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On January 11, the U.S. Court of Appeals for the 2nd Circuit affirmed a district court’s decision that two individual co-owners were jointly and severally liable for nearly $11 million for debt collection activities conducted by their companies (corporate defendants) that violated the Federal Trade Commission Act (FTCA) and the FDCPA. According to the opinion, the corporate defendants misrepresented that they were investigators calling from a “fraud unit” or a “fraud division,” falsely accused debtors of committing check fraud, threatened consumers with criminal prosecution if the debts were not paid, and contacted friends, family, employers, or co-workers, “telling them that the debtors owed a debt, had committed a crime in failing to pay it, and faced possible legal repercussions.” The district court held that the co-owners were personally liable for the $10,852,368 calculated by the FTC, which represented the total amount received by the corporate defendants from consumers as a result of their actions. One of the co-owners appealed the decision that he was personally liable and argued that the district court erred in determining the amount of equitable monetary relief.
On appeal, the 2nd Circuit agreed with the district court that the co-owner “had both sufficient authority over the [c]orporate [d]efendants, and knowledge of their practices, to be held individually liable for their misconduct as a matter of law.” The court also upheld the disgorgement amount, reasoning that the FTC’s process to determine the amount was entitled to a presumption of reliance because it was based on the submission of more than 500 consumer complaints concerning the corporate defendants’ debt collection practices, aggressive collection scripts, and audio recordings of twenty-one of the twenty-five debt collectors “falsely telling consumers that the employees were law enforcement personnel or ‘processors.’” Moreover, the court noted that the co-owner failed to submit proof that the corporate defendants earned some or all of their revenue through lawful means.
- Buckley Webcast: The next consumer litigation frontier? Assessing the consumer privacy litigation and enforcement landscape in 2019 and beyond
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- Brandy A. Hood to discuss "What the flood? Don’t get washed away by a flood of changes" at the American Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano to discuss "Mitigating the risks of banking high risk customers" at the American Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano, Kari K. Hall, Brandy A. Hood, and H Joshua Kotin to discuss "Regulations that matter in a deregulatory environment" at the American Bankers Association Regulatory Compliance Conference Power Hour
- Buckley Webcast: Data breach litigation and biometric legislation
- 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
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Brandy A. Hood to discuss "RESPA Section 8/referrals: How do you stay compliant?" at the New England Mortgage Bankers Conference
- Daniel P. Stipano to discuss "Lessons learned from recent enforcement actions and CMPs" at the ACAMS AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Assessing the CDD final rule: A year of transitions" at the ACAMS AML & Financial Crime Conference
- Douglas F. Gansler to discuss "Role of state AGs in consumer protection" at a George Mason University Law & Economics Center symposium