Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
On February 28, the U.S. District Court for the District of New Jersey dismissed a putative class action alleging a debt collector violated the FDCPA by sending a collection letter, which allegedly failed to properly notify the plaintiff of his right to dispute the debt. According to the opinion, the collection agency sent a one-page collection letter notifying him that a dispute must be in writing. The letter also contained two telephone numbers and requested the consumer call with any questions or concerns. In his complaint, the consumer argued that the inclusion of the phone numbers and request for telephone contact, “overshadows or contradicts” the debt dispute notice required by law. The collection agency moved for judgment on the pleadings and dismissal, arguing that the consumer failed to state a legal claim under the FDCPA. The court agreed, stating that “nothing about the form of the letter overshadows or contradicts the information in the validation notice.” Specifically, the sentence that requested the consumer call the collection agency does not mention disputing the debt, and the only reference to disputing the debt is in the standard validation notice one paragraph below, which specifies it must be done in writing. Because the consumer’s FDCPA claims failed, the court entered judgment and dismissed the action.
On October 18, the Colorado Court of Appeals held that a debt collector’s second collection letter violated the Colorado Fair Debt Collection Practices Act (CFDCPA) requirement for proper notification of the consumer’s right to dispute and request validation of the debt, reversing the lower court’s ruling. According to the opinion, a consumer filed a complaint against the debt collector alleging the two letters she received violated the CFDCPA, and the lower court disagreed, granting summary judgment in favor of the debt collector. Upon review, the appeals court determined that the first letter contained all the disclosures required under the CFDCPA but that the debt collector’s second letter, which prominently used the bold and capitalized phrase "we cannot help you unless you call," overshadowed or contradicted the statutorily required disclosures made by the company in the first letter. Specifically, the court concluded that the second letter, which arrived within the thirty-day statutory period initiated by the first letter, was “capable of being reasonably interpreted by the least sophisticated consumer as changing the manner in which the consumer was required by law to dispute the debt” and is therefore deceptive or misleading in violation of the CFDCPA.
6th Circuit cites Spokeo, but holds plaintiffs alleged sufficient harm from deficient debt collection letters
On July 30, the U.S. Court of Appeals for the 6th Circuit held that consumers had standing to sue a debt collector whose letters allegedly failed to instruct them that the Fair Debt Collection Practices Act (FDCPA) makes certain debt verification information available only if the debt is disputed “in writing.” The court found that these alleged violations of the FDCPA presented sufficiently concrete harm to satisfy the “injury-in-fact” required for standing under Article III of the Constitution.
The debt collector had filed a motion to dismiss in the lower court, arguing that the putative class action plaintiffs lacked Article III standing under the Supreme Court’s 2016 ruling in Spokeo, Inc. v. Robins (covered by a Buckley Sandler Special Alert). The district court denied the motion, determining that the letters “created a ‘substantial’ risk that consumers would waive important protections afforded to them by the FDCPA” due to the insufficient instructions. The 6th Circuit affirmed. After analyzing Spokeo, the court agreed that the “purported FDCPA violations created a material risk of harm to the interests recognized by Congress in enacting the FDCPA,” namely the risk of unintentionally waiving the verification and suspension rights afforded by the FDCPA when a debt is disputed.
- Moorari K. Shah to discuss "State regulatory and disclosures" at the Equipment Leasing and Finance Association Legal Forum
- Daniel P. Stipano to discuss "The state of the BSA 2019: What’s working, what’s not, and how to improve it" at the West Coast Anti Money-Laundering Forum
- Buckley Webcast: The future of the Community Reinvestment Act
- Hank Asbill to discuss "Creative character evidence in criminal and civil trials" at the Litigation Counsel of America Spring Conference & Celebration of Fellows
- Buckley Webcast: Amendments to the CFPB's proposed debt collection
- Brandy A. Hood to discuss "Flood NFIP in the age of extreme weather events" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss "UDAAP compliance" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Kathryn L. Ryan to discuss "Major state law developments" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "Leveraging big data responsibly" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Kathryn L. Ryan to discuss "State examination/enforcement trends" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Benjamin K. Olson to discuss "LO compensation" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- APPROVED Webcast: State and SAFE Act licensing requirements for banks
- John C. Redding to discuss "TCPA compliance in the era of mobile" at the Auto Finance Risk Summit
- Buckley Webcast: The next consumer litigation frontier? Assessing the consumer privacy litigation and enforcement landscape in 2019 and beyond
- Buckley Webcast: Data breach litigation and biometric legislation
- Buckley Webcast: Trends in e-discovery technology and case law
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Douglas F. Gansler to discuss "Role of state AGs in consumer protection" at a George Mason University Law & Economics Center symposium