judgment against the CFPB in its lawsuit against a law firm that had previously collected debts for the State of Ohio under the direction of former Ohio Attorney General and Bureau Director Richard Cordray. The Bureau’s claims focused on whether demand letters sent on firm letterhead were misleading if attorneys were not meaningfully involved in preparing those letters. As previously covered in InfoBytes, the CFPB sought a permanent injunction and fines against the law firm for violating the Fair Debt Collection Practices Act and the Consumer Financial Protection Act. However, according to the court’s memorandum opinion and order following a May 2018 trial, the Bureau did not meet its burden of supporting its claims by a preponderance of the evidence because, even if attorneys did not review every account before a demand letter was sent, attorneys were “meaningfully and substantially involved in the debt collection process both before and after the issuance of demand letters.” The court also concluded that the Bureau’s expert witness “did not present credible evidence from which the finder of fact could infer that any consumer’s [sic] were misled by [the firm’s] demand letter,” and therefore there was “no evidence that any consumer’s decision on when and whether to pay a debt was influenced by the inclusion of the attorney identifiers in [the firm’s] demand letters.” Instead, in the court’s words, “[t]he demand letters accurately describe the identity and legal description of the entity sending the letter. As such, it cannot be described as false or misleading simply for correctly identifying [itself] as a law firm.”  The court entered judgment against the Bureau on all counts and assessed all the costs of the action to the Bureau.

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